So, you have decided to take your first step into the world of bitcoin and cryptocurrency. You have probably had friends telling you they are making lots of money, buying this project or that project. The question for you is, how do you know what coin projects will be the next big thing?
If this is your first time investing in any type of asset there are steps, you should take before putting money into that asset.
First, you should do your own due diligence for any recommendations you receive. How do you do this?
If your friend has made a recommendation to you the first question you should ask them is why do they like the project? In my experience, if they cannot tell you this in 3 or 4 sentences that make sense to you too, then do not invest.
If they give you an answer that makes meets the criteria above, the next question should be how much they have invested? What is the target price for profit? And at what price do you decide to sell or re-evaluate the project.
After that, it is time for you to do your own research on the project. I would not ask them to give you websites or videos to look at, as this may be biased toward their own investment.
The key to doing your own research is to determine your own investment criteria. There are many ways to research the project and the best place to start is the website of the project and its whitepaper or roadmap.
During your research, you should also try to find other projects that are similar and see how far along in development they are and what is the value proposition and compare them against the recommendation you have received.
Once this is complete the next step is to determine your risk appetite. A good way, in the beginning is to allocate an amount of money that you are comfortable losing. For example, if you are only willing to lose $100 then your max investment should be $100.
You are in and invested, what next. The best thing to do would be to follow all their socials, Twitter, Discord, Telegram, etc. Also, follow competing projects to see how your project is tracking.
Most projects take 12 to 24 months to complete, and you will have to determine if you are happy to wait this long to see a return on your investment.
The key to navigating bitcoin and cryptocurrency is constantly educating yourself and this means finding good sources of information that you have some level of trust in.
In the beginning, follow as many people as possible and YouTube channels you can to get this knowledge and overtime reduce this to 2 or 3 sources that you like and have trust in.
The key is to constantly learn new developments in this space and refine your investment strategy. Emotions will get in the way of logical thinking, and this is something you can only experience and react to in real-time.
Good luck on your investment journey.