crypto investment strategies


Forget about the crowd, the media hype; the big gains you are seeing on the Newsprint about cryptocurrency, it is just a sheen.

Any professional investors who have been in the crypto space for a while can tell you, nothing is waterproofed in cryptocurrency investment and trading and it should be noted that 95% of people lose money whilst trying to trade or invest in cryptocurrency.

Especially retail investors though the case might differ slightly from corporate institutions like Tesla.

For the “small guys” retail investors I can tell you with every certainty that 95% of people within this nucleus are not making money on a par with the hype.

Likely, you might fall within this nucleus, so the question that begs for an answer is how can someone escape this labyrinth?

In this article, we will look at major factors that make retail investors lose money in crypto investment.

Crypto investment is one of the best passive streams of income right now if done right.

To avoid failure, here are seven factors you need to be mindful of if you want to make consistent money.

1. FOMO:

Is acrimony that means Fear of Missing Out.

Right now with the growing number of new coins being listed in the crypto market, there’s an ecstasy of rush like it was during the gold rush.

This fear of having to experience this lost opportunity again triggers when a price of a coin goes up, making people buy at the wrong time (when the price is high) with the fear of it not going back down.

95% of retail investors are guilty of this. During the last Doge Bull Run someone in my Telegram group was holding nice promising projects.

But because of FOMO, he liquidated the portfolio to buy Doge at 0.6557, when the market corrected he sold at 0.3967 losing a pretty amount of money.

2. Investing the wrong funds:

The narratives paint crypto investment as the magic wands to financial liberation; a viable get rich quick everyone is waiting for, maybe a better option to the lottery.

The mindset is wrong, and it has landed many into a financial mess.

Someone from one of the investment learning communities I moderate told me her ugly experience.

She borrowed NGN 150,000 from one of the loan App and invested in the money in crypto.

During the March-April dip that most Altcoins witness 60% correction, the coins she invested the money lost a degree amount of value and she lost over NGN105, 000.

The loan was due to be paid, so she has to withdraw NGN45, 000 and have to borrow money from friends to make up to pay the loan and its interest.

This wouldn’t be an issue if the fund is from her savings.

All she would have done is to exercise patience for the market to recover even she is likely to make a profit.

But she can’t because she is already in a tight corner. Imagine the interest incurring after the due date of the loan. Like this lady, many people have lost their house rent because they invested it in cryptocurrency.

3. Lack of patience, Fear and impulsive decisions:

This is the pinnacle. See if you are fearful, emotionally challenged when it comes to exercising patience or you normally take decisions impulsively without looking at data or involving some logic.

If this defines your personality, please forget about crypto investment and trading — this terrain has zero tolerance for people with this personality.

Crypto will you screw real bad!

To be frank, most people lose money just because of these three factors.

Even sometimes professional traders or investors who play outside his or her trading/investment rules likely will be bitten by these ugly monsters.

Then imagine a novice that just jumps into crypto knowing nothing about it.

Well, to deal with this, you need a trading and investment system.

If you make your investment or trading in line with a pre-defined system, it is unlikely that you will have issues with fear, impatience or deciding impulsively.

4. Lack of knowledge

My people are destroyed for lack of knowledge: because thou hast rejected knowledge, Hosea 4.

There’s no better way to explain this, the bible verse had said it all.

Like seriously, we bring the same attitude of not reading the manual in crypto investment, we might narrowly escape not messing up the appliance but see crypto investment, it takes no prisoner.

It will mess you up if you don’t have the right information and knowledge needed to be profitable.

5. Investing in coins without DYOR (Do Your Own Research)

I once asked a fellow to research before investing in any coin.

He replied; I don’t have to research a coin before investing in it, when I see others buying the coins I do.

If many people are investing in the coins, it shows that the coin is promising.

This might sound like rational thought, but it is just a piece of nonsense.

It is what it is!

A week later he came back to complain he just bought a Shitcoin that got delisted from the exchange.

The point is social media has perfected a way to amplify stupidity and make it looks woke.

In the same way, it has amplified Ponzi schemes and made them look legit.

If you invest in crypto with the mindset that others are buying it, you are likely to fall victim to a fake “hype” that can end up in disaster.

Always do your research since you will spend your own money, keep away from Social Media hyped coins.

6. Trading without Risk reward ratio and Stop Loss

Few people understand what the Risk-Reward ratio is.

What is a Risk-Reward Ratio?

The risk-reward ratio measures how much your potential reward is for every dollar you risk.

For instance, if your target profit is $2 and you risk $1 in case if the trade goes against you.

So, in every trade you make, you set a stop loss of $1 in case the trade goes against you.

To change the narrative, develop a mindset of always defining your Risk-Reward Ratio and setting a stop loss. Though it is not as easy as said, I am still struggling with setting a stop loss.

It’s a habit problem for me, which I am trying to fix the habit.

Apart from trading without a Risk-Reward Ratio and a stop loss, being a habit problem.

There’s another angle to it which is the lack of trading strategy or investment strategy.

This might sound technical to you as a beginner but you see strategy, winning rate, Risk Reward Ration and stop-loss make up the Holy Grail of crypto trading and investment. This Holy Grail will help you have realistic expectations. When your expectation is fixed, you will have better trade psychology, and this means one thing: profitability.

7. Trading or investing in Crypto without a well-articulated Trade strategy:

Going headfirst into the world of crypto trading with no strategy in mind is like a pilot flying an aeroplane without a radar communication system.

Crashing is inevitable.

For crying out loud this is a financial investment, people who spent years in college and after school undergo training to learn about how to invest using a well-defined strategy.

Yet they still record losses, then you think without strategy you will become Bill Gates overnight, while this kind of dream is only workable in Disney world.

8. Opportunity Cost:

This simply means the loss of other alternatives when one alternative is chosen.

This implies to crypto when you are trapped in a trade that the value has fallen to a level that you won’t afford to exit the trade or sell off the coins.

I won’t discuss the dynamics here, it will be another discussion.

Anyway, if you want to stop losing money there is just one simple thing you will do; invest time and money to learn about investment, crypto trading and risk management.

With this knowledge, you will fix all these factors.

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