"Slap your chest and ask your appetite first if you just want to start investing in crypto."
Most individuals will be interested in buying cryptocurrency as its performance grows, but it is important to ask yourself a few questions before trading digital assets that also have their own risks. Among the questions are:
Why are you investing in crypto?
Are you doing it because you believe in the technology and think crypto has long-term potential? Or do they do it because they think they can make a quick buck?
Investors who intend to buy crypto should study in depth about a digital asset in order to know whether it has potential to invest or not, whether in the long or short term.
What can you afford to lose?
Crypto investments are so risky that most credit card issuers refuse to allow cardholders to purchase digital assets using their credit cards as crypto prices fluctuate so rapidly.
Therefore, investors are reminded to consider the amount they are willing to invest in crypto because investors have the potential to lose part or all of the investment.
Investors also need to diversify their risk by buying different digital assets because the price of cryptocurrencies can fall overnight and never recover.
What is your investment strategy?
Is buying crypto as an investment or a speculative bet because the two approaches have big differences.
An investor is someone who believes in the technology and buys crypto to gain long-term profits while a speculator is an individual who wants to make a quick profit by buying low prices and selling them when they rise.
Individuals who want to become speculators should have a solid plan in their investments as most people who have no investment experience have bought a number of cryptocurrencies without any clear understanding.
What is your exit strategy?
Investing is easy but selling can be difficult without proper planning as crypto prices fluctuate rapidly all the time.
However, crypto selling is found to be easier for long-term investors than speculative trading who only want to sell quickly if a digital asset falls.
So you need to strategize to get out of the investment so as not to get caught in an inappropriate period of time.
