7 Golden Rules To Follow When Buying Bitcoin and Cryptocurrencies
Follow these rules to make winning investments in the cryptocurrency market.
The promising months ahead for Bitcoin and the cryptocurrency market in general in 2020 will necessarily whet the appetite of new investors. All this will benefit the market as a whole with the injection of new liquidity.
Nevertheless, new investors should be aware of a number of points before launching into and buying cryptocurrencies. Indeed, with a FOMO feeling that could take over the market as it did at the end of 2017, errors of judgment could once again be numerous.
To protect yourself from these potential mistakes, I suggest you discover the 7 golden rules to follow when buying Bitcoin and cryptocurrencies.
1. Avoid Trading On Weekends
The cryptocurrency market never sleeps. Unlike traditional financial markets, which are not open at weekends, the cryptocurrency market is open. Some investors are therefore tempted to continue to follow the developments in Bitcoin and Altcoins with frenzy on weekends.
Nevertheless, there is a major disadvantage to doing so. Indeed, at weekends, the volumes traded are much lower and the market is often much more volatile. It is much more difficult to predict the price of Bitcoin and Altcoins in these conditions.
You can therefore possibly make big profits but above all suffer big losses on weekends!
The best advice I can give you is therefore to avoid trading cryptocurrencies on weekends. Take advantage of your weekends to relax and start the week with as much energy as you can because you will need it to make winning investments.
2. After Buying Bitcoin Or Altcoins, Drop The Charts For 24 Hours
You have been carefully studying a particular cryptocurrency for a number of days or months. You have read all its fundamentals. You are convinced that this crypto is a good investment. Now you spend time studying the evolution of its price by performing technical analyses in order to choose the ideal time to buy it.
Once the moment you consider ideal has arrived, you move on to the buying. It is a good thing to take action. The error would then consist in continuing to follow frantically the evolution of its price by remaining fixed on the charts.
Indeed, it is possible that the crypto in question will fall after your buying or that its price will go up. In both cases, you may be tempted to fall into the trap of impulsive buying or selling.
Buying or selling Bitcoin and Altcoins on impulse is a mistake.
To avoid falling into this trap, you should leave the price evolution charts for at least 24 hours after your buying. Indeed, your choice of buying was the best for you at the time, so it’s time to move on and take a step back for a few hours.
3. Set Yourself Reasonable Time Slots For Your Cryptocurrency Trades
As I just explained in point 2, the world of cryptocurrencies never sleeps. It is therefore active 24 hours a day, 7 days a week. Some investors will therefore fall into the trap of constantly monitoring the evolution of Bitcoin and Altcoin prices, which will generate significant stress. This stress will then affect their ability to concentrate and lead them to make poor investment decisions.
The best advice to follow in this area is therefore to set reasonable time slots for your cryptocurrency trades.
Once these time slots have been set, you will have to stick to them. This will allow you to disconnect every day and give you time to decompress. You will be even better the next day when making investment decisions in the cryptocurrency market.
4. Buy Bitcoin And Cryptocurrencies Only When You Are In The Good Mindset
Buying Bitcoin and cryptocurrencies is an activity comparable to that of traders in the traditional financial world. However, it has always been recommended to have a clear mindset when making investment decisions.
So, you shouldn’t be too tired, stressed or upset when buying Bitcoin and cryptocurrencies.
If so, go on your way and take the time to get some fresh air to bring down this stress. This break will allow you to recharge the batteries. When you return, you will be ready to be totally focused on your investments, which will maximize your chances of making winning buying or selling decisions.
5. Build A Simple Decision-Making Model For Your Investments
Sources of information in the world of cryptocurrencies are booming. This gives you the opportunity to consult a very large amount of information before making investment decisions. This may seem like an advantage, but in some cases, too much information will interfere with your decision-making process.
This could slow you down by forcing you to constantly synthesize too many contradictory sources of information.
You must therefore be trained in the technical analysis of the price of Bitcoin and cryptocurrencies.
This will make it easier for you to make your own opinion on the ideal time to take your positions. Once trained in technical analysis, you will need to select some relevant sources of information and stick to them.
By moving in this direction, you will build your own decision-making process. Once it has proven its worth after a few exchanges, I advise you to stick to it. This will make easier your future decision-making.
6. Be Pragmatic When Buying Bitcoin And Altcoins
I often advise to study carefully the project behind a cryptocurrency. This involves an in-depth study of its whitepaper, obtaining information about the team behind its development, the goal pursued by the project or the number of competitors in its field, for example.
Taking this information is essential. However, by learning more about a cryptocurrency, you may fall into the emotional trap that will somewhat obscure your real vision of that cryptocurrency.
You should never let your emotions come into play when buying or selling Bitcoin or Altcoins.
All your cryptocurrency trades must be carried out in a pragmatic way only. Make your choices based on facts and follow the decision-making process you have patiently built for yourself by following point 5.
7. Set yourself a buying price or selling price and stick to it
You probably all know the following maxim:
“Buy Low, Sell High.”
By following this strategy to the letter, you will be tempted to always wait a little longer before taking action. This can be unfortunate both for the buying and the saling of your assets. Indeed, the cryptocurrency market is very volatile and prices can change very quickly.
Thus, by waiting too long, you risk missing out on a great buying or selling opportunity. It is therefore better to set your own limits for buying or selling and stick to them for each cryptocurrency you target.
Of course, you can and must be flexible in taking events into account. However, this should only be done after you have defined your expectations for each targeted cryptocurrency.
Bitcoin and the cryptocurrency market as a whole will experience a year 2020 under the bullish sign. In fact, this may attract a large number of investors. To avoid the same mistakes that occurred at the end of 2017, I think it is essential to focus on the 7 golden rules I presented to you in this article.
This will allow you to maximize your chances of making winning buying and sailing in the cryptocurrency market.