{"id":767,"date":"2022-01-31T11:26:06","date_gmt":"2022-01-31T11:26:06","guid":{"rendered":"https:\/\/digitalcoinprice.com\/blog\/?p=767"},"modified":"2023-03-29T11:48:09","modified_gmt":"2023-03-29T11:48:09","slug":"the-dos-and-donts-cryptocurrency","status":"publish","type":"post","link":"https:\/\/digitalcoinprice.com\/blog\/the-dos-and-donts-cryptocurrency","title":{"rendered":"The Do\u2019s and Don\u2019ts of Cryptocurrency Investing"},"content":{"rendered":"<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_73 counter-flat ez-toc-counter ez-toc-custom ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title\" style=\"cursor:inherit\">Table of Content<\/p>\n<span class=\"ez-toc-title-toggle\"><a href=\"#\" class=\"ez-toc-pull-right ez-toc-btn ez-toc-btn-xs ez-toc-btn-default ez-toc-toggle\" aria-label=\"Toggle Table of Content\"><span class=\"ez-toc-js-icon-con\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #223c50;color:#223c50\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #223c50;color:#223c50\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/span><\/a><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/digitalcoinprice.com\/blog\/the-dos-and-donts-cryptocurrency\/#Donts_of_Cryptocurrency_Investing\" title=\"Don\u2019ts of Cryptocurrency Investing\">Don\u2019ts of Cryptocurrency Investing<\/a><\/li><li class='ez-toc-page-1'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/digitalcoinprice.com\/blog\/the-dos-and-donts-cryptocurrency\/#Dont_Invest_Simply_Because_a_Cryptocurrencys_Value_is_Low\" title=\"Don\u2019t Invest Simply Because a Cryptocurrency\u2019s Value is Low\">Don\u2019t Invest Simply Because a Cryptocurrency\u2019s Value is Low<\/a><\/li><li class='ez-toc-page-1'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/digitalcoinprice.com\/blog\/the-dos-and-donts-cryptocurrency\/#Dont_Fall_for_Spoofers_That_Attempt_to_Inflate_a_Crypto_Assets_Price\" title=\"Don\u2019t Fall for Spoofers That Attempt to Inflate a Crypto Asset\u2019s Price\">Don\u2019t Fall for Spoofers That Attempt to Inflate a Crypto Asset\u2019s Price<\/a><\/li><li class='ez-toc-page-1'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/digitalcoinprice.com\/blog\/the-dos-and-donts-cryptocurrency\/#Dont_Lose_the_Private_Key_to_Your_Cryptocurrency_Wallet\" title=\"Don\u2019t Lose the Private Key to Your Cryptocurrency Wallet\">Don\u2019t Lose the Private Key to Your Cryptocurrency Wallet<\/a><\/li><li class='ez-toc-page-1'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/digitalcoinprice.com\/blog\/the-dos-and-donts-cryptocurrency\/#Dont_Invest_in_a_Cryptocurrency_Without_a_Defined_Stop_Loss\" title=\"Don\u2019t Invest in a Cryptocurrency Without a Defined Stop Loss\">Don\u2019t Invest in a Cryptocurrency Without a Defined Stop Loss<\/a><\/li><li class='ez-toc-page-1'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/digitalcoinprice.com\/blog\/the-dos-and-donts-cryptocurrency\/#Dont_Be_Impulsive_and_Suffer_From_FOMO\" title=\"Don\u2019t Be Impulsive and Suffer From FOMO\">Don\u2019t Be Impulsive and Suffer From FOMO<\/a><\/li><li class='ez-toc-page-1'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/digitalcoinprice.com\/blog\/the-dos-and-donts-cryptocurrency\/#Dos_of_Cryptocurrency_Investing\" title=\"Do\u2019s of Cryptocurrency Investing\">Do\u2019s of Cryptocurrency Investing<\/a><\/li><li class='ez-toc-page-1'><a class=\"ez-toc-link ez-toc-heading-8\" href=\"https:\/\/digitalcoinprice.com\/blog\/the-dos-and-donts-cryptocurrency\/#Do_Diversify_Your_Investments_Outside_of_the_Crypto_Space_Too\" title=\"Do Diversify Your Investments Outside of the Crypto Space Too\">Do Diversify Your Investments Outside of the Crypto Space Too<\/a><\/li><li class='ez-toc-page-1'><a class=\"ez-toc-link ez-toc-heading-9\" href=\"https:\/\/digitalcoinprice.com\/blog\/the-dos-and-donts-cryptocurrency\/#Do_Implement_a_Risk_Management_Strategy_to_Safeguard_Your_Overall_Capital\" title=\"Do Implement a Risk Management Strategy to Safeguard Your Overall Capital\">Do Implement a Risk Management Strategy to Safeguard Your Overall Capital<\/a><\/li><li class='ez-toc-page-1'><a class=\"ez-toc-link ez-toc-heading-10\" href=\"https:\/\/digitalcoinprice.com\/blog\/the-dos-and-donts-cryptocurrency\/#Do_Your_Own_Research_on_Cryptocurrencies_Before_Investing\" title=\"Do Your Own Research on Cryptocurrencies Before Investing\">Do Your Own Research on Cryptocurrencies Before Investing<\/a><\/li><li class='ez-toc-page-1'><a class=\"ez-toc-link ez-toc-heading-11\" href=\"https:\/\/digitalcoinprice.com\/blog\/the-dos-and-donts-cryptocurrency\/#Do_Use_Cold_Storage_for_Housing_Cryptocurrency\" title=\"Do Use Cold Storage for Housing Cryptocurrency\">Do Use Cold Storage for Housing Cryptocurrency<\/a><\/li><li class='ez-toc-page-1'><a class=\"ez-toc-link ez-toc-heading-12\" href=\"https:\/\/digitalcoinprice.com\/blog\/the-dos-and-donts-cryptocurrency\/#Do_Expect_Volatility_in_the_Cryptocurrency_Markets\" title=\"Do Expect Volatility in the Cryptocurrency Markets\">Do Expect Volatility in the Cryptocurrency Markets<\/a><\/li><\/ul><\/nav><\/div>\n<p><span style=\"font-weight: 400;\">There are generally two schools of thought when it comes to investing in cryptocurrencies. The first is that there are plentiful opportunities, and it\u2019s almost impossible not to make money buying and selling crypto assets on the leading exchanges. The second is that cryptocurrency trading is the \u201cWild West\u201d equivalent of conventional investments in stocks, shares, and commodities and shouldn\u2019t be touched with a barge pole.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">The reality is somewhere in the middle between these two polarized views of the crypto space. By abiding by the following do\u2019s and don\u2019ts of cryptocurrency investing, it\u2019s possible to give yourself the best opportunity to make money from the crypto markets.<\/span><\/p>\n<h2><span class=\"ez-toc-section\" id=\"Donts_of_Cryptocurrency_Investing\"><\/span><strong>Don\u2019ts of Cryptocurrency Investing<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<ul>\n<li>\n<h3><span class=\"ez-toc-section\" id=\"Dont_Invest_Simply_Because_a_Cryptocurrencys_Value_is_Low\"><\/span>Don\u2019t Invest Simply Because a Cryptocurrency\u2019s Value is Low<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">One of the biggest rookie mistakes you can make in cryptocurrency investing is buying an asset simply because its value is incredibly low. In many cases, cryptocurrencies have a low value for a reason, and you haven\u2019t just discovered an asset that\u2019s hugely undervalued.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">A typical reason for the low value of a cryptocurrency is its circulating supply. There may be hundreds of millions, if not billions, of this coin in circulation. With market values still driven largely by supply and demand, if demand far outstrips supply, it\u2019s hard for an asset to grow in value.<\/span><\/p>\n<ul>\n<li>\n<h3><span class=\"ez-toc-section\" id=\"Dont_Fall_for_Spoofers_That_Attempt_to_Inflate_a_Crypto_Assets_Price\"><\/span>Don\u2019t Fall for Spoofers That Attempt to Inflate a Crypto Asset\u2019s Price<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">One of the biggest scams in the cryptocurrency markets is the ability of fraudsters to \u201cspoof\u201d a market. Cybercriminals can work together to try to inflate (or deflate) the value of an unknown cryptocurrency. This is achieved using fake buy or sell orders that can create immense volatility on the crypto exchanges. Beginners spot the value soaring and unwittingly gravitate to buying these effectively worthless assets.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Some other crypto scammers will attempt to plug their assets heavily on social media, promoting it as the \u201cnext big thing\u201d to inflate its value on the supported crypto exchanges. They then sell their coins at a higher price and disappear into the ether, never to be heard again.<\/span><\/p>\n<ul>\n<li>\n<h3><span class=\"ez-toc-section\" id=\"Dont_Lose_the_Private_Key_to_Your_Cryptocurrency_Wallet\"><\/span>Don\u2019t Lose the Private Key to Your Cryptocurrency Wallet<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">If you choose to store your long-term cryptocurrency investments in cold storage, via an offline wallet that looks like a USB stick, you\u2019ll need to keep your private key to this wallet. Without your private key, you\u2019ll not access the funds online. Should this happen, you would lose your assets forever, as the cryptocurrency is secured using these cryptographic keys.<\/span><\/p>\n<ul>\n<li>\n<h3><span class=\"ez-toc-section\" id=\"Dont_Invest_in_a_Cryptocurrency_Without_a_Defined_Stop_Loss\"><\/span>Don\u2019t Invest in a Cryptocurrency Without a Defined Stop Loss<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">Whether you\u2019re day trading or investing in cryptocurrencies for the long term, you should always take full advantage of stop-loss orders on the exchanges. Stop losses help to remove human emotion from your cryptocurrency investments. By setting your stop loss at an acceptable loss \u2013 usually a small percentage of your overall capital \u2013 you can define your maximum loss and allow the investment to run.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">The worst-case scenario is that it will trigger your stop loss, the trade will be closed, and the best-case scenario is your trade will run and accumulate a substantial profit to boost your capital.<\/span><\/p>\n<ul>\n<li>\n<h3><span class=\"ez-toc-section\" id=\"Dont_Be_Impulsive_and_Suffer_From_FOMO\"><\/span>Don\u2019t Be Impulsive and Suffer From FOMO<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">Profitable investors in cryptocurrency (and other assets) are rarely impulsive types. The \u201cFear of Missing Out\u201d (FOMO) is real in the cryptocurrency markets. All too many newbies to crypto trading are desperate to take a position on the most popular assets and don\u2019t look at whether their values are at the top or bottom of their range.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">The key to successful cryptocurrency investing is to hop aboard the gravy train of the next crypto-asset before it even departs the station. This requires extensive research and you just can&#8217;t rely on other so-called \u201cexperts\u201d to tell you what\u2019s good.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Trading with a <\/span><a href=\"https:\/\/tradesanta.com\/en?utm_source=blog.digitalcoinprice&amp;utm_medium=link\" target=\"_blank\" rel=\"nofollow noopener noreferrer\"><span style=\"font-weight: 400;\">crypto bot<\/span><\/a><span style=\"font-weight: 400;\"> offers you a more reasonable strategy. When the chart goes in the direction you don&#8217;t need, you become unintentionally emotional, and when you trade emotionally, you always lose, since all of your carefully prepared methods and game plans can be tossed out the window, and you begin trading recklessly.<\/span><\/p>\n<p>&nbsp;<\/p>\n<h2><span class=\"ez-toc-section\" id=\"Dos_of_Cryptocurrency_Investing\"><\/span>Do\u2019s of Cryptocurrency Investing<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<ul>\n<li>\n<h3><span class=\"ez-toc-section\" id=\"Do_Diversify_Your_Investments_Outside_of_the_Crypto_Space_Too\"><\/span>Do Diversify Your Investments Outside of the Crypto Space Too<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">Just as it\u2019s important to diversify your investments across multiple crypto assets, you should also spread your risk further still outside of the crypto sector. According to <\/span><a href=\"https:\/\/freetrade.io\/how-to-invest-in-stocks\" target=\"_blank\" rel=\"noopener\"><span style=\"font-weight: 400;\">Freetrade<\/span><\/a><span style=\"font-weight: 400;\">, diversification of your investment portfolio into stocks and indices across multiple nations and industries is hugely beneficial. Regulated brokers also offer benefits, such as access to the stock exchanges. It ensures your portfolio is never reliant on one asset to enable it to grow and compound over time. Beyond stocks, you can also invest in Exchange-Traded Funds (ETFs), Real Estate Investment trusts (REITs), and investment trusts to help diversify your portfolio.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">It\u2019s a similar case with investing in cryptocurrency assets and conventional assets like stocks and commodities. Be careful not to put all your eggs in the crypto basket. It\u2019s still a largely unregulated industry and no one can wholly predict what the future holds \u2013 even if it does like bright!<\/span><\/p>\n<ul>\n<li>\n<h3><span class=\"ez-toc-section\" id=\"Do_Implement_a_Risk_Management_Strategy_to_Safeguard_Your_Overall_Capital\"><\/span>Do Implement a Risk Management Strategy to Safeguard Your Overall Capital<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">Risk management goes hand-in-hand with using stop-loss orders when buying cryptocurrencies. If you are serious about growing your capital and giving it the best opportunity to grow over the long term, you should limit the amount of risk you take per investment. This means you should only commit a small percentage of your capital on each trade you make.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">This could be as small as 1% of your overall capital. This is something that tried and trusted financial traders employ, as it\u2019s very hard to go broke this way. You\u2019d need to have 100 successive losing trades to even come close to losing your entire capital. As your capital grows, you can also compound that growth by increasing your trades on a sliding scale in line with your capital. 1% of a trading bank worth $1,000 is much less than 1% of a trading bank worth $3,000.<\/span><\/p>\n<ul>\n<li>\n<h3><span class=\"ez-toc-section\" id=\"Do_Your_Own_Research_on_Cryptocurrencies_Before_Investing\"><\/span>Do Your Own Research on Cryptocurrencies Before Investing<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">Even if you\u2019ve read multiple articles about a particular cryptocurrency and the potential for its value to soar, don\u2019t be tempted to part with your money there and then. Take some time to sit back and assess the cryptocurrency yourself first. Read up on the overall project that the cryptocurrency is involved in. Does it have longevity? Does it solve a problem in the crypto\/blockchain sector? Have you downloaded its whitepaper to discover its future plans? Only once you\u2019ve uncovered all there is to know about an asset can you make a well-informed investment move.<\/span><\/p>\n<ul>\n<li>\n<h3><span class=\"ez-toc-section\" id=\"Do_Use_Cold_Storage_for_Housing_Cryptocurrency\"><\/span>Do Use Cold Storage for Housing Cryptocurrency<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">We\u2019ve already mentioned that losing private keys to a cryptocurrency wallet is a cardinal sin and a one-way ticket to losing your crypto assets. Terms of cryptocurrency wallets, there are several types of wallets.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">The most common are \u201chot wallets\u201d and \u201ccold wallets\u201d. Hot wallets are typically housed within centralized cryptocurrency exchanges, which means the exchanges themselves have your private keys and could therefore access your crypto assets. Cold wallets are devices that house your public and private wallet addresses offline so that cyber-criminals cannot locate your keys and move your cryptocurrency without you knowing.<\/span><\/p>\n<ul>\n<li>\n<h3><span class=\"ez-toc-section\" id=\"Do_Expect_Volatility_in_the_Cryptocurrency_Markets\"><\/span>Do Expect Volatility in the Cryptocurrency Markets<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">Although the cryptocurrency sector is not the \u201cWild West\u201d in trading terms, there is still an inherent level of risk in trading all crypto assets. That\u2019s large because no one truly knows the ceiling for cryptocurrencies and blockchain technology. This makes it hard to know what a \u201cvalue\u201d price is for certain assets. It\u2019s not uncommon for assets to experience huge volatility daily. We\u2019re talking 10% moves in 24 hours, not just 1%.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Those with carefully researched crypto investments and risk management strategies will be best placed to ride out the volatility and stay the course.<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>There are generally two schools of thought when it comes to investing in cryptocurrencies. The first is that there are plentiful opportunities, and it\u2019s almost impossible not to make money buying and selling crypto assets on the leading exchanges. The second is that cryptocurrency trading is the \u201cWild West\u201d equivalent of conventional investments in stocks, [&hellip;]<\/p>\n","protected":false},"author":4,"featured_media":768,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[4],"tags":[],"class_list":["post-767","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-analysis"],"_links":{"self":[{"href":"https:\/\/digitalcoinprice.com\/blog\/wp-json\/wp\/v2\/posts\/767","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/digitalcoinprice.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/digitalcoinprice.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/digitalcoinprice.com\/blog\/wp-json\/wp\/v2\/users\/4"}],"replies":[{"embeddable":true,"href":"https:\/\/digitalcoinprice.com\/blog\/wp-json\/wp\/v2\/comments?post=767"}],"version-history":[{"count":7,"href":"https:\/\/digitalcoinprice.com\/blog\/wp-json\/wp\/v2\/posts\/767\/revisions"}],"predecessor-version":[{"id":2478,"href":"https:\/\/digitalcoinprice.com\/blog\/wp-json\/wp\/v2\/posts\/767\/revisions\/2478"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/digitalcoinprice.com\/blog\/wp-json\/wp\/v2\/media\/768"}],"wp:attachment":[{"href":"https:\/\/digitalcoinprice.com\/blog\/wp-json\/wp\/v2\/media?parent=767"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/digitalcoinprice.com\/blog\/wp-json\/wp\/v2\/categories?post=767"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/digitalcoinprice.com\/blog\/wp-json\/wp\/v2\/tags?post=767"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}