Original article by Ren & Heinrich adapted and expanded
by Ivan Somoza of beToken Research
It was in early 2016 when I discovered the crypto world and blockchain technology by chance; it was around the same time that my first dabbling with cryptocurrency trading began to take me out of my sleep. It's been a while since then!
But well... to the point. In order to get to know how this ecosystem and blockchain technology worked from the inside, as well as the different algorithms and protocols. I had to watch tons of videos and read a lot of articles on the web, and also, spend hours and hours glued to the screens of computer devices reading, analysing and studying a lot of technical documents (Whitepapers), to be aware of even the smallest detail of the different projects that were appearing in the ecosystem.
I really believe that this is the only way for any self-taught investor to exponentially increase their knowledge on the subject.
At that time, I let myself be guided by the recommendations of anonymous people who, through social networks and always under the slogan "To the Moon", predicted the next crypto gem. I remember now, with a faint smile, how many times I've been beaten up by stupid things like that. But I really believed that those strangers would lead me to financial freedom; big mistake!
I think that like almost everyone, I also had a time when I decided to use the pay groups to optimise my earnings, fantasising that these so-called investment gurus would surely have a magic ball that would tell them the direction of the market at all times. Perhaps in this type of thing it is like the Galician meigas: "There are some," but in general, the vast majority of them are smoke sellers.
It took me some time to realise that I was playing with my money blindly. There were times when I lost, and times when I won. I was beginning to realise that this was not investing. It was more like a game of chance; a casino roulette wheel where you bet on red or white.
Over time and after many mistakes made behind my back, things started to change and probably at the moment, the profits are still small compared to those of expert traders. But it has helped me significantly to change my life. I warn: I haven't bought a Lambo yet and I don't think I'll get there either. I consider all that to be colourful fairy fantasies. I am content to be able to live in peace and to be able to help the people around me. Even if I am a dunce and a stubborn, there are people I love and adore.
Perhaps some of you can see yourself in some of what I have just said. At the end of the day, I think that all of us in the ecosystem, in one way or another, follow the same path along different paths.
But in the end, the intention of writing this article is to establish a series of guidelines that, personally, have helped me to obtain benefits. If I can help others to find shortcuts along the way, I will have done my job and I will be enormously satisfied.
So let's get on with it!
25 golden rules to survive in the crypto market
1. Before investing; study the asset: If you want to invest in Bitcoin, the first thing you should do is read Satoshi Nakamoto's whitepaper. Study how blockchain technology works and at the very least: distinguish between a public and a private key.
Another thing to keep in mind is to know the difference between proof of work (POW) or proof of participation (POS), etc. If, on the other hand, you want to invest in Ethereum, you should study what smart contracts are or how an ICO (Initial Coin Offering) works and learn about decentralised finance (Financial Decentralized "DeFi").
In general, there are a lot of free resources on the Internet with easy to understand explanations.
2. You should know the tax regulations in your country: What kind of cryptocurrencies can you buy, what kind of documents do you need to provide when buying, what tax regulations are there regarding crypto assets, etc.
When you wish to sell, you will need to contact your cryptocurrency exchange to request information about the withdrawal process. Another thing to keep in mind when withdrawing from an exchange is: try to contact your bank and ask them if you need to provide any documents in case the amount to be withdrawn is somewhat large.
Remember that you should always research these things in advance, even if you don't plan to sell right away; these types of institutions will probably take a lot of time to study and verify everything.
3. Don't invest more than you can afford to lose: Never use money you have saved for emergencies. Prices in the cryptocurrency markets are very volatile and you may not get your money back when you need it urgently. Invest amounts that will not put you in a difficult situation if you lose them.
4. Never invest all your money in one asset ("All In"): Once you have decided on the total amount you are going to invest, spend only a small part of it on buying the asset that you have researched and believe has a future. You should also always have some liquidity to buy in case of a sharp market decline.
By taking these details into account, you reduce the risk of losing all the money when expectations are not met.
5. Try to keep your crypto assets in a cold wallet: Never leave large amounts of crypto assets on exchanges, they could be hacked or go bust. In such cases, you will lose all your assets irretrievably.
6. Securely store your private keys and seed phrases: Try never to store your private keys and seed phrases on your PC, laptop or smartphone. They could be hacked.
One option is to write them down on a piece of paper and keep them in a place where only you can find them.
7. Try not to trade intraday: Unless you are a very experienced trader, I don't think it is a good idea to trade intraday, you will be trading against countless "Bots" and "Whales" that ruthlessly drive the market and you are likely to lose a lot of money.
8. Do not over-leverage your trading: The vast majority of platforms offer highly leveraged trading, offering the possibility of extremely attractive profits. Unless you are very experienced in leveraged trading, your position will most likely be liquidated and you will end up losing all your money.
9. Try to accumulate as much information and knowledge about the ecosystem as possible: You should study new protocols, new developments, new projects, new regulations, etc.
Blockchain technology is still in its infancy and that is why there are so many opportunities within the sector. Above all, you need to spend a lot of time being continuously informed. You don't need to read every semicolon and comma either, just checking headlines and summaries on a regular basis should be enough to keep you up to date with what's happening in the industry.
This is a fast-moving market. Different news and protocols appear every day; something that makes this ecosystem a very interesting, but also a very dangerous sector.
10. Try to focus on the long term: In this sector, the long term should be defined as: any investment with a time horizon of more than one year. But, as I suppose there will be discrepancies in everything; others will say that a time frame longer than 6 months, in the crypto ecosystem, could already be considered long term. It all comes down to each investor's vision. For example, if we think of Bitcoin, the cryptocurrency with the largest market capitalisation today. When the price of Bitcoin fell by more than 50% in the market, tens of thousands of traders quickly liquidated their positions. However, if we try to look at it from another perspective, and review the long-term price development, we will find that anyone who has bought and held Bitcoin for at least 4 years is in profit.
11. When the market experiences a sharp fall, unless you have made a high profit and are thinking of exiting, do not sell: Normally whales and institutions use this type of strategy to accumulate assets at cheaper prices. Don't fall into the trap.
Also, as you can imagine, news such as: an exchange has gone bankrupt; country X has banned the use of cryptocurrencies or such a protocol has been hacked, have a negative impact on the price of cryptocurrencies. It should be clear to you that looking back at the history of the crypto ecosystem, the price tends to recover after a while.
12. When the price reaches its highest point or all-time high (ATH), don't even think about buying: Most user traders who bought at lower price levels, have very possibly as a target price to sell their assets at that level for profit taking. It is quite normal that after a parabolic growth in the price of an asset, the next movement is downward, in the form of a correction. Looking for liquidity, in order to be able to continue an uptrend in the price, in a healthy way.
13. Do not buy with the price in a downtrend: It is more than likely that the price will go much lower. It is best to wait until the price has stabilised and then place a buy order.
14. Don't give up when the price has bottomed out: It is usually at that point, when whales and institutions start to accumulate.
15. Accumulate periodically to average the price: The price of most cryptoassets follow what the price of Bitcoin does in the market. No one knows if tomorrow the market will go up or down. Therefore, one of the best strategies with excellent results is the "DCA" (Dollar Cost Average), which is based on using part of our monthly salary to accumulate, month by month, the assets that are most interesting to us.
16. Set a realistic profit target and exit strategy: We must remember that we are not in the markets to maximise profits, but to increase purchasing power. With time and experience you will discover that it is virtually impossible to buy at the bottom of a move and sell at the top. The most we can achieve is to try to buy at the bottom and sell at the top and make a profit on that move. Many will tell me that short selling exists, but I wish to leave that subject to people with more experience.
17. Withdraw the initial investment once you have made a profit: This is a good way to act, perhaps not the most advisable but certainly one of the safest. You will get your money back and even if the price turns around, you will only see the profit you made reduced.
18. You should diversify: You should not put all your eggs in one basket. When it comes to reducing risk, try to focus only on large-cap cryptocurrencies that actually have a real use case. It also doesn't hurt to diversify into other asset classes, such as equities and gold.
19. In the introduction I made a comment about this. Don't bet your money on someone's recommendation on social media, and don't buy tokens or coins that you don't know: There is a multitude of characters (I do not know what other adjective to use), who, thinking only of their own benefit, publish on social networks phrases such as: "Token X at the end of the month...to the moon", "Coin Y...next gem", do not listen to any of this advice without having carried out a proper study of the project.
20. In the same way as the previous rule, ignore what big influencers and Youtubers say: the vast majority of them, besides being funded by the projects they advertise, only want to get clicks and visits to increase the number of followers; they will always say what people want to hear. An example: after a big drop in the price of Bitcoin, they will probably use a headline like: "Tomorrow... Bitcoin to the moon", just because they know that many people in the market are losing money, and that's what they want to hear.
21. Read and listen to opinions from different sources: It doesn't matter whether the opinions are positive or negative. Nobody knows everything and that is why it is important to listen to different sources. If you have read rules "1" and "9", you should have enough knowledge to make your own judgement. And if you have been in the ecosystem long enough, you should be able to distinguish between reliable and unreliable sources.
22. Pass on "Pump and Dump'' groups: It's not that they are too risky, it's that they are outright scams. They are usually created by groups of traders or whales that, after having bought a large amount of assets from a project with little volume. By means of a super aggressive advertising campaign, they attract many unwary investors to buy this asset, causing the price to increase exponentially in a short space of time. Once the scammers have achieved their objective, they liquidate all their positions, overwhelmingly flooding the market and collapsing the price completely. As a result, those investors who were the last to buy are often left with assets at a much lower value than they paid for them.
Chances are that the price will never be recovered and you will lose your money.
23. Don't fall for scams: Nobody gives anything away, especially when you are asked to send tokens to a Wallet that is not yours, and don't listen to comments on Twitter or YouTube. Nor should you listen to fantasies of people who claim to earn huge amounts of money by pretending to be celebrities and influential people.
24. Try to control your emotions: When others earn money; don't be jealous. Be happy for them and learn from their experiences. If you lose money don't get frustrated either, try to learn the lesson and avoid it in the future. We have all lost money more than once, don't lie to yourself: it has happened to all of us.
25. Patience is key: If you are about to lose patience, refer to rule No. "10", step away from the Bitcoin chart and check the long term chart again.
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