The volatility of the cryptocurrency market has made it quite notorious and it is known for changing and evolving constantly. Even though it has only been around for a decade, it has already undergone a number of changes and numerous additions have been made to it as well. Therefore, experts like Shay Benhamou stress repeatedly that investing in cryptocurrencies is not like other instruments and even the most skilled traders have to face a horde of challenges. You have to learn how to select the best crypto exchange for your investing needs, the strategies to use and the mistakes to avoid.
You need to know what elements should make up your strategy in order to maximize your investment. Luckily, some expert advice has been put forth by Shay Benhamou, which can turn out to be quite helpful in the long run:
- Diversify your assets
One of the oldest proverbs that you have probably heard repeatedly in the investing world is to not put all your eggs in one basket. All experienced financial traders follow the rule of diversification. This simple principle should also be followed by all crypto investors who want to achieve success. Yes, Bitcoin is the first cryptocurrency and the market leader due to which it draws the attention, but it is definitely not the only crypto out there. You should spread your investment across different cryptocurrencies in order to earn maximum returns on it.
Rather than opting to invest in a large amount of a specific cryptocurrency, it is better for you to trade a small amount of several cryptocurrencies. Once your profits start coming in, you can increase the number of cryptocurrencies you have invested in, along with your trading volume.
- Have a budget in mind
Planning your budget before you invest is recommended by Shay Benhamou and this doesn’t just apply to crypto investment, but for any investment you make. It doesn’t matter how financially stable you are; having a budget is vital. It is not a smart move to put your financial stability at risk and you should always invest what you can afford to lose. Even if you can afford to lose the amount, it is still a good idea to implement some risk management strategies to reduce the chances of that happening. There are different tactics that you can use for this purpose, which include using stop loss. This can be a smart move for the crypto market because it is extremely volatile and your losses can multiply very quickly.
- Keep your emotions under control
Listening to your heart is not good advice where the cryptocurrency market is concerned. Making decisions emotionally can result in disastrous consequences that you may not have anticipated. For instance, people may hear some rumors about a cryptocurrency and spread it around. This can often cause investors to panic and they make their decisions based on these rumors. But, according to Shay Benhamou, it is better that you play the long game and not sell off all your coins. Even if your crypto goes down, there is a good chance that it will recover. If you panic sell, you will not be able to recover your losses. Crashes are a common occurrence in the crypto space and you shouldn’t let them get to you. Learn to exercise patience and have a clear mind when you are making decisions.
- Pay attention to security
It is not just the volatility that has made the crypto market so famous; the security issues associated with this space have also contributed to its notoriety. It seems quite convenient to investors to leave their digital assets in the wallet provided by the exchange they are using. This saves you from a lot of hassle and makes it easy to manage your cryptocurrencies. But, if the exchange is hacked or its security is compromised, your assets will be wiped off. Are you willing to take that risk?
Obviously, you want to avoid such a scenario and the best way to do this is by opting for your own secure wallet. Shay Benhamou advises that you should look at the various options and do an analysis of their pros and cons before you choose one. Don’t share your private keys with anyone and take advantage of 2FA (two-factor authentication) for enhancing the security of your wallet.
- Don’t follow the crowd
Yes, it is important that you keep up with the latest news and trends related to the crypto market, it doesn’t mean that you have to do what everyone else is doing. You will find a lot of data online, but not all of it is accurate and reliable. You need to analyze the data and make it a priority to double-check information before you follow through. It is a good idea to listen to the masses, but this doesn’t mean that you have to follow them as well. Keep your ear to the ground and only follow a couple of reliable sources.
- Avoid expectations similar to the stock market
A crucial thing that every crypto investor needs to understand is that the crypto market is very different from the traditional stock market. As per Shay Benhamou, a lot of people confuse the two and this can result in mistakes. As mentioned earlier, the crypto market is a volatile one and it can be difficult to predict, but it does have the potential of generating huge returns. it doesn’t behave like the stock market and while some of the trading strategies of the stock market can be used, not all of them will be effective.
- Find your own way
Lastly, Shay Benhamou recommends that you don’t follow the trends and look for your own options. Consider emerging cryptocurrencies, study and analyze them and make investments according to their potential. This can actually boost your chances of making higher returns, as you never know when you might end up discovering the next Bitcoin. Sure, there are risks, but it can be a win-win as well.