For an asset class that is new, extremely volatile and therefore highly risky and controversial, the crypto market attracts a considerable number of novice traders and investors. People from all parts of the world and walks of life enter the crypto space hoping to decipher its intricacies and make substantial gains.
However, not everyone has a positive experience while navigating the crypto space. As with all other investment vehicles, there is no guarantee of success, and it takes a lot more than opening an account on an exchange platform and learning how to buy Bitcoin with bank transfer or other preferred methods to make a profit. On top of it, the lure of high earnings, which draws in both versed and rookie investors, is overshadowed by the danger of severe losses.
You can never be sure what to expect when you step into the crypto realm. Prices can go up, down, or sideways without any warning, making it hard even for the most seasoned of investors to keep up with the changes and make sense of what’s happening. The only thing you get to control in this hectic environment is your own action, so knowing when to take the leap and when to end your venture is crucial for any aspiring crypto investor.
So, when is a good time to start investing in crypto, and when should you pull out? While there are no hard rules to abide by, the following recommendations should help you get the timing right.
Kicking off your crypto journey
The first step is understandably also the hardest one, but you can have more peace of mind when you know you are properly prepared for it. So, here are a few boxes you need to check before you embark on your crypto trading journey, as follows:
Adequate crypto literacy
If you’re planning to invest in crypto, you need to know what you’re dealing with. This means you have to educate yourself on the topic of cryptocurrencies and learn as much as you can about the market, from basic terms and concepts to the technology that enables them, the factors that influence market movements, and the different types of crypto projects that are out there with their specific characteristics and features.
Make sure you keep a close eye on market developments and everything that’s happening in the crypto sphere that could potentially impact your investments. To do that, you also need to learn how to decode crypto metrics and use different tools that will make it easier for you to navigate the market. This will help you become better at managing risks, avoid emotional trading, and make smart decisions that can set you on the path to success. Only after you’ve reached a good level of crypto literacy can you seriously consider getting into crypto.
Good financial health
Investing in crypto while you’re struggling financially or are on the verge of bankruptcy is never a good idea because you might end up losing the little money you have left. Taking out a loan is also extremely risky. This doesn’t mean you need to be rich to invest in crypto, but you do need to have a healthy financial situation before you get started.
The purpose of crypto investments is not to help you get out of poverty or solve all your financial issues but rather to serve as a solution for generating additional income. Therefore, you should only begin after you’ve sorted out your finances and made sure you have enough money to fund your crypto investing.
A solid investing strategy
With money to spare and the necessary knowledge, you can start developing an investment strategy that will help you seize opportunities while minimizing risks. There are various strategies that investors employ based on their needs, risk tolerance, and goals. You should learn about these different methods and be ready to apply the ones that best suit you. As a beginner, you need to start with a diversified portfolio to compensate for potential losses and invest only the money that you can afford to lose.
High level of confidence
Ultimately, it all comes down to confidence. You can start investing whenever you feel ready for it and consider you have the knowledge and skills to safely and successfully sail the crypto waters.
Calling it quits
Knowing when to stop is just as important as knowing when to begin, so here are some tell-tale signs that it might be time to take a temporary or permanent break from crypto investing.
You’ve reached your financial goals
If you’ve already achieved what you set out to do and have no further goal in mind, it might make sense for you to walk away before things start going downhill. It’s often said that the best time to quit crypto is when you’re still making a profit, as you can end things on your own terms and not be forced out of the market by unpleasant circumstances.
You’ve given in to FOMO
If you’re making decisions based on emotions instead of reason and you’ve realized that you can’t control your impulses when investing, you should probably stop. FOMO is a hard-to-resist force, and a lot of investors are thrown off track by it. Besides, crypto investing is not for everyone, so there’s no shame in admitting it’s not something you’re cut out for.
You’ve experienced major losses
If you’ve made one or several bad calls and lost it all, it’s pretty obvious you have no other choice but to back out and exit the crypto scene. You may be tempted to start all over again once you get back on your feet, but it may be wiser to try your hand at something else instead of knocking at the same door, hoping for a different response.
In the end, finding the right time to enter or exit the crypto market is a personal matter, so you need to think long and hard and decide what’s best for you.
