The global blockchain market is predicted to rise to US$23.3 billion by 2023. Following this growth, mainstream investors are becoming more attracted to venture into the crypto space. To be successful, one would be better off equipped with the right mindsets to win in this booming market. To get started, we’ve shortlisted seven tips that will help you become a more intelligent crypto investor.
Always have a plan
Yes, we know that this might sound cliche, but having a plan is crucial to your investment success. You don’t just go to an exchange and buy on a whim; you need to clarify what exactly you desire to get out of your investment. For example, is it a short-term or a long-term investment? What do you plan on doing with the profits?
By formulating a concrete plan, you can follow a course of action to achieve your ultimate investment goal. It won’t take long to build a plan, but it will have lasting effects that will help you win. Have an end goal in mind, and then work backwards to increase your chances of success.
Timing is key
If you are FOMO-ing in your crypto investment, consider it a sign of caution. FOMO, if you are not aware, means fear of missing out. It is a notorious reason why many investors fail. It can be tempting to jump into a lucrative trend, especially if you see others make massive profits in a short period.
Instead of becoming a victim of FOMO, think about rewiring your brain to do what 90 per cent of investors don’t –wait and be patient to buy when assets are relatively low in price, not when it’s high and overbought. For example, back in 2017, when almost all cryptocurrencies recorded their all-time-high prices, many people bought highly overpriced assets simply due to FOMO. Unfortunately, these investors saw their investments lose over 95 per cent of their value in the year after.
Buy low and sell high
This may seem like pointing out the obvious, but in reality, many people end up doing the exact opposite! This is one of the most common mistakes that crypto investors make. Having a plan to time your purchases in advance and knowing when to sell is a crucial step. Be patient and buy when it’s priced low relative to the asset’s true fundamental value.
No one has the crystal ball to know when prices will top out. Instead, setting price targets to sell at which you’re comfortable with is a smart move to bolster your investment skills.
Focus on net wins
While winning or earning money is your ultimate goal, you need to accept that you will lose some of it along the way. Some investments will not realise returns as you expect them to be. Remember, the goal is to make net profit.
It’s okay to lose some, as long as you can win more. Net profit is what matters, not the individual wins and losses. Otherwise, you’ll be attached to your losses and will feel unmotivated to continue. Let’s paint an example: if you invest equal amounts into 10 different assets, two might not perform well, three of them might perform moderate, and the remaining five may do exceptionally well. These five assets alone may reward you with substantial results.
Don’t forget to cash out
Unfortunately, many investors become content when their investments are growing. But seeing your portfolio grow along the way is not the final goal of crypto investing. You need to enjoy your hard work. Once the value of your crypto increases to your expected (or unexpected) goal, don’t forget to cash out. The cryptocurrency market is volatile. Your gains today may become your losses tomorrow. So remember to realise your profits in cash or stablecoins.
Also Read: Demystifying NFTs and DeFi
Take time to research
In this digital age where you can access the internet pretty much anywhere you go, there is no excuse not to make informed investments. Smart investors conduct due diligence before buying into any cryptocurrency, whether it’s a popular coin or a new one. This allows you to better understand where and how you’re investing your money. Crypto is one of the fastest evolving industries. Therefore, proactive research is key to thriving.
Diversify your portfolio
Investments are unpredictable. Even those that seem to offer promising returns can crumble down in a flash. As much as you can get thousands of profits in a day or less, the opposite is also true. To futureproof your investments from uncertainties, diversifying your portfolio is a battle-tested strategy that has led many famous investors to success.
With this in mind, many investors opt to keep a large percentage of their total portfolio in major cryptos such as Bitcoin or Ethereum. High-risk assets can make up a smaller portion of your portfolio to balance risk and reward. Therefore, even if your high-risk assets don’t perform well, you still have a majority of your portfolio that is relatively stable.
It all starts with the right mindset
By employing these mindsets when investing in cryptocurrency, you can avoid common pitfalls that many investors experience time and time again. At the same time, it will allow you to become an intelligent investor by empowering yourself with a solid footing to win in the ever-evolving crypto space.
No content herein is financial advice.
The content was first published by The Human & Machine.
Image Credit: The Human & Machine