Many first-time traders venture into the crypto market without doing any preparation, which often leads to them making bad investment decisions, losing assets, and even falling for a crypto scam.
To ensure you begin your crypto journey in the best possible way, you must prepare. But how exactly can you do this? Check out the following step-by-step guide to discover the five things you need to do before investing in cryptocurrency!
A Step-By-Step Guide on What to Do Before Investing in Crypto
If you're eager to get started with crypto trading but don't know where to start, then this is the perfect step-by-step beginner's guide for you!
1. Research, Research, Research
The very first thing that you need to do before you start trading cryptocurrency is to research! Otherwise, you're basically going in blind, increasing your chances of making avoidable mistakes and losing all your assets.
After all, trading is incredibly risky, and extensive research will help you circumvent these risks and reach your full trading potential.
Thankfully, there are endless resources online that offer all kinds of tips, tricks, and insider knowledge.
If you're unsure how to get started, you can head to Investopedia for a detailed dictionary of crypto slang and terms. You can also check out various news websites to find out the latest events in the crypto scene.
Other fantastic sources that you can use for research are community forums, social media accounts, and crypto podcasts.
2. Make a Plan
Once you've done a good amount of research, you're ready to make a plan. This means establishing your investment goals and deciding what 'success' means to you. New traders often dive into the crypto market hoping for short-term gains, which only sets them up for disappointment. Trading is all about the long term and setting attainable goals.
Before investing your money, you should also set a trading budget. This will help you to avoid impulsive decisions and risk more money than you're willing to lose.
This can also prevent you from falling victim to the fear of missing out (FOMO), which ends up tripping up many traders.
This refers to when traders see others making huge profits from certain coins and decide to jump on the bandwagon hoping that they too can make a profit.
However, this is incredibly risky as the crypto market is so volatile and any coin's value can plummet at any time. If you make a plan before you start trading, then you can steer clear of FOMO.
3. Choose Coins to Invest In
After you've made a plan, it's time to decide which coins to invest in. As the most popular and well-known cryptocurrency in the market, many traders resort to investing in Bitcoin.
Although it is a good idea to invest in a market leader for stability, it's essential to diversify your portfolio as much as possible. Altcoins (alternative coins to Bitcoin) are great assets to include in your portfolio as they are often cheaper and can potentially make you a massive profit.
Since there are so many different coins to choose from, you can check out a crypto marketplace like CoinMarketCap to explore all your options. New altcoins are always popping up, and it can be difficult to keep up with them all. Again, this is where research is helpful.
Before you invest in a particular coin, you should head to the official website and read the whitepaper. This will give you an idea of the purpose of the coin and the developer's future plans.
If the whitepaper is concise and the website is up-to-date without any spelling mistakes or grammatical errors, then it's a good sign that the coin you are interested in trading is legitimate and a 'safe' investment.
4. Learn How to Stay Safe When Trading
Before you begin to build up your crypto portfolio, you should understand how to practice safe trading. As cryptocurrency is so valuable, there are copious scammers around hoping to capitalise on unsuspecting traders.
For starters, to avoid becoming a scammer's next victim, you should always keep your software updated. Out-of-date software often contains security vulnerabilities that can be exploited by hackers to infect users' devices with malware.
Additionally, you should be aware of the most common types of scams that are plaguing the crypto environment. The most prominent of which are phishing scams.
These scams rely on human error, as scammers attempt to trick traders into giving away their crypto wallet private keys. This is often attempted through fake websites or emails that attempt to impersonate legitimate companies.
To avoid this scam, you should never click any links that have been sent to you and instead type the link URL directing into your browser. When navigating websites, you should also look for spelling mistakes and incorrect URLs.
Other common scams include giveaway scams, blackmail scams, and pump-and-dump schemes. Be sure to research each one of these so that you know what to look out for before you begin trading.
5. Sign Up for a Crypto Platform
Choosing and signing up for a crypto platform can help you to get off to a flying start when entering the crypto market.
The role of a crypto platform is to act as the intermediary between traders and brokers.
Once you complete the registration form for a crypto platform (which typically requires your full name, country of residence, and contact details), you will be contacted by a team member before being connected with a suitable broker.
This broker will then guide you and offer various resources that you can utilise to help step up your investment game.
Of course, there is an abundance of crypto platforms around, with plenty of them either lacking features or being downright scams.
To make sure you get the best trading experience possible, we recommend you opt for a popular crypto platform such as Bitcoin Profit. This platform connects traders with brokers from across the globe who are equipped with industry knowledge, trading experience, and a range of helpful tools.
One particularly notable tool that brokers often provide on this platform is a demonstration account. With this account, traders can use dummy funds to practice navigating the crypto market and investing in various coins without any risk.
If you've never traded before, then using this tool is the perfect way to build confidence and better understand the crypto market without losing any of your real money.
Now you know how to properly prepare before you start trading cryptocurrency and building up your portfolio!
So, before you step foot in the crypto market, remember to do your research, set a long-term plan, learn the signs of crypto scams, and decide which coins to invest in. After this, you can sign up for a crypto platform and embark on your exciting trading journey.
You should be ready for plenty of ups and downs, and you can expect your goals to change over time, but if you remain cautious and do enough research, then you have a great chance of making a profit from trading crypto! Good luck!