Cryptocurrencies and ICOs have been hot news in the investment sector recently. There are plenty of stories around about people who made loads of money through savvy investments in this area. There are also a lot of tales of people who have lost everything, though.
So, how do you keep yourself in the former category, rather than the latter? In this post, we will explore this.
Understand the volatility
Before deciding to make an investment, do a bit of research on btxchange the best cryptocurrency exchanges and see how the prices can change from one day to the next.
You need to understand fully that this is a very volatile market and there are a lot of skittish investors here as well. Market prices can double in the space of a couple of days and plummet again just as fast.
You might get lucky and hit it rich, but you must also be prepared for a downturn in the market. This might mean hanging in there when things seem to be going pear-shaped.
Know your appetite for risk
Investing here requires nerves of steel. The risks are very high, and you need to be willing to deal with that. If you have no appetite for risk, you are bound to lose money by selling too soon, or when the market is in a down phase.
Consider it a long-term investment
Much like investing in stocks, you need to consider this as more of a long term investment, around three to five years at the very least. You might get lucky and make huge gains as we saw in 2017 with Bitcoin, but generally speaking, to ride out fluctuations in the market you need to be committed long term.
Do your research
ICOs are particularly tricky to get right because you are really just investing in an idea. This, and the lack of regulation, has been taken advantage of by several con artists. So, when considering an investment here, don’t be taken in by a flashy website and an idea that sounds too good to be true.
Read through the whitepaper and see if it makes sense to you. Here you also want to see how much research the proposer has done and what experience the team has. There are many legitimate ICOs out there that never get off the ground because of the inexperience of the team or lack of planning.
Don’t put all your eggs in one basket
You must have a diversified portfolio. Don’t blow all your spare cash in one company, or even just in this one area. Put money aside in more traditional, safer investments as well so that if something goes wrong here, you don’t lose it all.
Time you’re investing
If you have just started working, you can afford to engage in investments that have more risk attached to them. If something does go wrong, you have time to rebuild your savings. If, on the other hand, you are only a few years from retirement, you should be more cautious.
If you are careful, investing with ICOs can be a rewarding endeavour for you. Check out our infographic for more facts about how they work.