I entered cryptocurrency trading back in May 2017. With investments of up to $25k, and a lot of losses, there's a lot I've learned over the past few months. Here's a few lessons I've learned (hoping it may benefit someone starting up). If you find the post useful, please do upvote :)!
- Bitcoin reigns supreme:
- Almost all cryptos are pegged to the value of BTC;
- BTC is sort of the "poster coin" for cryptocurrencies; almost everyone has heard of it;
- It is the most widely used coin for trading (buying/selling) alt. coins;
- It has the biggest market share among all cryptos (no surprise there);
- At least for right now, you can't really go wrong with it.
- Whatever goes up, has to come down:
- Do not panic buy or sell, because whatever coin goes up in value in a short span of time, is bound to come down eventually.
- Keep track of important dates of the coins you invest in:
- For this, it is very important to follow the social media of coins you're holding;
- People buy-in on the hype, so good news or important updates are likely to skyrocket a coin's price. Consequently, bad news can catapult it down.
- Stay clear of Cloud Mining Scams (and similar get-rich schemes):
- Almost all cloud mining companies so far (and I've tried all of them) are selling scams and doing shady business;
- The returns are very slow, and most companies peg returns to the value of the coin; so for instance, if the coin goes up in value, the amount they pay you goes down (this is especially true for companies not offering real-time monitoring of whatever mining they say they're supposedly doing on your behalf);
- Their customer support will almost always be terrible, and having businesses in foreign countries helps them easily get away with a lot of stuff;
- Don't believe the youtube bullsh*ters, as they basically make money off by selling their referrals! You're basically helping them get rich, while they feed you lies. Yes, they're making money, but they haven't invested (much) from their own pocket!
- Buy low / Sell high:
- Make it the first rule of trading!
- Short selling is very risky!
- This is where I personally lost a lot of money;
- It can be very profitable if done right, but since cryptos are highly volatile, this can be extremely risky!
- Ride the wave:
- Every coin has a wave of pump where the coin goes up in value -- you will have to analyze the historic data for the coin to determine and speculate when the coin goes up next so you can "ride the wave" up, and sell high!
- There's no formula:
- There's no formula to predicting accurately the prices going up or down, especially for alt. coins;
- You should instead really be watching Bitcoin predictions and news, because whenever Bitcoin goes up, or goes down in value, all alt. coins go down in value! It's only when Bitcoin is a bit stable price-wise that alt. coins tend to move more streamlined.
- Keep an eye for Bitcoin Hardforks:
- It's almost become a trend now to cash in on bitcoin's success and user base by forking off a new coin from bitcoin (e.g. bitcoin cash, bitcoin gold, and many others);
- Whenever such an event takes place, about 2 - 3 weeks early, you'd see trade volumes and prices of alt coins going down and price of bitcoin surge; this is because people dump their money into BTC in hopes of getting free coins of the bitcoin's "to-be-forked" brother;
- You can almost always expect the price of bitcoin to tumble a little on the day of the fork (because most likely all exchanges temporarily suspend trading), and you can expect the price to surge or drop right after;
- Also, since almost all coins' value is pegged to Bitcoin's value, you're likely to see a dip whenever a hardfork happens.
- Invest what you can afford to lose:
- High volatility and unpredictable nature of the coins makes chances of you losing some cash highly likely, so play with the money that you can afford to lose;
- Learn to trade with a small amount first!
- Holding long-term can be more beneficial than making short trades if you're just starting up;
- Take some time and learn the basics of reading charts and trading patterns, it will help you speculate better.
There's a lot more I could share, but these would be the top 10 off my head. If you got some points to add, share in the comments section below :)! And don't forget to resteem and upvote if you find it useful, thank you!
