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Since 2017, the number of people who have been buying cryptocurrencies such as Bitcoin has increased significantly. If you’re considering joining their ranks, this article posits guidelines that can safeguard your investment and protect your sanity.
The Crypto Market Is Poised for a Huge Boom
According to current predictions, the cryptocurrency market is set to witness massive growth in the first few months of 2020. In fact, John Mcafee predicted that Bitcoin (BTC) will be valued at $1 million by the end of 2020. This would give it a total market capitalization of $15 trillion, which is bound to attract new investors.
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Are you ready to start buying cryptocurrencies, too? Then make sure to follow these golden rules to safeguard your investment.
Study Cryptocurrency Properly
Before taking the plunge, you need to have a clear understanding of how cryptocurrency works. Buying cryptpcurrencies is completely different from making investments based on the workings of a fiat currency.
For example, the number of cryptocurrencies is limited. Therefore, their price is wholly dependent on the market’s demand and supply. That is, if the demand for buying the currency increases, the price rises as well. On the other hand, if more people want to sell their shares, the price decreases.
Additionally, there are a number of different cryptocurrencies available on the market. Each one has its own perks and drawbacks. Therefore, before buying any cryptocurrency, conduct thorough research to select the one that best suits your needs.
To get you started, Wikipedia offers a list of cryptocurrencies with basic information. Click here to study that list before buying any cryptocurrency.
Next, study in detail the performance of your chosen cryptocurrency. Learn the reasons why the currency’s price soared previously or why it has the potential to increase in the future.
This will give you an idea of the most suitable time to buy your chosen cryptocurrency. Once you get a clear idea of the recent patterns the currency’s price has followed, it will be easier for you to understand if it is the right choice for you.
Further, sites like Is-Scam Website can help you stay aware of the latest goings-on in the market.
Avoid Impulsive Buying and Selling
After selecting a particular cryptocurrency, use data analysis to study the patterns of change in the price of your chosen cryptocurrency. This will help you determine the best time to buy it.
Next—and this is important—after you have bought your cryptocurrency, don’t make the mistake of following the charts obsessively.
Of course, you want to follow your cryptocurrency’s current price in the market. However, you must keep in mind that all cryptocurrencies are extremely volatile. In other words, there is a high possibility that, right after you buy it, the price of your cryptocurrency will either rise significantly or fall drastically.
Moreover, it is almost inevitable that your nerves will be on edge right after you buy a new cryptocurrency. In such a condition, if you see the price rise higher, you might be tempted to invest more in order to earn higher dividends.
On the other hand, if the prices fall, you might succumb to fear. Afraid of losing all your money, you will sell your share at a very low price.
In either case, if you impulsively decide your next course of action based on these prices, you will be falling into the trap of carelessly buying and selling cryptocurrencies on a whim. However, the best practice is to avoid checking the charts for at least for twenty-four hours after your transaction.
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Avoid Selling and Buying Cryptocurrencies on Weekends
The cryptocurrency market, unlike the traditional stock markets, does not close on weekends. It is fully functional around the clock. However, it is advisable to avoid buying and selling cryptocurrencies on weekends.
Because many investors are eager to follow developments in the crypto markets even on weekends, the market is much more volatile on weekends. However, the volume of trading for Bitcoin and altcoins is much lower. Therefore, the market is difficult to predict on the weekends.
While you might gain good profit from buying and selling cryptocurrencies on the weekends, the possibility of suffering a large loss is equally high. Therefore, it is better to take a break from trading Bitcoin and altcoins on weekends. Conserve your energy so you can make better investments in the week ahead.
Devise a Decision-Making Process for Buying Cryptocurrencies
There is a plethora of channels where you can get information about the various cryptocurrencies. This gives you an opportunity to consult multiple sources before you make a decision on your investments.
However, excessive information about buying cryptocurrencies can do more harm than good. It will force you to weigh in on the contradictory sets of information you find, for example.
It is better to train yourself in the technical analysis of Bitcoin and altcoins. Doing so will make it easier for you to form your own opinions and determine the ideal time to buy cryptocurrencies. Also, before you make your investments, select some relevant and trustworthy sources of information and refer to them in the future.
Try this decision-making process for several trading cycles. If it proves to be successful, stick to it whenever you’re buying cryptocurrencies. But if, as you gain experience, you feel you can improve it for better returns, feel free to make changes.
Set Buying and Selling Prices—and Stick with Them
When trading Bitcoin or altcoin, many experts urge you to follow the maxim, “Buy low, sell high.” However, if you follow this strategy to the letter, you could be tempted to wait too long before buying new cryptocurrencies or selling off the ones you already possess. This can prove disastrous and put your investment at risk.
As we mentioned previously, the cryptocurrency market changes rapidly. Prices can change drastically within only an hour. If you wait too long, you might miss out on an excellent trading opportunity.
Therefore, it is better to set certain limits for yourself for buying and selling cryptocurrencies. Then try to stick to these limits in every trading cycle.
However, as you gain experience, don’t hesitate to change these limits as and when you feel necessary. After all, the limits you decide upon should be based upon recent developments and requirements.
Set up Blocks of Time for Conducting Trade
The cryptocurrency world never sleeps. Trading takes place around the clock every day of the year. As a result, some investors fall into the trap of following the prices of Bitcoin and altcoins all day every day. However, by continually checking market conditions, they set themselves up for a great deal of stress.
Don’t do this. If you are under stress, you won’t be able to concentrate, and you will therefore be less able to make wise investment decisions.
Instead, set up blocks of time during the weekdays when you will conduct your trades. Devote the rest of your time to everything else your life. Be sure to include relationships, self-care, and time for recreation in that mix.
In this way, you can stay on top of any new developments in the market and make wiser decisions about your investments.
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Enjoy Greater Profits by Following These Rules for Buying Cryptocurrencies
Just as in every other trading market, finding success in the cryptocurrency market is all about your research and your understanding. But if you follow these rules while buying cryptocurrencies, you will make more profitable investments more often.
For more ideas and inspiration written especially for entrepreneurs like you, be sure to visit our blog often.