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Rules of cryptocurrency trading for new investors

With very little data for fundamental analysis or past performance cryptocurrencies are a new investment class. When entering this high-risk high-reward arena, here are some tips to keep in mind:

  1. Very big bets should not be taken

In the past one year the phenomenal returns given by some cryptos are mouth-watering. Six months ago, if you had invested Rs 10,000 in Dogecoinnow worth’s Rs 5.75 lakh. But these numbers shouldn’t get you carried away. Co-Founder of GlobaliseVineet Nanda said to invest only on what people are willing to lose. Start trading with small amounts even if you have a high-risk appetite. The CEO of Giottus Cryptocurrency Exchange Vikram Subburaj advised people to not put more than 2% of their overall portfolio in cryptos. Before you allocate more read up about various coins and understand their value and prospects after you get familiar with the arena.

  1. People should be ready for extreme volatility

The best way to learn aboutcryptocurrencies is by investing in them. But you must be able to digest very high volatility as it is a high-risk high-reward game. An overnight fall of 70-80% is also a possibility as the May crash showed. Keep in mind that from its April high of Rs 50 lakh even a blue chip like bitcoin is down 48%. Founder of FinFix Research and Analytics said that people should enter this market only if their stomach can withstand extreme variations and the implications of an investment going wrong.

  1. A trustworthy platform should be used

New outfits are mushrooming every day and the crypto space is not regulated in India. Investors need to be careful when choosing the intermediary because the government has hinted that it will follow a calibrated approach towards regulating the industry of cryptocurrency and the Supreme Court has struck down the RBI ban on cryptos. The Co-founder of GlobaliseVineet Nanda said that people should invest through an established and trustworthy platform so that if there is a regulatory setback or the promoter company goes under your money does not get stuck. Click here to invest on cryptocurrencies safely along with accurate trading signals.

Consequently, based on the inherently human cognitive bias to extrapolate the future from the past FOMO triggers newcomers to place large investments after course jumps. However, common trading wisdom generally advises to buy at the end or after a recent dip, or as another simple crypto-trading rule states: BTFD and argues the opposite.

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