Like any investment instrument, cryptocurrencies are both rewarding and risky. The digital coins market is complicated, crowded and volatile.

The digital coin and blockchain technology is largely experimental and can be tremendously risky. However, it presents a very promising future and opportunities. In fact, more and more businesses and investors have begun to accept the digital economy.

The digital economy is a burgeoning market that has been luring real-world money into it. In December 2017, bitcoin has achieved its all-time high of $19,783 further raking more investments into it. And this trend is projected to further grow in the coming years. Considering the current market trends; now is a good time to begin trading while it’s still possible to find undervalued coins.

If you want to ride the bandwagon and take advantage of cryptocurrency, you have to act fast but wisely. The cryptocurrency market isn’t a predictable or stable investment tool that promises continuous gains. As such, being extra cautious and diligent can go a long way in cryptocurrency investing.

Below we list down some tips to invest safely in cryptocurrencies.

1. Conduct research

Before investing any amount in the digital economy, make sure to do an extensive research and exercise due diligence. Learn more about the cryptocurrency you’re planning to invest in. Starting right is critical for investing successfully in digital coins.

Know more about the coin, such as its advantages over other coins, current and past performance, analyst reports and forecast, etc. This information can guide you and keep you safe throughout your investment journey in the digital economy.

2. Start low

Hearing stories about investors making millions (and even billions) from cryptocurrency investments might lure you to dump all your money into it with the hope that you’ll get lucky, too. Don’t get bitten by the hype. Although investing in the right coin at the perfect time can really make you millions, the chances of this happening are very remote. You also have to be wary about scams just waiting to rip you off your hard earned money. Be rational at all times.

If you are new in the world of crypto investment, the safest strategy is to start low and build up your assets. As much as possible, choose safe investment options and established coins with lower risks. It’s better to earn small profits than lose everything, right?

3. Diversify your portfolio

Once you’ve learned everything there is to know about the crypto market and you’re ready to invest, don’t put all your investments on a single coin. You’d be safe investing your funds in different coins or investment tools since every coin is unpredictable. One day they’re up, the next day they plummet. Diversification is a safe strategy that will help minimize the risks.

Begin investing small amounts in several coins, and as you get experienced in cryptocurrency trading you can explore other investment strategies. Cryptocurrency index fund offered by Cryptos Fund is an example of an investment fund that simplifies the process of diversifying your portfolio. Aside from index funds, there are other types of crypto funds that you can explore such as mutual funds, hedge funds, public or private funds, exchange-traded funds, tokenized funds, managed funds, and more.

4. Set your investment plan and goals

Be aware that when you invest in the crypto market, there is always the risk of losing your money. It’s a very volatile market so only invest the amount you can afford to lose. Have an investment plan and a goal. This can ensure safe cryptocurrency trading.

You also need to be rational, which will help you avoid making decisions based on emotions. If your portfolio is up, don’t get too enthusiastic to pour in every penny you have. If it is down, don’t panic and withdraw at a loss. Sometimes you’ll feel the urge to buy more in anticipation that a coin will skyrocket and earn you instant millions. Extreme fluctuations are the norm in digital coins market, so just stay calm and stick with your investment plan.

5. Secure your crypto investment

Security is one major challenge in crypto investment. A research by IT security firm Group-IB noted a 369% increase in the number of hacked accounts of crypto exchange users. As such, you want to secure your investments using a secured wallet. Make sure you have a cold storage or an offline wallet. Stay up-to-date with the latest security tools and tips.

Use two-step authentication to keep your account safe. There is the constant threat of cyber attacks (malware, phishing, and virus) that attempts to sneak into your account and get whatever you’ve earned. With a two-factor authentication, hackers will find a hard time stealing your identity.

6. Be very cautious about crypto scams and ICOs

If you find an “investment opportunity” that offers too-good-to-be-true promises, chances are they are scams. Typically, these opportunities offer unrealistically high returns and quick profit schemes. They are akin to Ponzi schemes where you will be promised more than double of what other genuine investment tools offer.

You should also be very, very cautious when considering ICOs (Initial Coin Offering). While ICOs offer very high returns and promising potential, they are very risky. ICOs come and go quickly. And when they go down, your money goes down with them. However, this doesn’t mean that all ICOs are bad, some may be good. Due diligence is the key in investing in an ICO.

In conclusion, to stay safe while trading cryptocurrencies, always operate rationally, cautiously, and patiently. These traits are all you need to stay safe and be successful in the world of crypto investment.