Twelve Basic Common-Sense Rules for Cryptocurrency Investing

  1. Only trade and invest in reputable coins.
  2. Don’t buy shitcoins.
  3. Don’t buy ICOs (initial coin offerings). Ninety-nine percent of them are scams and it is very difficult to spot great projects.
  4. Do your own research and don’t listen to shills on Twitter, Bitcointalk, Reddit, etc. On Twitter, follow reputable cryptocurrency gurus with positive track records and at least 10k followers.
  5. Buy low and sell high. In order to buy low you should always put aside some cash for potential opportunities that may arise (aka a war chest). As for selling high, it is up to you to choose your goals and be able to stick to them.
  6. Don’t FOMO buy (FOMO = fear of missing out). Every day there are dozens of pump and dumps that are designed to make you FOMO buy and panic sell right after. Do not fall for the bait of market manipulators.
  7. Don’t panic sell. If you choose your entry points based on facts and logic (not FOMO) and you believe in the projects you invest in, you should be able to avoid overreacting to a daily price drop and focus instead on the long term.
  8. Diversify your investments to reduce the risk of losing all your capital.
  9. Don’t invest more than you can afford to lose. This is the best strategy to enable you to keep your emotions under control and sleep at night without keeping on checking Blockfolio and being constantly afraid of losing money.
  10. Employ unit cost averaging. Don’t buy/sell all at once but plan your investments and buy/sell a little at a time. In this way you will reduce the risk of buying at the top and selling at the bottom.
  11. Be aware that the market context changes frequently; therefore, especially if you day trade, you will have to keep adapting your strategy to it.
  12. Learn the basics of technical analysis. A great book to start with is Technical Analysis of the Financial Markets by John J. Murphy. It is really important to be able to understand charts in order to get a sense of what is happening in the market.

Are there other rules I should add to the list? If you know of any, leave a comment below. If you liked the article, please share it.

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