Don’t buy a single dollar of Solana until you do these 3 things

Solana (brush -0.67%) It is one of the most interesting cryptocurrencies of the year as the chain is the de facto home of meme coin investments. But that doesn’t mean every investor is ready to jump into buying the coin, even if they already have less thrilling but more solid options such as: Bitcoin or Ethereum.

Jumping in before covering the essentials is a sure way to jeopardize the value of your portfolio. To help you move forward in a responsible way, let’s look at three easy things to do before investing in Solana.

1. Diversify your primary portfolio with a mix of safe and less safe investments.

Solana is a relatively new cryptocurrency that was launched in 2020. For now, it looks like it will continue to gain traction and enough adoption to remain relevant. But if you can’t do that, you need to diversify because you don’t want your entire portfolio to go up in flames.

Your diversification plan should include assets such as blue chip stocks, index funds, and even bonds, as well as some cash. Your portfolio may also include a few risky plays, such as biotech stocks or stock options.

If you haven’t built a foundation for portfolio success, it will be very difficult to sustain your profits long enough to actually achieve your financial goals and improve your life. So diversify, diversify, and once that’s done – which can take years to do right – you’re ready to invest in riskier opportunities like Solana.

2. Establish an investment plan

You need to have a plan whenever you invest, and Solana and other cryptocurrencies are no exception.

The plan must specify:

• Investment Goals
• An investment thesis that explains why a coin is worth buying instead of something safer (or riskier).
• A reasonable set of price targets for when to take profits or cut losses.
• A timeline explaining how long you want to hold your coins
• Summary of the biggest risks your investments will face
• Anything else you think you might want to prepare in advance

If you don’t plan before investing, your plan essentially becomes hoping that prices will rise. But hope is not a plan, and anyway, it is too fickle an emotion to rely on to guide our actions when the going gets tough.

Don’t dream of making millions by buying cryptocurrencies. Create a roadmap that shows how you would buy specific assets to move your portfolio to where you want it to be.

3. Be prepared for volatility and know the two most common patterns of major declines.

Despite being fairly stable for smaller cryptocurrencies, compared to traditional investments like stocks, or even larger cryptocurrencies like Bitcoin, Solana is actually quite volatile, with daily price fluctuations of as much as 5% being common.

If you’re not prepared for what it’s like to look at your account and see that the value of your investments have dropped at least that much in a relatively short period of time, then you’re not ready to invest in Solana.

Even the most experienced cryptocurrency investor should prepare for several scenarios that are likely to occur with Solana.

As questionable as the usefulness of technical analysis (TA) is for investors looking to hold cryptocurrencies for long periods of time, it does provide some useful certainty that can be useful when coin prices are falling. % – or even 80% – there is no specific reason or trend that can be easily identified as the cause.

Simply put, for a fairly large cryptocurrency like Solana, the TA idea is that a 30% drop over several weeks is not something to be overly concerned about, unless there is a major negative catalyst event. It will be a (short) period of market consolidation rather than a sustained collapse. That means a short-term recovery is likely.

An 80% loss is a different and more difficult story, and can take months to unfold.

In this case, recovery, if it does occur, is expected to occur only over the long term. An aggressive move would be to back up trucks, buy a lot more, and then wait patiently for a recovery, but most investors would lack the confidence to do so after a big drop.

Instead, force yourself to buy a little more, log out, check back in a few months or a year, and be prepared to buy again if things don’t improve.

The idea is to show agency over the success of your portfolio even when things get dire, so you can at least maintain some control over the outcome. This in turn can be very psychologically beneficial and even very profitable.

If it doesn’t work, it’s okay to give up buying more, but avoid the idea of ​​selling at a loss. If the price eventually recovers, your small purchase at the bottom could result in a big profit, and if it doesn’t, you won’t lose much more.