Many people might think the answer is CAPITAL, but that’s not entirely correct. These factors are even more important than capital because without proper preparation, you could easily lose the money you invest in the market.
Let’s take a closer look at what’s crucial before stepping into the Cryptocurrency market with IzyCrypto!
Before entering the cryptocurrency market, there are two key things you need: the RIGHT MINDSET and the RIGHT PSYCHOLOGY. Both are incredibly important for success in this market. A positive mindset helps you develop the right strategies, while a stable psychology helps you stick to your investment plan. Without these, your chances of losing money are high.
THE RIGHT MINDSET
It’s common for newcomers to the cryptocurrency market to have misconceptions. For example, they may think investing is just about buying and selling for profit, expecting massive returns, or that technical analysis will guarantee accurate market predictions…
So, what’s the proper way to approach and start in this market?
The Cryptocurrency Market Is Not Just About Buying and Selling for Profit
Many people enter the crypto market with a simple mindset: create an account on an exchange, choose coins they “feel” are promising, buy them at a certain price, and hope to sell for a higher price to make a profit. This approach often leads to losses if you don’t equip yourself with the right knowledge, mindset, and investment strategies.
Cryptocurrency is built on blockchain technology, a continuously evolving field. New generations of blockchains offer better features than previous ones. Therefore, the smartest approach is to understand the technology behind these coins, what purpose each coin serves, and why its value will rise. This way, you can create a more informed investment strategy and minimize risks. This series of articles will provide you with the foundational knowledge to get started.
The Cryptocurrency Market Is Full of Potential, But It’s Not a Get-Rich-Quick Scheme
When you start in this market, it’s important to understand that cryptocurrency is not a “get-rich-quick” field. Keep these two answers in mind:
- Is it easy to make money in the Cryptocurrency market? The answer is NO
- Can you make a lot of money in the Cryptocurrency market? The answer is YES
This means that cryptocurrency remains a field full of potential and opportunities for everyone. It is a market that will continue to evolve both now and in the future. However, succeeding in this market requires a lot of effort, and continual learning and self-improvement are essential.
Invest in Value
Currently, there are over 22,000 coins listed on Coinmarketcap (as of 29/01/2022), and the number keeps growing. Why are so many coins created? Because each coin serves a specific purpose. Therefore, it’s important to invest in coins that have “value.” But how do you know which coins are truly valuable? The answer will come in the later sections. For now, understand that you need to assess the value of the coins you’re interested in. What potential do they hold? Don’t just invest based on others’ promises—invest in coins that genuinely have value, based on your own understanding.
“Short-Term Trading” Is Not the Best Choice for You
One thing is certain: “short-term trading” (day trading) is not for most cryptocurrency investors. In a highly volatile market like crypto, relying on technical analysis for short-term trades comes with high risk. The market’s unpredictable fluctuations can heavily influence investors’ psychology, leading to poor decisions.
I can assure you that if you’re new to the market and put all your capital into short-term trading, chances are you’ll face losses. That’s why this guide won’t teach you to be a trader; instead, we want you to become a strategic investor.
Focus on Medium- and Long-Term Investments
As mentioned above, short-term “flipping” has never been a wise choice for investors. Most people who have built wealth in this market are those who invest with a medium- to long-term perspective (at least six months or more). This is because every promising coin needs time to build value, requiring both price accumulation and ecosystem development, as well as broader community acceptance to become truly “valuable.”
Furthermore, the cryptocurrency market is still in its early stages. In the future, market capitalization will likely grow several times over, driven by continuous technological advancements that push the market to new heights. Thus, investing long-term reflects your forward-looking vision for this promising, emerging field.
Allocate a significant portion of your capital to medium- and long-term investments. Hold valuable, promising coins over an extended period. Store them securely in your wallet, close it, and open it years later to see the surprising returns.
Recognize Risk as an Inevitable Part of This Market
This market is far from easy; it’s filled with inherent risks. High risks, however, often bring great opportunities. Accepting risk in this market will help you:
- Strategically allocate investment capital
- Stay calm during major market swings
- Be cautious and spend time researching projects thoroughly
By understanding the risks, you can better manage bold decisions and avoid costly mistakes.
“If you don’t respect risk, it will eventually bring you down.” – Larry Hit
Learning to Manage Losses
No one enters the world of investing and profits instantly; everyone experiences losses at some point. What matters most is learning to control those losses. As long as you manage your capital well, learn from your mistakes, and stay patient in this market, the rewards will eventually come your way.
“Learn to manage losses wisely. The key to making money is not letting your losses spiral out of control.” – Marty Schwartz
THE RIGHT MINDSET
In a market full of temptations, it’s easy to let emotions take over. This is why cultivating a steady and resilient mindset over time is crucial.
Avoid FOMO
FOMO, or Fear of Missing Out, is a psychological state many experience when they fear missing a potential opportunity. Over 95% of newcomers to this market experience FOMO. One common example is rushing to buy a coin that’s already spiking in value because they don’t want to “miss out” on a strong rally. Unfortunately, this often results in buying at a high price.
People in this state often struggle to make sound decisions. Always remember: “Opportunities in this market are plentiful.” If you miss one, be patient for the next one. Here’s a mantra to help keep FOMO in check:“Better to wait than to weep.”.
Control Your Greed
Let’s face it—everyone has a bit of greed in them, and in financial markets, it often surfaces. It’s important to appreciate your own profits, regardless of the amount, and avoid comparing yourself to others.
“When entering a trade, don’t focus on potential profits; focus on limiting your maximum loss.” – Peter Brandt
Develop Calmness and Patience in the Market
Calmness is essential in the market. When there’s a sudden price swing or unexpected surge, take a moment to analyze instead of jumping in out of FOMO or hastily cutting losses in a downturn.
Patience is also key. Wait for an optimal entry, and be patient when holding out for a targeted profit. Avoid switching assets impulsively, especially with long-term investments. It often takes months or years for these investments to hit their targets, so resist the urge to sell prematurely during a downtrend.
Don’t let your emotions be swayed by outside information or others’ opinions. Before making any decision, take 5-10 minutes to clear your mind. Remember, there are always more opportunities ahead; there’s no need to rush.
Stay Disciplined
Discipline is essential in this market. When trading, adhere to a few core rules:
- Stick to a capital management strategy: Define what capital goes to short-term, medium-term, and long-term investments, and allocate to each project within your means.
- Follow your investment strategy: Hold on to medium- and long-term investments and set stop losses and profit targets for short-term trades.
- Wait for optimal entry and exit points based on your plan, and avoid trading impulsively out of FOMO.
These are some of the key principles to understand and practice before and during your crypto investing journey. In the next section, we’ll go deeper into how to Manage Your Capital in the Crypto Market.
