Step 1: Decide if you want to trade cryptocurrencies or you want to invest in them. Trading is a stressful and very time consuming job, you will be buying and selling frequently trying to have a profit overall (aiming for the sum of profit and losses to be positive). You can become a good trader after 1–2 years of practice. On the other hand, investing should not be stressful, you buy some Ethereum and you plan to keep it for a long time. This post is about investing, not trading.
Step 2: Define the amount of money you can afford to lose. Every investment comes with a risk. Usually the higher the risk the higher the potential for profit. The younger you are or the easier you can get a job then the more you can afford to lose. If you are retired living off your savings you should take a lower risk. If you don’t have the stomach for a loss, it might be better to not invest at all.
Step 3: Decide if you are in it for the profit or you just want to support the team working on the coin or you want to support the values the coin represents. In the first scenario you should define your exit point. How much do you want to make? For example you can have a 100,000 USD in profit goal. Then you close the position (sell) and you never look back or reinvest. In the second scenario things are easier, you do not care about profit or loss much, it is more like a vote & donation because you really like a coin project. You might be hugely rewarded or nothing might happen, but you should not care. You supported a project and you should be proud of it.
Step 4: Do some research to find which coins you like. Bitcoin & Ethereum are the base coins now. I think of it like USD & EUR which are the biggest reserve currencies (USD is 65% of the global reserves, EUR is 20%). I would personally invest in those two and then decide if I want to add some altcoins in my portfolio. That will be a bit more time consuming but it might be worth it.
Step 5: Enter the Altcoins world. Use http://coinmarketcap.com to see what is going on in the top 20. Altcoins there are already popular. Check what those teams are doing and their posts on Twitter and Medium. Choose up to 5 of them and invest equally. Unless you want to dive deep into it and willing to do more research, then you can decide different allocations and more coins.
Step 6: Never try to predict the market or think you see the future or you know what will happen. Markets are irrational and unpredictable. We like Bitcoin, Ethereum and the Cryptocoins but if some of them dissappear, don’t be surprised.
Note: If you like Ethereum (ETH) do not support and invest in Ethereum Classic (ETC). They are totally different and the Ethereum Foundation does not support ETC.
If you have more questions about investing, DM me on Twitter https://twitter.com/victorfigol
Have you made any investments yourself and what altcoins have you jumped on board with?
ETH (70% allocation), BTC (15% allocation), Ripple (5%), NEM (5%), Dash, Litecoin, Aragon the rest 5%.
nice portfolio. I personally don't trust ripple. It doesn't seem like a sturdy ride just because its in the hands of the investors. An altcoin that can't be mined is a tough one to get into.
I agree, I got carried away by the hype on that one. Half of my Ripple I got them at a very high price. But I read it is a deflationary coin, so I m curious to see how that works out.
What is unique about Litecoin??
Great piece - do you mind checking out my last post? I need a bit of help from the red night :(
Replied!
Thanks a ton @victorfigol! Gave you a follow too - am trying to stay as active as possible in this community!
I think Steem is probably a great investment.
I agree.
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Nice article. Same thoughts here. Buy and hold for the upcoming 2 to 5 years and the market will find it's way. I was researching a way to find more info about the current cryptocoins on the market. I really advice people to take a look at: https://www.coincheckup.com Since I use this site I make so much less basic investment mistakes. For example: https://www.coincheckup.com/coins/Bitcoin#analysis For the Bitcoin Report