After two years of trading cryptocurrencies, here are the most important lessons I've learned:

1: Develop a strategy

How many times have you heard "I heard Bitcoin is a good investment, should I buy it?"
Those who say these words are doomed to be unsuccessful investors.

It's not that I don't think it's a good investment, it's that there are far more problems with investing than that.

You need to have an entry and exit strategy. You need to understand your expectations for growth, timing, risk, and the amount of capital you're willing to invest. These are all important questions that should be clearly answered before making your first cryptocurrency investment.

I've seen too many people buying coins that just came out, or just taking advice from others without doing their own research. Sometimes these guys get lucky with some good deals. But in the long run, they all failed.

Before jumping into cryptocurrency investing, decide how you are willing to risk/invest. Decide how much time or effort you are willing to invest, and the time frame of your investment and exit strategy.

2: Decide "What type of investor are you?"

This is where your personality type comes in. Cryptocurrency trading is more psychological than most people realize, and it's important to be the type of investor that best suits your personality type. Otherwise it could end in disaster.

There are three main types of cryptocurrency investors:

Day trader

These are the people who watch the markets 24/7, constantly researching and often buying and selling multiple times during the day. It's high intensity, high risk and high adrenaline. Most traders I know are young and high-spirited. If this isn't for you, then don't even think about a one-day deal.

Opportunity investor

Similar to Day Trader, but with less intensity. Investments typically last for an extended period of time, from days to weeks. Some buying and selling are done during the week, which can be done on a part-time basis. Most traders I know are opportunistic traders.

Long term investor

These are buy and hold guys. This is the guy who bought Bitcoin 7 years ago and continues to hold on to it. Exactly those who decide to allocate 1% of their diversified portfolio in cryptocurrencies. Long-term investors are not interested in intraday, daily or weekly trends or phases. They think their investment is multi-year. These are buy and hold type investments.

Decide what type of trader you are from the start.
Cryptocurrency is a seducer, and she will do her best to keep you away from your trading "personality". Don't let it happen because it will end in disaster. Stick to the types of deals that work best for you, as this will help clarify which deals you will consider and which ones you won't.

3: Don’t buy junk coins

Another way of saying this is to only buy coins that have intrinsic value. Don't buy some coin you hear just because it's going up and it's just what your friends told you.
Sadly, most cryptocurrencies are shitcoins. Over 1,500 + different cryptocurrencies traded last year, with another 1,000 new coins entering the market, most of which can be classified as junk coins

4: Do Your Own Research

Sadly, fear, uncertainty and doubt rule the cryptocurrency market. Trading cryptocurrencies is a mental game that you need to master. Learn to make your own opinions. There is no God in this market. Experts only offer educated guesses.
If you don't do your own research, then you're relying on someone else's research. In my personal experience, the investments I'm best at are cryptocurrencies that I discovered myself, before they became popular, before everyone else was talking about it.
Learning to do your own research is an important life skill that can be very costly if you get it right. It's about developing your critical skills, pattern recognition, and balancing your emotional and logical abilities.
Doing your own research and forming your own opinion will help you better combat the psychological component of this game.

5: Start small

Start small. By starting small, you can make mistakes and learn from them with less cost. Your success earns more return on capital investment. The better your skills, the more profitable the trade. The more profitable your trades are, the more you can trade.
Starting small also means that anyone from almost anywhere in the world can participate in this market. You don't need large sums of money to enjoy cryptocurrency trading.

Think of it this way. The marketplace rewards your skills. The better your skills, the most profitable trading, the more capital you need.
There is a learning curve and money cannot buy you this kind of education.
This education can only be gained through experience. In the beginning you invest in yourself. You'll know when your skills as a trader improve because the capital you have available to invest increases with your ability.

Also, there is an important psychological component to be aware of when you start building your own small cap in the cryptocurrency market. Most of us have money problems. If you start thinking of your trades as "this investment is worth 3 months' salary", then it will definitely affect your ability to make good deals.

Finally

These are lessons I've learned for a lot of money, frustration, and study time. Investing in cryptocurrencies can be fun and financially rewarding if done in the right way.
Cryptocurrency trading can also lead to financial ruin if you do not invest in the right way.
To all those traders out there who want to trade, have fun, enjoy the ride, and heed this advice.

Be safe.