The crypto market is not controlled by the central bank like other markets. As a result, cryptocurrencies are volatile.
That’s why we’re going to tell you about 4 rules you need to know before entering the crypto market.
1. Make sure you are prepared for emergencies
Although the crypto market is more common than in previous years, it is still considered a highly speculative investment. Therefore, when investing, you should start with the assumption that you may lose all your money in the end.
Also, since the cryptocurrency market can be very volatile (much more than stocks), you should not be surprised that the value of your currency will fluctuate from day to day. This is why having cash reserves is so important.
If you don’t have money in the bank for emergencies, you may be in a situation where you have to sell some cryptocurrency. And if it still goes down after you sell it, you could be permanently at a loss.
2. Research different cryptocurrencies
While some cryptocurrencies are more popular and talked about than others, there are technically thousands of cryptocurrencies on the market that you could potentially own.
“I will buy cryptocurrency.” Spend some time researching different currencies to find the right one.
Be sure to do your preliminary research about the investment you will make. Then, after collecting information about who it was created for, for what purpose and its goals, you should enter the market.
3. Do your risk management well
When you buy cryptocurrency, there is always a risk that it will become less valuable over time. Because the digital money market is much more volatile than the stock market. However, various analyzes are made to predict this.
If you don’t know how to do graphic analysis about the stock market, you definitely need to learn it. Graphical analyzes do not give 100% correct results. This should not be forgotten.
Before investing, make sure you understand how risky cryptocurrency can be.
4. Decide what your overall strategy will look like
General investment strategies are divided into two. We call these long-term and short-term investments.
In the long term, do you want to follow a less risky path compared to the short-term or if you want to follow a short-term risky path, you need to determine your crypto money accordingly.
For example, you can think of cryptocurrencies such as Bitcoin and Ethereum as long-term. Because these digital currencies have been developing slowly in the stock market for a long time and under solid foundations.
However, cryptocurrencies such as Dogecoin and Avax, which we call altcoins, are more suitable for the short term. Because they are cryptocurrencies that have just appeared on the stock market and are not known or trusted.