Obligatory Notice: (It should go without saying…) Cryptocurrency is a highly volatile market. You can make money, and you can lose money. Therefore, do NOT invest more than you’re willing to lose. Treat cryptocurrency investing as you would treat entertainment funds spent at the casino. If you have questions about the basics of Bitcoin and cryptocurrency read our Bitcoin/crypto FAQ.
Now that we got that out of the way. I’m not gonna waste your time. You want to have make a little (or a LOT) of money investing in cryptocurrency, AND you want to have fun while doing it. Follow the step-by-step guide below to get started. The only requirement is having a brain 😉
1. Sign up for a cryptocurrency exchange.
You need an exchange that has live updating price chart and a diverse selection of currencies to invest in. I recommend YoBit and Binance. They have the most favorable reviews AND they are the quickest to get started. It literally takes minutes. Click here to read my comprehensive YoBit review.
2. Purchase Bitcoin.
This step depends on what forms of payment you have available. If you’re willing to wait a few hours to a week, then you can use Coinbase. Another option is to use Changelly to convert one cryptocurrency to another.
Alternatively you can buy Bitcoin from PayPal through VirWox. It sounds complicated, but it’s really not! You sign up for an account using this link. Then, you purchase “SLL” which stand for Second Life Lindens. It’s a virtual currency used in a very, very old game. Don’t worry about that. You can then convert SLL into Bitcoin using the interface. The whole process takes minutes and many consider this to be the fastest way to buy Bitcoin with PayPal.
3. Transfer your Bitcoin.
Deposit them in YoBit or Binance. As soon as the transfer completes (after several network transaction verification) then you can begin trading right away!
4. Decide on your first investment.
These exchanges are very fast paced, and they will take getting used to. Therefore, I highly recommend you do very very small purchases of altcoins to get used to the interface. Think of these purchases as less than 1% of your total, that way if you make a mistake or choose a poor-performing coin, it hardly dings you.
I’m not really going to mention what coins you can invest in because they are constantly changing. A coin that might be hot today may be obsolete tomorrow (or it may be the next Ethereum!) It WILL take you a few days or a couple weeks before you can start making money on these exchanges.
Play around with them. Have fun. As you get more familiar with buying and selling at the right times, then you can put more and more investing funds into these coins.
An Example of Investing in a New Altcoin
As of this morning, a very new coin called “Ember” was worth… literally 0.00000001 Bitcoin each (1 satoshi). Then it increased 7x within a few hours. As of writing it’s down to 0.00000005. It may continue to go up, or it might be another flash in the pan. However the point I’m trying to make: people who invested at 1 satoshi are now 5-7x richer (if they sold now). That’s how volatile cryptocurrency can be.
You must pay attention to the markets. Keep an eye out to see when new coins are released to trade. It might be worthwhile to invest a small amount (anywhere from $5 to $50 depending on your financial stability) on several new coins just in case one of them increases 20X+ and makes you a lot more money. This has happened, and many seasoned day traders have an idea what coins have a chance to increase substantially.
Investing Smart, Safely
ALWAYS enable 2-Factor Authentication (2FA). In the chance that your investments become very successful, you want to ensure that your account is secure enough to keep your coins safe. NEVER give out your private keys. Always have 2, 3, or even 4 copies of your private keys in very safe places. Hint: Bank Vault (a small fee is worth thousands or more in cryptocurrency!) If you have family members whom you trust with your life, you can leave a copy with them to keep in a locked storage they have (this has backfired, but only rarely). Don’t let a cold storage wallet ever touch the internet. Do not keep a large sum on a phone or computer connected to the internet. Finally, wear a tuxedo and learn about trilbies!
Invest a Little in a Lot
A great tactic is investing small amounts in MANY different coins. This is a very recommended newbie investor tactic, because you never know what coin will take off and become huge. An example: Ripple used to be worth pennies, and now it’s worth over a dollar at the time of writing. Some people experienced 100x on investment. Others bought too late and realized their mistake and experienced a loss.
Minimize Your Losses
If you feel that you are late to the party, you might be right. By the time a coin increases to a noticeable level, many investors start to bail out and take their winnings with them. This is called dumping. Therefore, it might be best to invest when there’s not much activity in hopes that increased activity will make you rich.
Don’t Try To Predict Ups and Downs
As soon as you try to predict if the price will go up and down (without much experience day trading) you’ll fall victim to the new investor’s curse, which is making a foolish investment and then selling at a loss in order to prevent more loss. You repeat this a few time and suddenly realize your 0.01 Bitcoin lighter!
That’s why I recommend the “Little in a Lot” method. Imagine that you invest $10 in 10 different coins. Now let’s say 3 stay the same, 6 go down, but 1 goes up 50X. Your total worth is now worth $500+, which is 5x total. This is called diversification of assets. This is NOT promised, which is why you have to invest what you’re willing to gamble.
Don’t Listen to Success Stories Too Much
There will ALWAYS be success stories of someone becoming 6-figures rich or a millionaire overnight. These stories are not promised. People will tell you, “Just pick a coin and invest, you’ll get rich!” This is a very toxic mentality that drives too many people into financial distress. This is why you should play with, literally only a few dollars at a time (expecting to lose them, of course) while you get the hang of reading the price graphs
Understand a Market Order (Taker) and a Limit Order (Maker)
Market orders are costly over time. A market order is when you buy on the upswing and sell on the downswing. market orders are purely reactionary; you start to see a coin’s value going up so you buy before everyone else does. Then you see the market start to go down, so you sell off before it returns to the trend line.
Maker orders are when you bank on the value of a coin to go opposite than the direction it’s in right now. For example if a coin’s value stays at $0.10, you’ll be a maker if you set an order to buy at $0.09, and you’ll be a maker if you set an order to sell at $0.11.
Don’t Forget to Have Fun
Never ever before has day trading become open to the general public. 10 years ago you’d have to have a large sum of investments and have an investment broker to help you get involved in trading. Even then, you’d be successful even if your annual return on investment went up only 5%! These days many people are experiencing 5-10% ROI in a single day. This is crazy.
Is Day Trading Here to Stay?
Most definitely not as we know it today. Yes, cryptocurrency day trading will be around for a very long time… but it’s my personal theory that we’ll see less and less of these new AltCoins released over time. It’s almost like we’re in a huge hype bubble, and everyone wants to create their own AltCoin… it’s very chaotic. People are getting rich, and people are losing a lot of money. Both of those scenarios happen completely on accident.
Therefore have fun while the cryptocurrency market is still finding its true value. Pay attention to the emerging technologies involved. Keep an eye out for new coins. Watch out for those market upswings before everyone else does. Don’t invest more than you’re willing to gamble. Have fun!
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