What i wish i knew before investing in Crypto (Final Part)
There are so many things i wish i knew before i made my first steps into the Crypto Space.
For insights, i started to get involved in crypto during Summer 2017. Back then, the market went wild and i made massive gains before getting wrecked a few months latter…
I got hit, emotionally speaking, so hard that my interest in crypto fades until Spring 2021.
Yeah that’s right after the massive pump occurring between the End of 2020 and April 2021… Apparently i learned some lessons from the previous experience but timing wasn’t one of them. 😅
After nearly one year going crypto investing full time, I summarize for you all the insights i gained along the way. With this knowledge and the same amount of work, i would have been able to multiply by more than ten times the solid gains i made.
First part was mainly about ground rules with the second one leaning into the psychological side of crypto investing. This final portion is about money management. You decided to invest some money in crypto-currency, now you have to choose what to do with it : when to sell or buy back, lock them up with staking, … I’ll give you rules and guidance to hopefully steer your own ship at the desired destination.
The point is to help you forge your own strategy.
First some common sense
Most rules you used for traditional investments apply to crypto-currencies. I imagine that’s not what you had in mind but trust me, they can help you go a long way. And are the best foundations on which you can build your strategy. Never disregard the basics, even advanced investors still apply them. 😉
Never invest money you aren’t ready to loose
Maybe the most obvious one. Crypto are volatile and risky assets by nature, even Bluechip Projects can have 80% decline during some periods of time. So i strongly encourage you to not pour all your capital into them.
Diversification is key
And the mother of restful nights … It’s tempting to make an all-in on a project you like and hope it’ll go to the moon but this lottery not investing. Most of the time you are going to get hammered down (or rekt, since you are now an initiate). So don’t put all your eggs in the same basket. 😉
You also shouldn’t want to be overspread. In my humble opinion, for most people 10 different cryptos are a maximum, and ideally should be a little less (i do 8 for instance). It’s easier to follow and to manage while giving you some benefits :
- Many positions equal many questions for every step you want to take. You don’t want to find yourself locked up with days of reflexion needed for each buy and sell orders.
- Only having ten forces you to wonder if this new project is better than your actual top 10.
- With only 10 cryptos, each position is sizeable : you don’t loose an arm if things go south and you really benefit when one outperform. If a crypto does a x5 performance, it won’t affect your wealth very much if it’s only 1% of your portfolio.
Simplicity is really important : the more complex the plan the more likely you are going to be tempted to not follow it only to regret it later.
Have the discipline to follow your plan
Make some decisions, take actions and walk the path you’ve set for yourself. Believe me it’s the most effective way to flourish it the crypto space. More efficient that going in all direction, buying every crypto you heard of and ultimately finding yourself with so much lines that you don’t know what to do with.
Have a buy and a exit strategy
In crypto, buying is normally easy : you find a project you love, do your research and buy some. Have great buying opportunities and deciding when to reduce your positions (sell) : that’s the real challenge.
Buy and sell progressively
To avoid making mistake, the simplest path is to buy and sell in multiple times. For me i always buy in 3 times : 1/3 instantly and the 2/3 if price goes down. If the crypto price skyrocks, i have some chips on the table and if it tanks it gave me the opportunity to buy at a lower price.
The selling part is trickier and deserve an article on this own. I have two rules :
- Retrieve the money you put in as fast as possible (for instance sell 25% when the crypto x4 to retrieve your initial cost)
- Take profits on a regular basis and more aggressively when price goes to the moon (ie 10% each time your initial position gain +100%)
Don’t FOMO (Fear of Missing out)
You see a project on the spotlight, that gained massive traction with amazing returns and you feel like you are missing the deal of lifetime.
Relax and stay calm, there will be often an other opportunity to buy into it at a lower price. Generally what goes up massively tend to have a correction and go down after some time. In short, never buy into a pump.
I also suggest to always do your own research and don’t blindly follow some influencer. Since they could make some hype to sell their own token or participate in a pump and dump scheme. It’s always best to think for yourself, especially in crypto where there’s a lot a mania.
Final piece of advice : learn some basic technical analysis. While it’s a whole subject on his own and too vast to deep into in a few sentences, it will help you have better entries and exits. 🙂
Don’t delve on the past
What’s done is done. You and I will make some mistakes along the way, i can guaranty you that. While it’s great to remember them and learn from them, you shouldn’t feel compelled to compensate.
You can’t change the past so why focus on it ? It’ll take an emotional toll on you and most of the time, you are going to make bad decisions trying to make up for your previous losses.
In trading, it’s called revenge trading. An emotional response usually making even more financial loss and mental pain.
Hope you learn something and appreciate your readings. If you haven’t already, please consider checking First part and the second one.
Wish you well and a pleasant day.
Kind regards
Guillaume
