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Have you decided to enter the “wonderful world” of cryptocurrencies? Taking the plunge and buying your first cryptos is not a trivial act and requires being aware of the risks and having a minimum of knowledge, which of course, will grow as you gain experience.
Getting into cryptocurrencies is the start of a great adventure made of discoveries, but also of doubts and questions. Indeed, between familiarization with technical jargon, learning new tools, questions that invade the mind, it is not always easy to manage your emotions.
Because beyond the mastery of technique, psychology and discipline are important elements when it comes to dealing with cryptocurrencies. Whether you are a long-term investor or a short-term trader, starting out in cryptocurrencies supposes respecting certain rules that will allow you to approach this experience serenely.
Training: essential for a serene entry
Nothing is more stressful and risky than embarking on a new adventure without preparation, and this is especially true when it comes to cryptocurrencies. Preparation is most important to learn how can you day trade bitcoin and other currencies.
Information and training, an essential preliminary step
The reasons for investing in cryptocurrencies are numerous and vary according to each one. Some will want to get started out of simple curiosity, others to speculate, and others, rarer but more and more numerous, are in a perspective of long-term investment or wealth management.
Really born with Bitcoin in 2009, cryptocurrencies are a whole new class of assets from a young sector in constant evolution and full of prospects. Created and secured thanks to the blockchain, they guarantee their users security, transparency, and a certain discretion.
All of these are good reasons to be interested in cryptocurrency trading platforms, but it’s a big world – and to enter it serenely, it is recommended to train and educate yourself to understand the principles, mechanisms, and fundamentals of the currencies in which you want to invest. Behind every cryptocurrency, there is a project: before investing, it is important to make sure that you understand and appreciate the concept, but also that the team behind it is solid. This information can be found on the official cryptocurrency website, which should not be hesitated to study in-depth (technology, possible uses, potential demand, founders and team, etc.). As far as possible, it is advisable not to listen to “pseudo-experts” who are, for many, “influencers” with a biased opinion… when they don’t recite a speech pre-concocted with the founders of the project. We can’t say it enough: the key is to do your own research.
Fundamental analysis? Technical analysis? Or both?
For a long-term investor who will have put a little of his savings in one or more crypto, knowing the fundamentals and believing in their philosophy may be enough. But for those who want to take advantage of short-term price movements like stock marketers on traditional markets, it is important to train in technical analysis in addition to having a fundamental analysis of projects.
Technical analysis is a way of studying price movements in financial markets based on the historical charts of an asset. It is based on the idea that if an investor can identify market trends, these can be a fairly accurate prediction of future price paths. Fundamental analysis, for its part, focuses on studying demand, competition, and technology. While fundamental analysis focuses on the true value of an asset, technical analysis is purely based on the charts of an asset. Before intervening in the markets, it is necessary to have both a fundamental and a technical vision.
In the internet age, there is a multitude of tools online that are gold mines for training. Be careful to sort the wheat from the chaff if you want to use paid training, and remember for all intents and purposes that everything you need to know can be found for free on the internet. But this represents time and a minimum of commitment for those who will put in place a serious “training plan.”
Determine your investor profile
As we all have our own personalities and character traits, we do not all have the same way of understanding the markets, the risks they involve, the stress they can induce, and the emotions that arise from a winning or losing position. However, it is important to know yourself in these situations in order to put in place strategies that correspond to us. Being “risk-phobic” or “risk-loving” will condition the way we enter the markets and manage our positions. Likewise, we do not all have the same resilience to stress, and this also affects how we respond.
To determine your investor profile, ask yourself these questions: Am I a long-term investor or a short-term trader? Am I risk-loving or not? Am I rather stressed or calm by nature? This should lead you to answer the following questions: what is my budget for long-term investing and short-term trading? If I intervene in the short term, what is the maximum loss I can afford per day, per week, per month, per year?
When you have defined your investor profile with the risk budgets, you can claim to go to the markets with confidence, provided you are disciplined and respect the investment and trading plans as well as the risk management that you have imposed on yourself. For example, if your daily risk budget is completely consumed, you will not be able to enter into trade for the rest of the day. Likewise, taking a break after a big win or loss is important so as not to enter a vicious circle which, through the play of emotions, will turn your trades into rash bets and risk aggravating your losses or reduce your earnings.
Is there a good time to get started?
You’ve read everything about Bitcoin, opened an account on a trading platform, and are ready to go, but there’s this little question in your head that is nagging you: is this the right time? The answer will depend on a number of criteria: a long-term investor will not enter at the same time or in the same way as a trader who enters the markets every day.
The right time to take a trading position
As we have seen, there is not really a good time for a long-term investor. The latter could be satisfied with entries by fractions to smooth the risk over time and disregarding short-term movements. For traders either, there is no magic formula, and everything will depend on the profile of the investor, the tools used, and the analysis he has made of the market.
Getting into cryptocurrency is not a decision to be taken lightly and requires good preparation. Training remains the most important and time-consuming step, but thanks to the internet, there is a multitude of free tools to take your first steps in this new world. The rest comes with experience! Do not forget to set yourself rules of discipline and not to give in to the sirens of huge profits, gains without the contribution and effort, and rewards beyond measure. Many beginners lose their feathers because of these extraordinary promises.