> For the complete documentation index, see [llms.txt](https://chain-detective.gitbook.io/chain-detective/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://chain-detective.gitbook.io/chain-detective/basics.md).

# Basics

**Investment Basics** 

When investing in these volatile currencies, your mindset should be prepared for losses. Remember that you're bound to lose money before you start making profits. Consider this an educational fee. The majority of these lesser-known coins may fail. Your goal is to discover the rare ones that surge in value, outweighing your losses.

**Risk Management** 

Don't let your emotions run wild; invest wisely. Each penny you spend on these coins is a gamble, so only allocate funds that you can afford to lose. When you buy, consider that money as already lost. Be optimistic, but also be prepared for the worst-case scenarios. If you feel apprehensive about the amount you have invested in a token, you've probably overstepped your limit. Take a step back, breathe, and remind yourself that the moment you purchase these coins, your investment is at risk.

**Approach to Investments**

 An investment strategy that works well in this volatile market is dollar-cost averaging (DCA). If a coin's value has soared and you're tempted to make a hasty purchase at its peak, remember to be smart. Consider initiating your position with 50% of your intended allocation, and wait for a dip to invest the rest. If the coin's value decreases, you can leverage this opportunity to lower your average cost and exit earlier with a profit. If it doesn't drop, that's fine too; you've already got an entry point and can keep up with the dollar-cost averaging.

**Investment Amount** 

Don't be tempted to overinvest. Many new investors make the mistake of putting too much into each investment. Sometimes, even a small amount invested in the right coin at the right time can lead to substantial profits. Start small and, once you're confident about your selection, it may be safer to increase your investment. I suggest investing proportionally to the market cap, maintaining a liquidity to market cap ratio. Pay attention to this as a high market cap with low liquidity can lead to easy pumps or dumps.

**Profit and Loss** 

Realize that increasing your investment value is more challenging than losing it. It's extremely difficult for a coin that has already surged in value to double again. However, it's quite easy for the same coin to drastically decrease in value. Ensure to profit from your winners instead of waiting for another price surge. Remember, it's better to miss potential profits than to incur losses.

**The Value of Volume** 

Semi-consistent volume can be a good sign. A decrease in volume could indicate incoming sells, especially with new tokens. However, this rule may not always apply.

**Portfolio Management** 

It's advisable not to spread your investments too thin. If you distribute your investments across too many tokens, one win may not be enough to offset several losses. It's better to focus on a select few coins at a time.

**Refresh Your Investments** 

Understand that these coins have a short life-cycle; most don't survive past a few days. Every few days, it may be beneficial to clean your slate, sell off most of your investments, and start hunting for new ones.

**Safety Measures** 

For safety and organization, it's recommended to use a fresh wallet for these coins. However, trading standard ERC20 tokens on Uniswap doesn't typically pose a risk. As we move forward to explore trading specifics, keep these initial principles in mind.