Crypto Buying Guide For Newbies

The crypto markets are booming, and seasoned investors don’t know what’s happening. Most of them attribute the meteoric rise to the pandemic and equate this rapid growth with the Dot Com bubble. But that’s not the case at all.

So many young people have been swept up with the blockchain revolution since it’s one of the ways in which the monetary economy of the world can be improved. Experienced traders that have been looking at the market now want to get a piece of the action. Visit this website to read more.

But should you do if you’re a total beginner and don’t know where to start?

Figure out what you’re buying

If you’re a total novice, the first thing that you need to do is buy some Bitcoin. That doesn’t mean that you should buy an entire coin. Instead, put a few dollars into an exchange and see what happens for a few days. This is going to help you understand the volatility, and how worldwide events can be responsible for the highs and the lows.

Of course, you can also notice this in the stock market, but the volatility in crypto makes it much more obvious. There are thousands of coins that you could put your money into, but it’s always wise to start with the first one, and then diversify your portfolio as time goes by.

For example, Bitcoin is not backed by a physical commodity such as gold, real estate, or oil. Instead, it gets its price from scarcity and its use case. It’s the first and the best method for sending peer-to-peer transactions without a third party overlooking the transfer.

Ethereum is right behind it and has the potential to create decentralized applications. You can go to https://bestplacestobuycrypto.com/crypto-trading-guide-for-newbie to find out more information. The thing that connects both ETH and BTC is the blockchain, which makes it transparent when transactions happen.

Don’t look at the past

Making decision based on past performance doesn’t work in the crypto sector. Sure, Bitcoin was a penny at one point, but it also got close to 70 000 dollars. No one knows what’s going to happen next, since institutional investors are joining in on the fun. Experienced investors always look toward the future, instead of focusing on the past. Don’t wait for the perfect moment to get in. You need the profits of tomorrow, not the ones from yesterday.

Pay attention to the volatility

Wall Street traders have been playing with volatility for years. But even they haven’t seen the sways that the world of crypto brings to the markets. Currently, this sector is the most volatile since mere seconds can cause an asset to lose 10 percent of its value.

A simple rumor can cause prices to spike or drop. Elon Musk’s tweets have raised the prices of Bitcoin and Dogecoin, similar to the war in Ukraine. Savvy investors that know what’s happening in the world have a grasp of how the market is going to move, which makes them more likely to make money.

For newbies, it’s important to dollar cost average your way into a stable portfolio, and only start trading when you have created a solid base. Beginners get scared from trading because they often buy high and sell low. Wait until you master the basics.

Manage risk correctly

This mainly depends on whether you’re a long-term or a short-term investor. Those that are in it for the short term buy an asset, wait for a 10 percent price increase, and sell it for profits. That’s a routine rule-following that can make you speculative.

However, long-term investors manage their risk by never selling. Their mentality allows them to stick with their position for a long time, and then choose a time when they exit the markets years from now. Most people that have bought Bitcoin plan on holding it for years before selling it. To be able to do this, you need to take control of your emotions and not let a trigger force you into a panic sell.

Invest only what you can afford to lose

Don’t put next month’s rent into the crypto markets. It’s volatile and you could lose 90 percent of what you put in. Always go in with this thought in mind, since that way, you’re only going to invest a sum that you can afford to lose. Think of your money in crypto as locked for 5 years, since that’s usually the time when a bull run happens.

Are there other ways to invest?

Apart from buying the coins themselves, you can also choose funds, futures, stocks, ETFs, and IRAs that are based on cryptocurrencies. All these methods differ from each other in their exposure to the markets, as well as the level of risk. It’s up to your personal preference to pick one.

About the author

    Whale Sumo

    Hwang is a self-proclaimed nerd who loves helping people understand complex concepts. He has a passion for crypto and online privacy and enjoys teaching others about the benefits of both. Hwang is an advocate for individual freedom and believes that knowledge is power. When he's not busy sharing his knowledge with the world, Hwang can be found running full marathons or playing video games.