Daily, there are thousands of investors from all backgrounds watching Bitcoin price. There’s a good chance that you have considered throwing your hat into the mix and seeing what you can do with a few coins.
Don’t be one of those people who jump into Bitcoin without looking first. Keep reading, and you will at least take away a few tips that will come in handy at some point, possibly even saving you from major trouble.
Cryptocurrency is a Long-Term Play
The biggest and most common mistake is trying to make money overnight on Bitcoin. For the most part, you aren’t going to succeed and will wind up costing yourself a lot of money with this kind of play.
It’s possible to score big, and Bitcoin has had its fair share of spikes. But most of the time, you should hold your investment. Bitcoin has a history of rising and falling, sometimes at historic rates. By holding for the long term, you can enjoy the wave rather than riding the roller coaster.
Have a Plan
Another seriously deadly mistake Bitcoin investors make is just jumping in. You buy some Bitcoin, hold it until it goes up, and sell, right? That’s not hard, but it is also foolhardy and the path to some major losses in the near future. Never invest without a fair idea of what you’re trying to accomplish.
If you don’t have a solid plan for investing in Bitcoin, stop right there. Creating a plan doesn’t have to be overly complicated. Think about what you want to get done by investing, check out some markets, and know which types of crypto you want to get involved with. If you just jump in and throw some money into Bitcoin, there is a good chance you won’t have it for long, and you will wish you had done more to protect yourself.
Investing, in general, is about mitigating and managing risks. You go into the process knowing there are risks around every corner, and you take action to reduce those risks. Putting measures in place to keep open trades from completely tanking and taking huge losses is more than possible if you don’t know what to do.
For starters, only put in what you can afford to lose. Don’t put your mortgage, car, or children on cryptocurrency. Risks are part of the equation, but if you don’t manage that risk, it could take everything from you before you know it. Insulate yourself from catastrophic loss by knowing your risk from the jump.
We’ve heard about the people who got rich on Bitcoin by investing everything they had left at the right time. But that old phrase about putting your eggs in one basket is helpful to pay attention to. It worked out for those people, but what about the ones whose eggs (and basket) were crushed beneath failure?
Diversifying your portfolio is another great way to mitigate and limit loss. You chose poorly on one investment, which accounts for just five percent of your overall assets. The loss doesn’t feel good, but it feels much better than having it sink even more, if not all, of your total investments. A diverse strategy will keep you in the game longer and give you more potential opportunities to make that money back over the long term.