9 Things Every Crypto Investor Should Know How to Do

Suppose you are currently investing, or thinking about investing, in cryptocurrency. In that case, there are a few things that you definitely need to know to ensure that you avoid the many pitfalls, and reap the many rewards of doing so. Below, you will, therefore, find nine actionable abilities to keep your portfolio from spontaneously combusting.

1. Set Up a Secure Wallet (and Actually Use It Correctly)

Having a wallet is like having a digital fortress for your coins. Yet many investors grab the first free app they see, choose “password1234,” and pray for the best. A secure wallet means using hardware wallets when possible—think Ledger or Trezor, or at least reputable software wallets with strong encryption. Memorize your seed phrase, store it offline in a safe place, and never, ever share it with anyone. Yes, that includes your best friend who says, “I swear I’m trustworthy.” No one is safe from FOMO, so treat your seed phrase like nuclear launch codes.

2. Enable Two-Factor Authentication

If your password is the front door, 2FA is the moat filled with digital alligators. Most exchanges and wallets offer 2FA via an authenticator app or SMS. SMS is better than nothing, but authenticator apps, like Google Authenticator or Authy, are the gold standard. You’ll need to enter a time-sensitive code every time you log in, which feels slightly annoying but is infinitely less annoying than a hacker emptying your account. Imagine trying to get into your account with just a password, only to be blocked because you lost your phone. That is a small price to pay for keeping sneaky cyber-thieves at bay.

3. Research Projects Like a CIA Agent

Buying a random token because it has a funny name is like betting your life savings on a llama race. Instead, do thorough research. Read whitepapers, examine the team, especially if their LinkedIn profiles look more like a credit card application, and scrutinize tokenomics. Look for red flags: promises of guaranteed returns, anonymous teams without any credible background, or overly complicated jargon that makes you think they’re hiding something. Even meme coins deserve a quick look at their community engagement and developer activity. If you can’t tell whether the project’s code is legit, consider learning how to create block explorer tools so you can inspect blocks and transactions yourself. It’s not as hard as it sounds, think of it as peeking behind the curtain to see if the wizard is a fraud.

4. Master Basic Chart Reading 

Charts can look like hieroglyphics to the uninitiated, but understanding basic candlestick patterns can save you from panic selling during a knee-jerk dip. Learn what bullish and bearish candles look like, recognize trends, and identify support and resistance levels. You don’t need to become a full-blown technical analyst who writes books about Fibonacci retracements, but knowing that a series of large red candles might mean “sell-off” and a string of green candles could signal “bull run” is helpful. Chart reading gives you an edge, so you don’t end up crossing your fingers every time you check prices.

5. Use Limit Orders Like a Pro

Market orders let you buy or sell at the current price, which is fine if you love surprises. Limit orders let you specify the exact price at which you’re willing to buy or sell, so you don’t get stuck with a trade fifty percent worse than expected due to low liquidity. Imagine placing a limit sell order on a token that jumps 30 percent in thirty minutes, you just locked in gains without babysitting the screen. Some platforms even allow advanced order types, like stop-limit or trailing stop, which can automatically lock in profits or stop losses when prices move sharply. Learn these tools, or risk letting volatility eat your lunch.

6. Diversify Without Becoming a Coin Hoarder

Putting all your money into one cryptocurrency is like betting your entire retirement on a single horse. Diversification doesn’t mean buying every token under the sun, but it does mean spreading your risk across a few fundamentally sound projects. You could allocate a core position to established coins like Bitcoin or Ethereum, add some mid-cap projects with real use cases, and maybe even tuck a small percentage into high-risk, high-reward tokens—so-called “alt-season” gamblers. The point is to balance safety and growth. If you find yourself owning fifteen obscure coins you can’t pronounce, it might be time to consolidate and focus on quality over quantity.

7. Manage Your Tax Obligations (Because Uncle Sam Wants His Cut)

Ignoring taxes in crypto is like pretending pinching pennies means you’re immune to a looming debt collector. Most countries treat cryptocurrencies as property, so you need to report capital gains and losses. Track every buy, sell, trade, or even airdrop, because these can incur taxable events. Consider using portfolio trackers or tax software that integrates with major exchanges to generate reports. Don’t assume your crypto fairy godmother will fix everything at the end of the year. Get ahead of it, or risk penalties that turn your gains into regrets.

8. Keep Up with Security Updates and Scams

Crypto scams evolve faster than you can say “rug pull.” Phishing sites, fake airdrops, and malicious smart contracts are the new norm. Always double-check URLs, avoid clicking suspicious links on social media, and never connect your wallet to unknown decentralized applications without verifying their legitimacy. Subscribe to reputable security and crypto news outlets, join community channels where white-hat hackers share alerts, and regularly update your wallet software. Think of security as an ongoing subscription, not a one-time purchase. No one wants to be the person who lost $10,000 because they clicked on a “free token” link.

9. Understand DeFi Protocols 

Decentralized finance, or DeFi, can feel like walking into a candy store after fasting for a week—exciting, overwhelming, and potentially disastrous if you don’t know what you’re doing. Lending platforms, yield farms, liquidity pools, and decentralized exchanges all promise juicy returns, but each carries smart contract risks and impermanent loss. Start with reputable platforms like Uniswap, Aave, Compound, skim through their documentation, and test with small amounts before committing significant funds. Remember, the “APY” numbers you see might fluctuate wildly. If you lock your funds into a liquidity pool without understanding impermanent loss, you could end up poorer, even if the pool’s token price rises. Treat DeFi like a buffet: sample a bit, but don’t overindulge.

If you know all this stuff, then your crypto journey will be much easier, and much more successful too!