Nathaniel Fried
I’m no crypto expert, that’s why I reached out to leading cryptocurrency experts to get their tips, tricks, and warnings about what to look out for when investing in Cryptocurrency.
#1 Make sure to have a clear cut strategy either as a trader or investor
Too many people enter the marketplace without a strategy and end up getting burned on their investments. If you want to be a trader make sure you have an entry point, and an exit point both on the high side and the low side. You need to know when to get into a position with profit, as well as when to exit without too big of a loss.
If you are an investor remember to do your due diligence, you need to look at the team behind the project, the use case of the company, and how viable the use case is. If the company doesn’t have a strong use case then they are eventually going to run out of money.
Contributor: Kyle Asman from bx3.io
#2 Don't blindly trust the rating websites
Do your own due diligence. If you invest in the pre-ICO stage, you should treat this as any other kind of startup investment. Check the team, scrutinize the white paper, ask tough questions and make sure the company has a solid plan for the future.
Contributor: Yael Tamar from topofblockchain.com
#3 Never leave your crypto assets on an exchange. Ever.
The only time you should ever have cryptocurrencies on an exchange is when you are preparing to trade them. Then, once you have executed your trade, withdraw them to a secure wallet to which you control the keys.
Contributor: Cynthia Turcotte on Twitter, LinkedIn and Bitcoinist.com
#4 One option for cryptocurrency investing is to invest in the mining itself
In order to get a good ROI from crypto mining, you need access to cheap electricity. There are only a few places left in the world where it is profitable to invest in mining - such as China, Canada, and Russia. At Cyberian Mine you can buy preinstalled bitcoin mining machines that benefit from some of the cheapest and greenest electricity on the planet.
Contributor: Malcolm Cannon, CMO from cyberianmine.de
#5 Only invest what you can afford to lose
So, don't run up credit card debt or take a 401K loan to invest in cryptocurrency. Cryptocurrency is highly volatile and your investment could go to zero.
Contributor: Mark Grabowski from markgrabowski.com
#6 Initially, you should invest conservatively and only purchase blue chip cryptocurrencies, such as Bitcoin and Ethereum.
Note: you don't have to buy a whole Bitcoin; you can buy a very small fraction of a Bitcoin. After you gain some experience, you might foray into altcoins. Don't day trade or invest in ICOs unless you're a savvy investor willing to take risks. Be patient. Eventually, most coins increase in value, but it might take several months or even years.
Contributor: Mark Grabowski from markgrabowski.com
#7 Avoid shady exchanges
Only use well-known exchanges that provide good security and liquidity. I recommend opening an account on Coinbase to get started. It's very easy to use. Gemini is also good. Use Bittrex and Binance when you're ready to invest in altcoins.
Contributor: Mark Grabowski from markgrabowski.com
#8 When investing in altcoins, pay close attention to the coin’s marketcap and coin supply
The higher those are, the less room there is for growth. A single Ripple, Stellar or Cardano, for example, will never be worth $1,000 or anywhere near as much as a single Bitcoin.
Contributor: Mark Grabowski from markgrabowski.com
#9 Know when to take a profit
The most successful gamblers know when to walk away from the table. Don't get greedy. Set realistic profit goals and sell or at least pare down once you hit them. Cash out your initial investment as soon as you can, so you're playing with house money. Sometimes, converting your coins into fiat and sitting out of the cryptocurrency market is your best option. The market can be quite bearish at times and there's no profit to be made.
Contributor: Mark Grabowski from markgrabowski.com
#10 There are lots of self-proclaimed experts on social media, but few of them provide shrewd advice
Take all expert advice with a grain of salt. Never invest in a coin because one person said so. Crowdsource and do your own research.
Contributor: Mark Grabowski from markgrabowski.com
#11 Some words of warning
I can tell you right now most cryptocurrencies are manipulated by the super rich playing with the press.
When it comes to ICOs most are indeed scams, you really need to look into the vesting and token structure to see if the owners can dump it after the ICO.
Also, the team and progress of the technology will help you understand its legitimacy.
Finally, if its based in the USA and registered as a security is probably legitimate, otherwise, there is nothing holding them back from scamming you.
Contributor: Chase Hughes from EquityUp.io and Vartheta.com
#12 Know your objective
If you are buying for a quick trade and the trade doesn’t work out then sell, if, at the same time, you are planning on holding it for the long term, try not to get caught up with the day to day moves.
Contributor: Henry Stanley from ICOAxiom.com
#13 Invest less than 5% of your total portfolio unless you’re an expert
Crypto is extremely risky and you don't want to expose most of your portfolio to that much volatility.
Contributor: Cal Cook from consumersafety.org
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