5 tips for beginners before starting cryptocurrency

Trading cryptocurrency is really hot, but you need to know what you are doing, so in this article 5 essential tips for beginners.

At the time of writing, the cryptocurrency market is a bit down. After months of seemingly uninhibited growth, multiple Bitcoin crashes mark the end of that phase. Now that everything is ‘on sale’, now would be the ideal time for beginners to prepare. Before you go broke, we have a few tips for you that every crypto beginner should take with them.

5 tips for cryptocurrency beginners

1 – Only use ‘fun coupons’

As a golden rule and little disclaimer for this article, crypto trading starts with the money you risk. By definition, speculating on stocks or digital currencies is risky. You can wake up in the morning and have doubled your investment. While you were on one ear, your investment could also have evaporated. Start small; get to know crypto without taking too much risk.

So only use money that you can spare; fun coupons, as infamous investor Jordan Belfort in The Wolf of Wall Street puts it, is money spent for fun. In crypto-currency, that is money that you are willing to lose. That possibility is always there, so make sure that you can pay the rent and your sandwiches, regardless of whether Elon Musk lets the Dogecoin price plummet or not.

2 – Cryptocurrency is rocket science for beginners, do your research

Even before you can conquer the crypto market with your perfect investments, it is important to know what you are doing. The internet is full of gurus and quacks claiming to know what is truth. I can hear you think: ‘you do that now too’. And then you are absolutely right, which is exactly my point!

So always do your own research! As with good journalism, one source is not a source. If someone makes a claim, they must be able to substantiate it. By doing your own research, you will quickly encounter patterns. If you understand the way of thinking, you can estimate for yourself how reliable that information is. Scour forums, news sites, social media and the occasional guide for insights – right and wrong – to build your own knowledge.

3 – Learn from your mistakes and those of others: use a journal

In addition to your own research, it is also essential that you build your own data sets. There is only one trader like you and that is you yourself. Record every transaction meticulously. Detail the time, entry price, guidelines, goals and your thoughts behind them. For example, here you have a good template for a journal. And remember tip 1: only when you understand all the terms in that file, you can really get started.

A trading journal helps to keep an overview of all your positions. It also gives you information about previous decisions. For example, suppose that all your investments in one specific currency eventually go wrong. Then you can continue from that science to analyze what goes wrong.

4 – Setting boundaries is half the battle

Which brings me to one of the most important tips for cryptocurrency beginners: set boundaries for yourself. Without getting too technical, your ‘R’ (ratio of the risk and the return you can achieve) says a lot about the margins in which you operate. If you go for high profits, then there are also large losses. If you aim for smaller profit margins, you run less risk.

Ultimately, there is no good margin, no golden ratio; the most important thing is to be hard on yourself. Do not take positions that you are unsure of. Do not put in more money than you agreed with yourself in advance. Don’t take unnecessary risk, so decide in advance how much that risk is. This way you limit any losses, but the opposite is also true. Once you’ve reached the goal, you can get out again, instead of getting stingy and missing the climax.

5 – Steel balls, don’t panic

Which brings me to the last of the five tips for cryptocurrency beginners, namely the importance of steel balls. One of the biggest beginner mistakes is to sell your crypto at the slightest bit. It is rare for prices to rise (or fall) continuously. Keep that in mind.

Don’t panic when there is a small drop. Don’t count yourself rich if there is a small peak. This underscores the importance of predetermined limits; make informed estimates so that you are less prone to panic moments. After all, if a dip is within your predetermined margins, nothing is wrong.

And as a final bonus tip, do even more research, because one 800-word article is definitely not enough to make your crypto millionaire. Here you already have another piece of reading material.