Investing in the cryptocurrency market is a journey of learning and experience and along the way, we will make mistakes. However, some mistakes we shouldn’t have to make.

Even Warren Buffet would agree,

It’s good to learn from your mistakes. It’s better to learn from other people’s mistakes.

I have made my fair share of mistakes when it comes to investing in the crypto market however, none of the mistakes have been severe enough that I haven’t been able to recover from it.

That said, there is no shortage of mistakes cryptocurrency investors have made. Like the guy who mistakenly put a hard drive with 7,500 bitcoins in the trash while clearing out his home. To help avoid these mistakes and learn from others, over the years I have put together a set of rules and guidelines I try and stick to which I would like to share with you.

These guidelines are grouped into six sections:

Determine Your Involvement in Crypto
The Psychology of Trading
Become Autodidactic
Crypto Setup & Administration
When Buying Crypto, and
When Selling Crypto

Determine Your Involvement in Crypto

Cryptocurrency investing can be a part-time hobby or a full-time career. You get to choose. However, if you are not careful it can overtake your life.

Adopt a Balanced Lifestyle

When I first started my journey in cryptocurrency investing, I dove right in and started day trading, this was early 2017. This meme says it all.

Don’t Day Trade

The cryptocurrency market is live 24/7. Unless you are young or some sort of expert, leave the day trading to the bots and AI traders. In the early days, it was possible to day trade. However, now with all the automated trading, unless you are looking for premature baldness, sleepless nights and no social life, don’t bother.

The Psychology of Trading

Once you have determined your involvement in cryptocurrency investing, understand the psychology behind the market. It can be highly addictive and there are many ploys in use to force your hand (either to buy or sell).

Cultivate Patience (Avoid FOMO)

The cryptocurrency market isn’t going away. There will always be a newer and better technology and coin or token around the next corner. There is no need to rush. If you feel rushed, chances are you are doing something wrong.

Avoid Emotional Trading

Determine beforehand your plan for your trade. Are you looking for short-term or long-term gains? Once you make your decision try and stick to it.

The cryptocurrency market is highly volatile and one day you may have thought you lost the bulk of your investment and then a day later it bounces back. Don’t sell in fear. Keep those diamond hands strong.

Don’t concern yourself with the trades you could have made or should have made and don’t worry about other individuals’ successes or failures. This is a personal journey. Focus on your own trades and only trading when you have the appropriate mindset.

Become Autodidactic

To be autodidactic is to be a self-learner. Those who truly do well in cryptocurrency are self-taught and spend much of their time learning about the market.

Invest in Knowledge

Your involvement in this industry can be seen as a skill to be honed. It begins with gaining knowledge. New technologies will always be emerging in this market and it's up to you to determine what is important to learn and not.

Specialize in a Niche Market

There are literally tens of thousands of cryptocurrencies actively traded daily. There is no way to know what is happening in the entire market. Find a niche, an area within the market you are interested in and become an expert within that niche.

Know the Season of the Market

The market as a whole will have its ebbs and flows. As the saying goes, the tide floats all boats. In a bull market, all coins will likely go up. even sh*tcoins. A bear market can be a testament to the true value of a coin or token.

Know when to play the game and when to stand on the sidelines.

Think Long-term

The cryptocurrency market is only eleven years old. We really have no idea of the potential of this market. The real profits come from staying in the game for the long haul, especially for platform coins.

Setup & Administration

There are some cardinal rules when setting up and administrating your cryptocurrency accounts. Many of these you have likely heard before, but it's also (unfortunately) necessary to mention them.

Always use a hardware wallet

Where reasonable and possible, use a hardware wallet. If the hardware wallet doesn’t natively support the coin, chances are the hardware wallet can at least be used to authenticate a third-party wallet.

Always have access to your private keys

As the expression goes, if you don’t own the keys, you don’t own the crypto. This also goes for exchanges. Don’t leave your crypto on an exchange (you don’t own the keys) or other ‘online’ service. If you do, then be fully aware, you don’t own the crypto.

Unless of course, you are Chuck Norris.

When Buying Crypto

The biggest mistakes in crypto happen when you either buy or sell. Let's take a look at some guidelines for when buying cryptocurrency.

Have a Plan and then stick with it

Write it out and then stick with it. If you don’t you may get carried away.

Do Your Own Research

This is one you have likely heard many times. If you are going to invest in a cryptocurrency, then do your own research. Make your own decision. To be able to understand the market and price movements is a skill. Hone that skill.

When to Buy — Buy During an Uptrend

It’s generally good advice to buy during an uptrend. Newton's first law of motion comes into play here — An object in motion tends to stay in motion unless acted upon by an unbalanced force. Try and buy in early on the upward trend.

Diversify Your Crypto Portfolio

To help minimize risk in a highly risky market, it’s necessary to diversify. Diversity in both the types of coins and market capitalization of those coins. Low-cap cryptos are great, but also have high volatility. Mega capitalized cryptocurrencies have lower volatility. Have a mixed bag of caps.

Buy the Dip

Always easier said than done. Try not to chase the price rise or buy-in at the peak. If you are not already in the market, then watch the crypto and buy in the dip. There will always be a dip. Just be patient.

Do Not Chase the News

This tends to occur typically with pump and dump groups and mainstream media. Be contrarian with your investing and make your move before the bulk of everyone else.

Invest in Fundamentals

Let the business behind the cryptocurrency drive up the demand and price. The market price should be a reflection of the value of the cryptocurrency project. Buy into solid cryptos.

Don’t invest more than you can afford to lose

We have all heard this one. It doesn’t matter how ‘sure’ you are, don’t mortgage the house or risk more than you can afford to lose. If you are short on money, don’t bet on the market — find another way.

Avoid Scams

If it is too good to be true, it likely is. The cryptocurrency world is still highly unregulated and there are lots of scams. Use common sense and your better judgment. If it sounds too good to be true…well, you know the rest.

Never Go All In

It’s an unnecessary risk. Always have some to buy the dip and always have some for more trades. Diversifying your risk is the name of the game.

Do Not Leverage Trade

Don’t do it. Period. I know too many personal stories of people who lost a lot doing this.

Do Not Buy Shitcoins

Do not buy shitcoins. Period. They may be profitable for a short period, but if there are no fundamentals keeping the market price, it will fall. Don’t be left holding a bag full of worthless shitcoins.

When Selling Crypto

Once you have made your investments, the next question you should be asking yourself is how and when to exit the market. Unless you are looking to make your inheritors wealthy, you will need to exit the market.

Have an Exit Strategy

Don’t HODL for life. There is no point unless you want to make your descendants rich. We don’t yet live in a world where we can easily buy everyday goods with cryptocurrency (maybe one day soon). Until that day, determine how and when you will convert your crypto into fiat.

Do Not Panic Sell

If you have followed the above advice, you would already have an entrance and exit plan before you buy-in. Try and stick to the plan. There are times when the plan will change, but don’t change your plans out of panic or fear.

Exit the Market at its all-time high

Know what season the market is in and where possible, time your exit when the market is at its all-time high. It would seem that every three or four years the market hits an all-time high. Be patient and when you exit, try to exit at its peak. You may have to wait a while, but the massive gains would be worth it.

Don’t Get Attached to a Coin

We all have our favorite coins and tokens, but at some point in time, you will likely need to sell. Selling is a clinical decision, not an emotional one.