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The Risky Vs. The Conservative Investor

Investment trading is not a new word in the financial market. What is new however is the cryptocurrency investment trading. Cryptocurrency came to being in 2008 when a certain Sahtoshi Nakamato published a white paper online proposing digital currencies. It’s been a decade but by standards, cryptocurrency is still considered a new concept. But despite the fact that cryptocurrency market is a whole new concept that is different from the traditional financial investment markets like stocks and foreign exchange, the investment approach and choices among investors remains the same. This is evident as most of the investors can be categorized into two choice groups according to their investment choices;  the ones who are all in with uncertainties and the ones who do as much as they can to play safe. Hence the risky and the conservative investment choice, in cryptocurrency investment trading.
 

CONSERVATIVE  INVESTMENT CHOICE

The cryptocurrency market is a very volatile market. For an investor to decide to invest in the market alone, he or she have taken a risk. The conservative  investor is not an investor that does not take risk, rather he is one that plays it safe according to the ‘never put what you cannot lose’ rule. He is categorized  to be a moderate risk taker, with the preservation of current capital and income as the main goal. In the cryptocurrency market, there are many conservative investors. Going by the volatility  of the market, this might be considered to be the safe approach. But with a conservative investment approach comes lower gain. Most of this class of investors, although have little to lose, they are considered  to be on the bottom of the chain, with the high risk investors on top of the chain. One of most popular conservative investment choices is the diversification of investment. That is, not putting your eggs in one basket. For example, the prices of most altcoins are affected by the price of bitcoin, such that when the bitcoin is on a bullish zone, these altcoins go into the bearish zone.  A typical conservative approach will involve playing safe with this discrepancy, thereby investing in different altcoins and not putting all investment into bitcoin becomes a safe approach. While this might be safe from all indications, it weighs down on the returns of investment.

RISKY INVESTMENT CHOICES

There is no conscientious definition for risk in financial markets.  While some school of thoughts see risk as a measure of what an investor stands to  lose, others see it as a measure of the uncertainties in the choices made by investors. Which ever school of thoughts you belong to, a look into  the cryptocurrency market will spell nothing but risk. The fact that the value of a crypto coin is determined by diverse factors, which are out of the control due to the  trustless and unregulated policies makes it more risky. For example, the interference of organised financial institutions can affect the price of a coin. Hacks, pump and dumps and 51% attacks also have high effects on the values of coins. However, despite the risk that is imminent  in this market,it does not in anyway stop investors who are willing to go all in with their investments. Investors that make risky choices stands to gain more, just as they stand to lose more in the cryptocurrency market. A typical risky choice in cryptocurrency investment is found when an investor cashes all in into single coin. In the fourth quarter of 2017, the bitcoin was on a comfortable bull rise, this resulted into many investors taking risky investment  choices; they invested mainly in bitcoin. We all know what happened to bitcoin in 2018. But no, risky investment choices doesn’t necessarily mean not knowing when to call it a profit, although most people argue that there is a thin line between greed and risky investment choices.

Summary

The classification of these investment choices cannot be overemphasized, however there is need to strike a balance. Making it big in the crypto currency market is somewhat a blend of the two investment choices stated above, with the right information being the determining factor. In other words, flexibility  of choices is important as you have to know exactly when to make either the conservative investment choices of the risky investment choices. Also, it important that the fear factor should be differentiated from these choices.

Top 7 Daily Rules To Be Followed By Crypto Investors

The cryptocurrency capital market has continued its strides to being one of the most preferred mode of investment among small and big investors with no discrimination. The bitcoin which is the biggest crypto coin for example can be purchased to its one millionth fraction (Sathoshi), making it available at lowest of denominations in fiat currency equivalent. There have been a wide number of new investors recorded in the crypto currency world, especially with the introduction and popularity of the blockchain technology. However, one cannot deny the fact that the cryptocurrency market is as volatile as every other investment markets. As a matter of fact, cryptocurrency is more volatile as a result the unavailability of regulatory bodies. So as an investor, you can go to sleep and the next minute you wake up, you find out that your investment have either taken a bullish rise or a bearish depreciation. It is therefore imperative that while investment in the cryptocurrency market is a good investment, some rules have to be followed by investors. And since the investment market is an everyday thing, these rules are dubbed daily rules. Without wasting much time, let’s get familiar with the rules.

Invest what you can afford to lose only

This is the number one rule of investment. Most experts in cryptocurrency say that once they invest money into a crypto coin, they virtually make themselves believe that the money is gone forever.  Although they make sure they get their money back, they use this act to ensure that they are investing what they are willing to lose. The dips in the prices of cryptocurrencies are affected by many factors, most of which are out of control. So it does not entirely depend on how smart you are with investment. Bugs, hacks and government regulation can affect the prices of coin. The bitcoin crashed when there a hack on the South Korean internet servers.

Diversify your investment

Just as there is a potential to earn more when you have high investment in a coin on a bull market, there are equal potentials to lose your investment when that same coin enter a bear market. The best way to invest and cash out big in the cryptocurrency market is to diversify your investment, spreading your earnings across multiple coins. Data shows that when the coins leading the market capital rises, it simultaneously leads to the rise of other crypto coins.

Don’t be greedy

The whales of the cryptocurrency market are where they are because they know when to call it quit on profits. Don’t be greedy; consider calling it a profit after 30% increase at most. Some investors who are blinded by greed keep their investment for too long and end up losing all their investment. Have it at the back of your mind that bitcoin went from $20,000 USD to $3,400 USD in  one year.

Put a goal tag on that investment

Putting a goal tag on your investment prevents trigger sales. Such that when you invest in a coin and you find it taking a dip, you do not go into panic and sell. You can categorize your investments into long, short and medium investment plans. Some coins takes up to 20% dip for some given period, and before you know it, they are on a 50% bearish rise.

Learn from mistakes

Luckily for you, you do not have to learn from your own mistakes. The crypto market is like a cycle of events, everything that you are doing on a daily basis have been done by other people. So while you are keeping an eye on that investment, go online and search for materials, learn from the experience of others. And if you happen to make mistakes, learn from them.

Pay attention to the price of Bitcoin

Most altcoins are affected by the price of bitcoin. A rise in price of bitcoin leads to a reduction in price of these altcoins. And a dip in price of bitcoin does the reverse on them. The best time that altcoins rise in price is when the bitcoin is stagnant in price.

Keep a tab on the team management of the coin you are investing in

Always make sure that you are in tune with the updates of the management teams of the coin that you have your investments in. Most coin management teams operates account on Git and other social platforms.