Scenario: Bob see's people saying BUY BUY BUY! on Token-X -the price is climbing- Bob doesn't know what Token-X is, but he whips out his money bags and spends all of his money getting as much as he can. 24 hours later, Token-X crashes and Bob is left with 1/100th of his investment. He decides to sell and take the loss.
Where did Bob go wrong?
A: Bob didn't immediately visit the website for Token-X and read the "Whitepapers" and roadmap which would have told Bob what Token-X is and what it does and why it's got a future.
B: Bob invested money he couldn't afford to lose. Always a bad practice.
C: Bob sold when he should have held "#HODL" You never know, Token-X might go back up again, but that depends on what's in the whitepapers (See A).
Always do your own research, not only on the cryptocurrency token of the week, but on the whole eco-system of cryptocurrency itself. Understand the fundamentals of Decentralized Finance and what that actually means.
2: Never invest what you can't afford to lose.
Sometimes, the market will crash and some tokens won't recover. If you're trying to be a "trader" and buy low to sell high to buy low to sell high etc. etc. then you need to be sure that you're using money you won't need a week later for rent or food. The emotion of "panic" will cause your mind to make stupid decisions and you'll end up broke.
3: Keep emotion out of your trading.
Too many stubborn people fall in love with a crypto-currency and go all in. They think that because it's "destined" to rise that they must hold it and buy more. Sometimes this is true, but crypto-currency is always evolving, newer and better technologies are emerging from trial and error and some tokens cannot compete. Some tokens are actually useless, but are cute, like #Dogecoin, which is pumped by celebrities, who undoubtedly have the means to buy millions, pump them with a few choice words, then sell them off when all the peasants raise the price by buying them up. Sometimes the peasants can make a few bucks, but don't get attached to coins that have no fundamentals or tech. Especially when there's no cap on the supply.
4: Understand Market Cap.
Market Capitalization is the (value of the coin x circulating supply). The circulating supply is how many of that coin is out on the market for buyers and sellers to exchange. Bitcoin #BTC has a circulating supply of 18 million with a total supply of 21 million that will ever exist. Scarcity =value, that's why Bitcoin is worth over $50,000 per coin, plus is the alpha-crypto, the first.
People will tell you to get into a coin on the cheap, only .0000000005/coin, but a little research will show you that the coin has a circulating supply of 100 quadrillion coins and has no case-use. ie. the coin does nothing. Now, something like #Safemoon started with a supply of 1 quadrillion coins, but has employed a #Tokenomics mechanism which burns 5% after each trade, while offering another 5% to a liquidity pool that will keep the coin stable. So essentially, in time, as the coins supply drops, the value increases and it's pool of liquidity becomes a natural reserve. Genius. Then you have #Doge coin that has no max-supply and does nothing. Between BTC, SAFEMOON and DOGE, smart investors will avoid DOGE.
5: Fear Of Missing Out (#FOMO)
You will never experience the fear of missing out if you study and understand the first 4 commandments. FOMO is built by hype with no research. Do Your Own Research.
6: Don't trade chaotically.
Have a strategy and a plan. Do your research. Know what you're buying into and why. If the tech is good, the price will rise. #DigiByte or #DGB, is basically Bitcoin, except 40 times faster, 100% decentralized and has genius level tech protecting it. When you find coins such as this then you must invest long-term. Hold it and buy on the dips. Thus it is the same with Bitcoin and Etherium. These power cryptos are core to the DeFi multiverse and should never be traded recklessly.
7: You can avoid losses by not selling during the dips.
Fees are a killer for traders who don't do their research. Buying and selling crypto incurs fees from the exchanges you're on and if you're not making profitable trades, you're going to lose more than your initial investment. There are no crystal balls, but selling when the currency has fallen below your purchase price and then paying the fee on top of the loss is a double whammy. If you have done your research and the coin is strong technically then the price will go back up eventually, wait.
If you need to trade off some BTC to buy into a strong new coin (because you have no free cash flow, then take the hit and be sure the new coin you're investing into can give you a return that will allow you to sell a small portion to replenish the BTC you borrowed from yourself.
8: Keep your Seed Phrases well protected.
If you can't access your crypto, it's not yours. The exchanges own your crypto, so unless you have a personal wallet (highly recommended), you're going to need to keep your seed phrases in a fireproof safe. KEEP ORGANIZED. Make sure you write a will for your loved ones with all of your holdings and phrases so they don't get left out.
9: Volatility will occur.
Crypto-currency is a calm sea, a stormy sea and a voyage to Valhalla if you play it right. Do not panic. Do not panic. Do not panic. Prices will go way up and way down. Always look at the 12 month chart, not the 24 hour chart.
10: Have Fun.
Crypto-currency is a whole new system of finance that will eventually be the norm. Fiat currencies are doomed. The endless printing of the US Dollar means an endless circulating supply and that means inflation. Crypto is deflationary, it increases in value over time. Crypto is also decentralized, meaning there is no "central bank" or central anything controlling the flow. Bob can send 1 BTC to Beth as if he was handing her a block of gold.
So have fun. Know what you're investing in and don't panic. The only thing that can stop cryptocurrency is a total loss of internet and if that happens, money won't matter anyway.