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Do Your Own Research (abbreviated as DYOR) is a golden rule used by crypto enthusiasts before investing in a cryptocurrency project.

The rule aims at reducing the number of investors who invest in cryptocurrency without the necessary information, encouraging potential traders to research and understand every project before putting in their money. That helps an investor to know precisely why they are buying a certain digital currency and support the project.

Why Doing Your Own Research is Important

Shilling is a popular practice in the crypto world. That involves people advertising the digital coins they own, hoping they can positively affect the price. Unfortunately, it can be tricky to distinguish the difference between an unbiased post and a shill.

When buying any digital coin, it’s advisable to make the decision based on your own research and conclusions and not because a self-proclaimed expert says it’s worth the money.

That’s because some people quickly create multiple fake accounts on social media platforms like Facebook, Twitter, and Reddit, attempting to trick the investors into certain cryptos, based on popularity. Unfortunately, fake accounts are hard to spot, so it’s always important to be sceptical and do some research.

The Process of Doing Your Own Research

Here is how investors can start doing their own research before investing in crypto projects to minimize their losses in the market while trading:

Identify Potential Investments

Start by shortlisting the digital assets and crypto tokens that most appeal to you to know your potential investments. When choosing which cryptocurrencies make it into your list and those that don’t, start by considering whether there is a good amount of transparent information on the project out there.

The more available information you can find on any digital asset, mainly from independent sources, the better.

If most of the information available is either from the project’s website or shaky sources that are suspiciously optimistic on its prospects, avoid including that digital asset into your potential investments. Fortunately, www.cryptovantage.com simplifies the process of buying crypto by giving you trustworthy information you can use in your research.

Enlist Your Investment Goals

After identifying your potential investments, make a list of your investment goals. Think about whether you want to target short, medium, or long-term timeframes with your investment and also your appetite for taking investment risks.

If you want short-term investments, consult crypto price charts instead of reading the project’s literature. However, you must ensure that your skills as a day-trader are up to par.

Medium and long-term investments usually carry less risk and are better for traders with conservative investment goals. That’s because crypto investors rarely make outsized gains, even though cryptocurrency enthusiasts love talking about currencies “going to the moon”.

Additionally, it’s impossible to predict when that’s going to happen.

Your list of goals should help you narrow down your long prospect list by eliminating risky crypto projects, especially those that don’t line up with your values.

Know What You Can Afford To Lose

While knowing the amount of cash you can afford to lose might seem counter-intuitive, losing your hard-earned cash always stings. That’s why you need to avoid money meant for college, rent, or anything else you can’t afford to lose. Ask yourself whether a loss can break or make your quality of life.

Fundamental Analysis

Fundamental analysis means conducting extensive research on several internal and external factors using publicly available information online to determine an asset’s true value. Fortunately, you can determine an asset’s real value by ignoring future fluctuations.

The information you get from the fundamental research helps you to carefully plan the entry or exit points when investing in an asset. It also helps the investors to buy undervalued assets while selling overvalued ones.    

Technical Analysis

After gaining some experience and starting to engage in high-volume trades, consider practising technical analysis. This objective research aims at reading live crypto price charts to understand the market direction and interpret price trends to trade cryptocurrencies effectively.

Technical analysis is best suited for short-term research, but it helps you develop a knowledge base for long-term research. That’s why technical analysis is important for long-term investors, although it can be a little time-consuming.

Make an Informed Decision

When you’ve spent the time researching your crypto investment options, now it’s time to decide which projects to subtract from your list. Remember that for a project to check out, it will need to have the right tools. That means powerful resources, a capable team, and a reasonable plan.

Other additional factors you need for your project to succeed include having all-start advisors or proof of concept.

Thankfully, if a crypto project proves to tick all the right boxes during your research, then it's likely it will turn out to be a solid investment for you. However, nothing can be certain when trading crypto because even the best projects flounder at times.

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