In general, many of the tips, concepts, and ideas that are considered solid crypto investing advice also apply, and were often originally developed, in other investing sectors. While diversification, risk management, fundamental analysis, and technical analysis can all have their place when it comes to both crypto and stock investing, there may be a need to alter these tools when investing in crypto — or to use new tools entirely. 

Crypto Trading Automation Tools and Orders

While crypto trading used to be largely a manual process, there are now a variety of tools (many derived from stock trading platforms) and order types you can use to simplify your crypto trading experience. For those that see the merit in purchasing crypto at regular intervals, you can automatically set up recurring buys on most major crypto exchanges. You can select the buying cadence (daily, weekly, monthly, etc.), the amount spent each time, and the specific crypto(s) you want. This can simplify your investing by automating something that you may have a tendency to forget.

You can also automate the process of both buying and selling crypto at specific price points by setting orders that will execute when certain conditions are met. Examples of these orders include: take profit, stop loss, take profit limit, stop loss limit, and a variety of others. You can also specify how long an order will run, such as: until (manually) canceled, until a specified future time, or some other metric.

Let’s look at a quick example using a stop-loss order. You bought 10 litecoin (LTC) at $50 and it is currently trading at $65. You set a stop-loss at $55 that will expire in 30 days. If the price drops to $55 within 30 days, the LTC will automatically be sold at that price. If not, you will still have your LTC — and your stop-loss order will be canceled. While in this scenario, you are still selling for a profit, a stop-loss can also be used to limit losses (such as buying at $65 and selling at $55). In essence, a stop-loss order is selling when the price decreases to a point below where it currently is (or immediately selling if the stop-loss order is set below the current price). 

This is just one order type of many that can be used to give you some trading piece of mind (take-profit orders, you guessed it, take profits). With busy lives, most people don’t have the time to constantly monitor price movements and make trading decisions. These tools allow you to trade while you work, eat, or sleep. The luxury of being able to sleep with some peace of mind is particularly important for crypto investors because, unlike the stock market, crypto markets are open 24 hours a day, seven days a week.

Crypto Trading Portfolio Management

If you’re a crypto investor who has a diversified portfolio, you may need help keeping track of all your crypto. You may continually trade on multiple crypto exchanges, make recurring buys, and also collect staking rewards. While logging all this activity manually in a spreadsheet is ostensibly doable, you probably need some sort of portfolio management assistance — or tools.

One positive trend is that most major crypto exchanges can provide their customers with trading reports on their crypto investing activity. If you’re only trading on one exchange, you may be fine with using the reports provided. However, if you have multiple crypto exchange accounts and also trade on decentralized exchanges (DEXs), it may make sense to use some sort of portfolio tracking tool that can combine all of your trading activities.

In addition to making it easier to calculate your profit/loss for a specific trade, you also need to log many of these trading activities in order to accurately pay your tax bill (if applicable). 

Custody and Crypto Investing

Custody of your crypto is another consideration that needs to be mentioned. Unlike stock trading, there are some choices to be made when it comes to how you store the crypto you purchase. Most novice investors choose to purchase, store, and trade crypto on a major crypto exchange. While this is usually a great choice, you should be cautious by choosing a major crypto exchange with a good reputation and track record. Smaller exchanges have been known to close — or disappear — sometimes leaving you without your investment and little recourse when it comes to recouping your crypto holdings. Sometimes even major exchanges (FTX for example) close down and this can come as a painful shock — and brutal reminder.

For this reason, some investors choose to initially purchase crypto on one of these exchanges and then transfer it to a wallet they control (such as Ledger, Atomic, MetaMask, Trust Wallet, and so on). While these wallets allow you to control your crypto, you need to be careful to not share your wallet PIN with others. In addition, you should know how to recover your wallet in the event it is damaged, lost, or stolen. While this makes it very unlikely that someone else will steal your crypto, some crypto wallet holders have lost this crypto by forgetting both their PIN and recovery phrase (or by throwing their computer in the dump).

Another concern is the abundance of scammers who want to try to steal your crypto. While there are a number of different methods to be concerned about, a good starting point is to never share your password, PIN, or recovery phrase with anyone (even someone claiming to work for a crypto exchange or crypto wallet company). This is almost always a scammer who just needs this information in order to steal your crypto (in much the same way that some scammers target the elderly to steal money from their bank accounts).

A concern of both novice and grizzled crypto investors alike, theses custody concerns are gradually getting alleviated through the use of a variety of tools and options, including: social recovery, biometrics, multi-sig wallets, and a host of other solutions focused on crypto custody and security.

Crypto Investing Course Conclusion: Final Thoughts

There you have it, you are about to complete Decrypt’s crypto investing crash course. For current and future crypto investors, please consider this as an introduction to the crypto investing world. While we covered the basics, there are entire chapters — or books — on some of the points in here that only received a few sentences. Other finer nuances (like the difference between line/bar/candlestick charts or algo trading bots) didn’t even make it into this series because we didn’t want you to get bogged down in things that many investors never end up using (or that may be quite technical or complicated for beginners).

From here, the choice is up to you on where you want to take your crypto investing education. While you may have no desire to trade professionally, having a solid crypto investing footing can help you decide what route you will take to give you the best chance of achieving your investing goals.

Cheat Sheet

• While many of the tools, tips, and advice for investing in stocks/bonds are also applicable to crypto investing, there are some notable differences as well.
• Originally deployed on stock trading platforms, you can use trading orders (stop loss, take profit, etc.) to automate certain crypto trading decisions.
• Crypto investors should consider using a portfolio tracker if they have a diversified crypto portfolio, multiple exchange accounts, and/or make a lot of trades. This can also be used to calculate crypto taxes.
• Choosing how to safely custody your crypto is a key consideration for crypto investors. The primary choices: use a major crypto exchange to store your crypto, store your crypto on a wallet you control, or a combination of the above.
• Being aware of scammers is another key concern for those with crypto holdings (regardless of how you store your crypto).
• Continually learning about crypto investing can help guide you on your investing journey and help you make more informed, reasoned, and rational trading decisions.