You can make millions in the blink of an eye or lose your shirt if you have overextended yourself investing in cryptocurrencies. Everyone has seen the effect of a recent tweet by Elon Musk that sent the value of Bitcoin tumbling. This volatility and uncertainty of prices prevent many people from trying their hands at investing in cryptocurrencies, and even seasoned investors can feel apprehensive about generating a decent ROI. If you want to invest in cryptocurrencies and get a high ROI without losing out big time, you need to follow a robust investment strategy incorporating the following tips:
Invest Only What You Can Afford To Lose
Even though you may be afraid that this is the kind of advice that warns you to stay away from the cryptocurrency market, you need to understand that it is perhaps the best investment advice you will ever come across. You should only invest an amount that you can lose without compromising your financial security and lifestyle. The point is to assume that you could lose your entire investment if the market goes against you and ensure that you live to see another day. Essentially it means that you should only invest the money you have to spare after meeting all your requirements in the near-term, short-term, and the long-term.
It is not enough to identify a cryptocurrency with growth potential and sit back to watch your investment grow and make you a millionaire. It is vital for you to closely monitor the market because the market for cryptocurrencies is extremely volatile, as per Bitcoin Noticias. There could be plenty of signals that you need to interpret to either increase your investment or exit partially or fully. If you exit at the wrong time or do not increase your portfolio when the market has dipped, you could potentially lose out big time. If you stay invested when the market has crashed and there is little chance of a quick recovery, you could be in serious trouble. By being an active investor, you can quickly react to market movements and profit from them.
Do Not Hesitate to Average
Since you cannot hope to keep buying when the market is at its lowest and selling when at its highest, you need to average your investment portfolio. Instead of panicking every time the price dips, you can consider buying more to lower your average acquisition price. By consistently doing this, you will be able to avoid missing out on a particular buying opportunity that you will regret. If you believe that the market might crash soon, even if it is rising at the moment, it can benefit you if you keep selling as much as you can so that you can build a reserve and buy later when the market has dipped.
Regardless of how confident you are about a particular cryptocurrency, you should never restrict your portfolio to it since you will put at risk your entire investment. It is also a good idea not to enter the market if you cannot predict its movement.