How to invest in crypto: Top 5 crypto investment rules for beginners

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By Tokenize Xchange
July 02, 2021

Cryptocurrency investing is tough for most veteran investors, let alone beginners! A bad decision may lead you to a huge loss, and worse, make you broke! In order to avoid making huge mistakes, earn profit and win this crypto game, you should never miss the chance to arm yourself with crypto investment knowledge and skills. Put up a chair, and let’s get ready for the top 5 golden crypto investment rules to help you outperform your portfolio with Tokenize Xchange!

crypto investment rules

Never invest more than you’re willing to lose

No matter the stock market, Forex, or cryptocurrency market, you should never put more than you are willing to lose! This crypto investment rule is old but gold! 

The global crypto market has recently experienced strong fluctuations, making it riskier than ever. But “high risk, high returns”, that’s what you hear from previous investors who become successful with their investment. 

>>>Read more: Beginner’s guide: Understand Altcoins and Altcoin investment<<<

When the market is exploding, it seems so attractive to invest in. When everyone around you is talking about which digital coin will reach ATH this week, “The fear of missing out” may drive you to keep buying in instead of sticking to your budget. When the market is down, you may lose everything and become broke. 

Make sure you stay disciplined. Remember, no matter how high the return could be, it is never worth risking your whole retirement savings. 

Never put all your eggs in one basket

“Don’t put all your eggs in one basket”– a quote from 1605 is still a golden crypto investment rule for all investments. In the case of cryptocurrency investing, it refers to crypto portfolio diversification. 

Cryptocurrency portfolio diversification is the act of investing your capital into different crypto projects to spread the risks in case one or some of your investments perform badly. The diversifying strategy will save you from getting a huge loss even when some of your portfolio items are experiencing a slump. 

How to invest in crypto currency

So, how to start diversifying your crypto portfolio? 

Before applying any strategy, you need to identify which digital coins are suitable for your needs and purposes. Let’s move on to some suggested strategies to help you diversify your investment. 

Types of cryptocurrency: The approach here is to choose different types of digital coins and invest them. Some suggested options are Bitcoin, Altcoins, security tokens, utility tokens.

Investment time: Investors can invest some of their portfolio items in swing trading while holding others for a long-term investment. 

Industry diversification: The idea of this strategy is to make sure you own a cryptocurrency portfolio with different industries, for example, supply chain, medicine, or finance. In this way, if an industry suffers a huge loss, the rest of your portfolio can minimize the impact on your returns.

Do your own research 

It sounds obvious to do thorough research before making any investment, not all traders actually do it, though. The cryptocurrency space is extremely complicated and innovative with numerous concepts that cannot be explained by a single comment from a stranger on the Internet. 

Cryptocurrency trading rules

>>>Read more: Beginner’s guide: Crypto trading volume<<<

If you truly want to get involved in this market, you’d better start to do your own research. Make sure you double-check any information that seems fishy since most traders are biased to their crypto portfolio and keep saying only the good things about the digital coins they are owning. Make your best effort to stay objective and keep an unbiased view when accessing any news sources. 

Below is the checklist of 5 criteria to check before putting your money in any project:

  • White paper
  • Developer team 
  • Community activities
  • The business position
  • Total supply 

Stay updated 

Crypto investingThe next one in the list of the golden crypto trading rules is to stay updated. As mentioned, the crypto market is such a strongly fluctuating market that if you don’t keep up with the latest news, you may miss vital information and the chance to make the key decision. 

Investors can keep updated by:

– Joining a cryptocurrency community, for example, Tokenize community on Facebook

– Following the official social media accounts of crypto developers, whale investors, crypto influencers like Elon Musk, and valid cryptocurrency platforms such as Tokenize Twitter or Tokenize Xchange Facebook page

– Subscribing to news sites regarding Blockchain and crypto. Check out 10 cryptocurrency news sites to provide you with legitimate news every day.

Be careful with FOMO

FOMO stands for the “Fear Of Missing Out” – a commonly-known concept among crypto traders. When a coin suddenly rockets in price, most people who have FOMO syndrome would feel like they are missing out on a crucial event. 

Since the cryptocurrency market is extremely volatile, it is easy for investors to make rash and emotional decisions, which in many cases, drive them to a preventable failure. Crypto investment requires critical thinking and a logical mindset, so take your emotion out of it. Do your own research, buy the coins that you believe in, and stay disciplined with them! 

We hope that our top 5 simple crypto investment rules help you answer the question: How to invest in crypto? Keep following Tokenize Blog to get yourself more helpful investment guides!

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All content produced by Tokenize Exchange is intended solely for educational purposes. This should not be taken as financial or investment advice. Individuals are advised to perform due diligence before purchasing any crypto as they are subject to high volatility.