Determine your crypto investor profile
A major rule for getting interested in crypto-currencies is to be consistent with your expectations. There are several thousand crypto-currencies with various characteristics. Many are illiquid and therefore riskier. The less important of these cryptos are more like betting than investing. Apart from the risk, it is therefore more relevant to own liquid crypto-currencies in a medium-term perspective. In the long term, the important thing will be the selection of the asset in question, and thus the risk aversion.
Sort virtual currencies according to your profile
Exactly as with stocks in the stock market, there are the must-haves. The main cryptos (in valuation) to date are: Bitcoin ($280 billion); Ethereum ($50 billion); Thether ($16 billion); Ripple ($10 billion). These are somewhat equivalent to the major stock market indices.
The example of Ethereum (ETH) is quite revealing. Many crypto companies issue “Tokens”, the very rough equivalent of shares of “crypto” companies on the stock market, which for a large part of these tokens are based on the ETH Blockchain. This is the case of cryptos like BNB, OMG, Augur, CHSB SwissBorg, etc.
These tokens can be traded. Each token should be thoroughly researched before any investment. Choosing to bet on industry “indices” (ETH, BTC, etc…) or industry players (tokens essentially) are two elements to be dissociated. The largest cryptos allow to spread the risk while benefiting from the emergence of the industry. This is less the case with smaller cryptos (especially those with less than a few tens of millions in capitalization) where the risk is much higher.
Defining a strategy for investing or trading cryptocurrency
There are the fundamentals of money management. Therefore, it is important to answer some fundamental questions:
What is my availability to invest? What are my time horizons? What extreme movements can I expect over this period? What will be the ideal distribution between cryptos of different sizes? Should I prefer the most liquid ones? The less liquid ones?
Take its marks and invest gradually in cryptos
The most important thing is to get your bearings, especially for beginners. Acquiring a progressive experience allows minimizing the risk which remains high with the lack of experience (via regular observation of the market, books, a logbook, etc… Dozens of techniques exist). It is better to get your bearings gradually: pay attention to leverage, etc. This experience will allow you to refine your strategy as closely as possible to your investor psychology. This is a key parameter for the stability and consistency of your strategy.