Whether you’re new to the cryptocurrency market or a seasoned investor, it’s important to know the rules of the game.
In this article, we’ll discuss seven rules for new investors to follow when trading cryptocurrencies.
Table of Contents
The Markets Never Sleep
The cryptocurrency markets never sleep. Cryptocurrencies are traded 24 hours a day, 365 days a year. While the markets may take breaks on weekends, they are generally open for trading every day of the year. This means that if you wake up early in the morning and start trading, it’s possible that by evening when you’re getting ready for bed, your portfolio has already undergone substantial change.
It’s important to keep this in mind when choosing how much time and effort to put into cryptocurrency trading: Cryptocurrency is an ever-changing field that requires constant attention and adjustments to make sure your strategy stays relevant as prices fluctuate over time. If you’re looking for something more passive than active participation in crypto investing, this kind of flexibility might be just what you need!
Do Your Research
You’ve got to do your research, and I mean that in the most literal way possible. It’s easy to find a lot of information about cryptocurrencies, but it’s hard to know what you’re getting into.
So how do you know whether a cryptocurrency is worth buying? First, take the time to learn about the coin itself: its team, its market cap (how many coins are out there), its price history, and future projections. You should also look at how many people are talking about it on social media sites like Reddit or Twitter if they’re not already investing in it themselves—it might be that everyone already knows who this coin is!
Finally, then comes technical details such as how many blocks per second can be added onto each blockchain network without slowing down performance too much–this will help determine whether or not someone should invest in something like Litecoin instead of Bitcoin Cash based on these factors alone.”
Only Invest in Coins You Understand
The first rule of cryptocurrency trading is to only invest in coins you understand. The second rule is, also, only invest in coins you understand. And this one: You should only put money into cryptocurrencies that you can afford to lose.
The reason these three rules are so important is because they’re the foundation of sound investing, and they’ll keep your portfolio safe from harm. If the market takes a dive, or if Bitcoin falls into another bear market, you won’t be affected because your investments are diversified and spread across multiple coins with different values and potential profit margins. Investing wisely doesn’t require rocket science; all you need to do is follow these simple guidelines and practice patience (more on that later).
Be Careful With ICOs
It’s important to remember that ICOs are not regulated by the government and have no backing from banks or regulatory agencies. In fact, there’s often no company behind an ICO at all! The name “initial coin offering” is a misnomer; it suggests a relationship with IPOs (Initial Public Offerings), but instead, it refers to a transaction where someone buys coins for cryptocurrencies in exchange for legal tenders like dollars or euros.
So why do people invest in these things? Well, many ICOs offer investors something that sounds more promising than what you can get from traditional stock markets: quick returns on investments.
And some investors believe that they’re helping early adopters create something revolutionary—like Facebook co-founder Chris Hughes’ cryptocurrency venture, Basecoin—that could improve their lives one day. But keep in mind that most cryptocurrencies have no value outside of their ability to be traded at higher prices on the market
Pay Close Attention to Fees
Fee structures on cryptocurrency exchanges vary widely. Some charge a flat fee for every transaction, while others include them in the bid/ask spread. Many exchanges also charge withdrawal fees, which can be high or low depending on the coins you’re withdrawing and where they’re being sent.
Exchanges can change their fee structure at any time, so it’s important to always check what you’ll be paying before you send funds anywhere. You might think that one exchange has lower buy/sell spreads than another—but if they charge higher withdrawal fees, then your profits will actually be less once that’s taken into account!
Some exchanges may also have hidden fees—for example, some have minimum deposit limits imposed by banks or by themselves because of Know Your Customer (KYC) regulations. In some cases, this could mean that even if an exchange doesn’t charge a fee for depositing fiat currency like USD or EURO; it’s impossible for them to accept deposits below $2k-$3k due to these regulations imposed on them by financial institutions
Never Trade More Than You Can Afford to Lose
The most important rule is to never trade more than you can afford to lose.
This means that if you use your retirement fund or rent money, or anything else essential for survival, then cryptocurrency trading isn’t for you. You need to be able to walk away from it and come back when things are better.
If your car breaks down and needs fixing, don’t dip into the crypto market just because there’s a bit of extra cash sitting in your wallet right now. Use that money instead of risking everything on a gamble with no guarantee of success.
Don’t Chase the Market
“Don’t chase the market” is a common rule that traders use to avoid making emotional decisions. It’s tempting to try to buy when you see your losses start to go down or sell when your profits start going up, but these are exactly the types of decisions that can put you in financial trouble. Instead of trying to guess which way the market will turn, focus on investing for the long term and putting aside any emotions about recent price fluctuations.
As with any new investment, it is important to know how cryptocurrency markets work before investing. It’s also essential to understand what you’re investing in and how much you can afford to lose.
The cryptocurrency market is notoriously volatile: its price swings between 0 and 100% over short periods of time (even as short as a day). In fact, invested money can be lost overnight if the market suddenly drops or surges by more than 20%. In other words, if you want your investments to remain stable over time—which is usually recommended for any type of investment—crypto isn’t for you!