Welcome to the wonderful world of Bitcoin!
If you are just now getting involved in the world of cryptocurrency, you have chosen a great time to start. As you may be aware, the world is only just beginning to embrace digital currencies as a method of wealth transfer and money receiving. Let’s dive in to your very first steps as a Bitcoin Investor.
Your First Bitcoin Purchases – Investing Small
The first problem many new investors encounter is feeling as if they need to invest a substantial amount. This is primarily due to a psychological pull that compels investors to commit something that could potentially make one a great profit. The drawback with this approach is that an investor may wait too long to get involved. The price may increase and they will feel as if they, “missed their opportunity.” You would be surprised how common this is!
To combat this, you should consider making your very first investment a small one. While it seems a bit lackluster, a small initial investment opens the doors to more frequent and larger investments. By investing small you eliminate the hesitation that prevents most other investors from getting involved in Bitcoin and other cryptocurrencies.
Approaching your long term Bitcoin holdings this way, you can think of investing in terms of, “How many small investments mush I make in order to get where I want to be?”
Another reason these small Bitcoin purchases are beneficial is due to the influence that fear and emotions play when it comes time to putting your money on the table. As mentioned, it’s easy to get caught up in the ideal that you must make your first investment significant. This is a purely emotional belief. There’s nothing beneficial at all by making your first investment a substantial one!
As a long-term Bitcoin holder, you must do all that you can to eliminate negative (or greed influenced) emotions from your state of being. Emotional investors trust their “gut feeling” and often make foolish, un-recommended mistakes. Too many investors share the story on forums of that time they ‘felt’ the market was going to crash and cashed out. What happened? You can guess it. The market did quite the opposite.
Perhaps even worse are the stories of Bitcoin investors feeling that the market was going to make a sharp up-swing (increase), so they broke the #1 rule and invested what they did not have available. These folks took out loans, borrowed money from friends or family, cashed out on an auto loan or mortgage, and put all of their earnings in Bitcoin. While a small few got lucky and managed to make a profit, most others suffered tragic fates of ruined relationships, legal troubles, bankruptcy, and more.
Avoid The Traps of Selfish Thinking & Impulsive Action
The greatest feeling/thought to watch out for is the one that says, “You must act now or it will be too late!” Following this feeling will get you in serious trouble. Avoid it at all costs! It’s quite easy for you to focus on those rare success stories of people making an investment move and getting rich overnight. This is simply not the reality you should put your faith in.
Any Bitcoin fanatic who gets in it to “get rich quick” is in it for the wrong reason, guaranteed. Bitcoin and cryptocurrency is not a get rich quick scheme. By doing so you’re not only putting yourself at risk, but you’re sending out the wrong message to other new Bitcoiners. Your initial reaction to these get rich quick stories on the news, media, and blogs should be “they got lucky!” Any large and substantial investment is the equivalent to putting an uncomfortably large sum of money on a roulette wheel table in the casino and hoping to quickly double your fortune.
Having Fun & Investing Short-Term
Absolutely. Don’t read this and think that you should avoid having fun at all costs. We live in an amazing world of technological and financial progress. There are indeed areas where you can ‘live a little’ and have fun. For example one of the most sought after investing tactics is day trading.
Day traders will keep a constant eye on the market, continuously buying and selling throughout the day. Some pick up small portions of profit; others will have tremendous success. If this sounds like something that interests you, do many hours of research before you deposit your first investing funs. And, most importantly, decide if this small sum is something you’re okay losing if you make a mistake or read the market improperly.
Day trading is quite the exhilerating experience. However, this method of investing should be treated like penny slots rather than a high-rolling blackjack table. A good figure to follow when it comes to day trading is to start out using 2% of your investment pool to day trade, and use the rest in long-term Bitcoin investing. That way, if you lose it all, it will only be a small ding in your portfolio. If you experience great success, you can recoup your initial investment and apply 1-2% more to day trading.
Day trading doesn’t have to be so fast-paced. There’s another type of investing that is in between short- and long-term trading. These investors will buy when they feel the market is in a ‘bubble’ (that is, when it’s too high for what it’s worth – and sell when they feel the price will shortly increase. These tranders will place a buy/sell order once every day, or every week, or even every few months. Like day trading, they’re not putting down a substantial sum of money; they are also playing safe by designating only a small portion to their very liquid investment portfolio.
Final Words: Enjoy the Wild Ride
If you’re like many Bitcoin enthusiasts, you see this digital currency as something that will be a core foundation of finance in years to come. You believe that the blockchain, anonymous wealth transfer, and electronic wallets will only grow and become more commonly used.
Therefore, even if you are a short-term trader, don’t take your eyes off the future. Don’t let your short-term gains inhibit your long-term growth. Enjoy this growing world of cryptocurrency. Take time out of every week to do research on the latest developments.
Understand what pitfalls and obstacles are coming in the near future. Practice explaining Bitcoin and cryptocurrency to people who do not know much about them. As you learn for yourself, set aside some time to educate others as well.
This will also benefit you by reinforcing core concepts of digital currencies that are cemented as you educate others. If Bitcoin truly is the future of finance, you’ll want to be well-equipped to serve as a leader in the coming new age of digital currency.