Imagine you decide to invest in cryptocurrencies with the goal of earning $100 per week. Here I explain how you would do it by applying a real-life example from point 1 to point 5:
1. Small goals: John has $500 to invest in cryptocurrencies. Instead of trying to double his money all at once, his goal is to make $20 a day. Each day, he makes small purchases and sales, looking to increase his balance little by little. For example, if he buys Bitcoin and its price rises slightly, he sells a portion to secure a profit of $20 that day.
2. Easy markets: Juan decides to invest in Bitcoin and Ethereum because they are well-known and very liquid cryptocurrencies. This means that he can easily buy and sell them without the price changing too much, allowing him to make his profits quickly, just like when you go to the market to sell products that are always in demand.
3. Easy strategies:
- Swing trading: One day, John buys Ethereum at $1,800 when he sees the price is low. He holds the investment for a few days until the price rises to $2,000, and then sells, making a profit of $200. It's like buying clothes on sale and selling them for a higher price when there is demand.
- Day trading: If John has time, he can also take advantage of Bitcoin's price ups and downs within a day. If he sees the price drop by $100 in a few hours and then go up again, he sells quickly to make a small profit. It's like buying fruit in the morning when it's cheap and selling it in the afternoon when it goes up in price.
- Debt-cost averaging (DCA): Every week, John invests $50 in Bitcoin, regardless of whether the price goes up or down. This helps him average out his investment and reduce risk, such as saving $5 a day without worrying about exactly how much he has in his account.
4. Useful tools: Juan learns how to use charts and price patterns. When he sees that the Bitcoin chart shows a steady rise, he decides to buy more, and when he sees a possible drop, he sells. It's like reading the weather forecast to know when it's best to go out or stay home.
5. Watch your money: To protect his investment, John always uses a **stop loss** order. If Bitcoin drops 5%, his system automatically sells to avoid further losses. He also never invests all his money in one cryptocurrency; he spreads his investment between Bitcoin, Ethereum, and a few other coins, so as not to put "all his eggs in one basket."
With this approach, Juan makes his profits little by little, keeping his risks under control and taking advantage of short- and long-term opportunities. Thus, after a week, he achieves his goal of earning $100.
