Cryptocurrencies are one of the most democratic financial instruments there is, and this gives them the illusion of being easy to profit from. While cryptocurrencies have made a lot of people very rich, they are not for everyone, and if you want to be successful with them, you will need to have the proper skills, attitude, and attributes. And you have to be willing to work. Let’s take a look at whether or not you’re fit to trade cryptocurrencies.
How Much Do You Know About Trading in General?
You should know that cryptocurrencies obey many of the same laws as many other financial instruments, and while they look more approachable, you still will need to understand a few trading basics before you get started.
One of the things many beginners in the field are surprisingly oblivious to is how to read charts. You have to know how to read a candlestick chart and figures before you get started. You should also try to get familiar with a few technical indicators like the RSI, among others. This will allow you to reconcile some of the information you get from the voices online with price action and better predict movements.
How Patient Are You?
You can’t be successful trading crypto if you are not patient. There will be peaks and valleys and they can be dramatic. Crypto markets are more volatile than virtually any other, so you have to be willing to stay for the ride and follow your strategy no matter what.
How Do You Handle Risk?
You cannot invest in crypto unless you are willing to take some level of risk either. You should still, however, shield yourself from risk by limiting the percentage of your portfolio that you will dedicate to crypto. Some people advise that you do not invest more than 20% of your assets in crypto, but figures vary. It’s up to you to know what you are truly comfortable risking and adjusting the amount of money you have invested in the market as your knowledge of it grows.
How Much are You Willing to Learn?
The crypto world is ruled by technology, and unless you are willing to dig deeper into the technology that underlies cryptocurrencies, you can’t expect to be very successful with them. You will not only need to learn all of the basic terms, but you will also need to start learning about subjects like computer science if you truly want to understand what you’re investing in.
It would also be a good time to start looking at calculators that will allow you to convert crypto to currency so you can stay on top of the latest movements and capitalize on them.
These are all questions that will let you know if crypto investing is truly for you. Do a bit of introspection before getting started and consider doing a few mock trades first to see how you handle the markets.