Bitcoin. 5 tips for newcomers from Chris Dunn

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Tokeneo
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3 min reading

Are you taking your first steps in the crypto market? Chris Dunn, a popular trader and one of the first creators of YouTube crypto channels, has some tips for you.

bitcoin-and-altcoins

Diversification of portfolio is risk's antidotum

Although risk cannot be completely eliminated when investing, there are methods that can effectively reduce risk. One of them is diversification of the investment portfolio. "Don't put all the eggs in one basket," that's a saying every investor probably knows.

As Dunn argues, putting all your money in one (or very few) asset can be disastrous if its (or their) price falls seriously. Diversification means spreading risk over many assets.

"I think it's extremely dangerous if you don't diversify. Even if you believe in Bitcoin and crypto, it's just very risky to put all your wealth in the crypto market alone," said the trader. "I'm still making big profits in the cryptocurrency market and investing in gold, real estate and stocks," he added.

Read also: What affects the price of cryptocurrencies? 5 main factors

Thorough market analysis is the key to success

Compared to traditional markets, the crypto market is relatively young. Although the stock market has existed for over a century, digital assets did not appear until 2009, with the creation of Bitcoin (BTC), and have not yet been adopted on a massive scale, despite the growing interest in cryptocurrencies in 2017.

Therefore, Dunn believes that the crypto market will grow significantly in the coming years. In order to find the most profitable projects, investors should conduct their own comprehensive research," he says.

"I think there are already projects... ...which in 20 years' time will be like the Amazon. I think people need to be more patient and selective and make sure they are involved in the right projects," the trader added.

Sell on the top, buy in the bottom

The key principle of investing in the crypto market is seemingly simple: sell at the top, buy at the bottom. In other words, you should buy assets when market slump, and sell when the boom reaches its peak.

But it is not as simple as it seems. The point is that it is impossible to know if it is already the peak and you should sell, or if it is already the bottom of the hole and you should buy. Moreover, human nature and emotions are prone to panic, which can lead investors to sell assets when prices fall, and FOMO (fear of loss) when prices rise sharply.

Dunn is convinced that accumulating during falls of BTC or other assets in which investors really believe is crucial for long-term success. "Don't make any hasty decisions when there are sharp fluctuations in the chart." - convincing.

Read also: How to Create Bitcoin Paper Wallet - Step by Step Tutorial

Invest as much as you can lose

According to Dunn, risk management is perhaps most important. He says that most investors ultimately lose money because they do not think about risk at all. "They just think about how to get rich quickly."

According to the trader, in order to better manage risk, investors should use the famous narrative - buy only with money they can afford to lose. This makes it more likely that, in the event of a sharp decline, they will not make a hasty decision and there will be no panicky sales and thus huge losses.

Blame yourself and only yourself

One of the most common mistakes made by beginners in trading is to rely on others and try to hold someone else responsible for their decisions.

"(In the marketplace) many beginners come and buy something because they watched a YouTube video or listened to a guy on CNBC and then blame other people when they lose money. If you want to be a real investor, you have to take 100% responsibility for all your decisions. - summarized Dunn.

Read also: Proof of Work - what it is?

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