There is a tendency for blockchain technology and cryptocurrency investment to be regarded with awe, as if it were some kind of special class of investment where the normal rules don’t apply.
Mystery, hype, FUDD, and even smear campaigns have created an aura of mystery that makes this investment option something certain investors are hugely enthusiastic about, while others feel completely intimidated.
Yet, if you are in the latter category, there is no genuine reason to fear the technology itself. The real problem when an ICO goes bad is not the technology but the people behind the offering. If you do your home work and follow the normal investment rules, there is absolutely no reason to fear this type of investment more than any other type of investment.
Indeed, careful selection of your investment choices means you can potentially make greater profits than is possible with ordinary investments such as shares and commodities.
All you need to do is follow the six simple steps that apply to all investment classes, plus accept that all investments carry some risk.
1. Investigate
The most important step when deciding to buy into an ICO is to thoroughly research who is making the offering and why. Don’t put any less effort into this than you would into an IPO investment.
The people behind the offering are the most important factor. Don’t be blindsided by promises, look for facts and consider the track record of each of the key players involved in the ICO.
2. Anticipate
It’s not easy to accurately predict what will happen with any ICO, but you can get some reasonable sense of what trends to look for based on the historical performance of other ICO releases.
Of particular interest should be the failed ICOs, because it is those that will be most helpful in helping you avoid significant losses. When you understand trend patterns, you’ll be more accurately able to predict how a particular currency is going to move.
3.Verify
Jumping onto something too rapidly without testing the accuracy of your investigations and anticipations is not usually a smart move. You should test the waters a little and verify that you’re on the right track, gradually increasing your investment scale if you’re certain it’s a sure thing.
Check that everything in your research is actually playing out in reality. It’s very easy to fall into the trap of making biased predictions before you actually put money into something.
4. Diversify
There’s a lot to be said for not putting all your eggs in one basket. Spreading your risk and doubling down on the selections that perform to expectation is the right way to go.
If you find some of your selections are dragging you down like anchors, don’t be afraid to cut those investments loose. It will allow your other investments the chance to soar.
5. Buy Low
Unskilled investors are attracted only to the most successful performers, but this leaves very little room for growth. The more successful an individual selection is, the more it will cost to get involved with it, and the less room there is for growth.
Furthermore, there is more chance of making a loss on short term plays, because buying at high prices means there’s more chance that the selection is overvalued. Buying in at low prices on selections that look promising allows you maximum chance of seeing real growth, and your buy in price per unit is a lot lower.
6. Sell High
Another trap new investors fall into is clinging on to their successful investments. This can leave your investments stagnant, and also creates a risk of experiencing short term losses as the price fluctuates relative to others.
Anticipate where you feel the natural ceiling is, and slowly begin selling off some of your investment when the price is getting close to that ceiling. Don’t just dump your investment or you’ll lose money that way. It could create an impression that turns into a stampede.
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