Cryptocurrencies and meme stocks are in the news almost every day now.

Trading Bitcoin, Dogecoin and other cryptocurrencies can be exciting. Same goes for AMC, GameStop and others. In 2021, many people have made fortunes doing this, many more have lost money. The potential returns can be very attractive, and even the biggest skeptic can get FOMO — fear of missing out.

I am not a financial advisor or expert trader. What I am is a person with 5 years of experience investing and trading who has made some pretty bad mistakes when I first got in.

It’s good to learn from experience — but as I like to say it is better to learn from someone else’s mistakes than your own.

So learn from mine:

1. Invest only what you are willing to lose.
2. Are you investing or trading? They are not the same thing. In life, it is important to know what you are doing before you start doing it. If we are talking about your hard-earned money, it is even more important. There is no 100% guarantee of success, but like anything else the more you are educated in something, the better your chances for success.
3. Trading is not a recommended activity for beginners. Trading is a much more complex and risky activity than buying and holding Bitcoin or Ether as an investor. You can easily lose your money in many ways, most listed here.
4. Trading is a zero-sum game. Meaning, someone wins and someone loses. You try to buy low and sell high to someone else. Sometimes you buy high and sell low. You are buying and selling from other traders in the market.
5. DYOR — do your own research. This applies to the general subjects of investing, to trading and to Bitcoin & cryptocurrencies. This also applies to specific companies, projects, or cryptocurrencies you are considering trading or investing with. A friend telling you that something is going to “moon” or finding out about a 50% increase after a celebrity endorsement doesn’t count.
6. Emotions can overpower anyone. This can lead to bad decisions, especially if you feel this doesn’t apply to you. Even very experienced professional traders can succumb to emotions, both the terror of the crash and the hysteria of the boom. Are you a beginner or prefer to be a lazy investor? Do you want to conquer these emotions easily? You may want to choose dollar-cost averaging (DCA) as a strategy, which you can read about here.
7. Make and Follow a Strategy. This doesn’t need to be complex. Have an entrance strategy and an exit strategy. It is important to decide at what percent gain or loss you will sell. If you are trading, what would you do if the price dropped 20%? 50%? Went up 20%? 50%? 100%? When do you take profits? When do you sell at a loss? Only a fool and a beginner thinks they can win on 100% of trades. This is the hardest lesson to learn, and I don’t think I can teach it to you. I just hope you listen. Loss is part of the activity. If you can learn to limit your losses, you will increase your chances of success.
8. You Are a Small Fish — Beware of the Whales. In trading, you are often dealing with individuals and companies with huge amounts of the asset who can cause massive price swings when they buy or sell, which usually even the seasoned trader cannot predict or control. These are known as whales. Think of regular investors or traders like small fish — a whale makes huge splashes when they move and the small fish have no control. Now imagine a giant whale in a small lake or pond. The smaller the market, the more effect a whale can have.
9. Crypto Exchanges are Like a Public Bathroom — You Go in, Do Your Business and Get Out. This is a healthy attitude instead of the extremes of being too scared or too careless. If you decide you want to be an investor and hold for years or even months because you strongly believe your cryptocurrency will go up in value, it is generally not recommended to keep your crypto on exchanges, but instead on a software or hardware wallet. Why? Because of hacks on crypto exchanges. If you have been around the crypto space long enough, you have heard about some of these, where an exchange loses some or all of its (and your) money/crypto. Or even worse in several cases an employee or owner ran off with the money or gambled it all way trading other’s funds. To their credit, Binance and KuCoin recently survived hacks and their customers funds were not affected. If you don’t want to go through the trouble of using the recommended course of a software or hardware wallet, the next best thing would be an exchange that is in your own country, that is regulated and you can verify has insurance against hackers. So, in the unlikely occurrence that they do run off with millions, you can join the class action lawsuit and get your funds back.
10. Protect Your Funds. If you decide to get a hardware wallet (it looks like a flash drive) or a desktop wallet (software), this puts you in complete control of your funds. No exchange can control your funds, no government can order it seized. And no one can hack it without your password. Just also realize that you are your own bank at this point, so if you lose your password there is no customer service number to call. Your funds could become inaccessible forever. And no one stole it, so you can’t sue someone. If your password is stolen, your funds can also be taken.
11. Read and Follow the Instructions on How to Send Crypto Exactly. You can lose all your crypto if you alter the instructions of how to send and receive. One of these is that the wallet address you are sending to has to be the exact same wallet and the exact same cryptocurrency. For example, if you send Bitcoin to a Bitcoin Cash wallet, or Ether to a Litecoin wallet, your crypto is lost and cannot be recovered. There may be other rules as well depending on the cryptocurrency.
12. Watch Out For Scammers. This is the most important. There are many out there, and they attempt to contact me on Facebook, Instagram, Twitter, YouTube and elsewhere. To learn some tips on how to spot scammers, I wrote an entire blog.
13. When Not to Trade. This last one sounds lame to write but it is very important. It is an unsafe practice to buy, sell, send or trade while you are distracted or not 100% mentally. This could include when you are: in a rush, traveling to and from work, upset from a recent fight, very tired, in a conversation with someone, or under the influence of alcohol, drugs or strong medicines.

Stay safe out there and have fun. I wish you lots of success!

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This content is for educational purposes only. It does not constitute trading advice. Past performance does not indicate future results. Do not invest more than you can afford to lose. The author of this article may hold assets mentioned in the piece.