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Quiz: Investing for Beginners

Investing strategies are a crucial part of succeeding in the crypto world. Test your knowledge of investing with this Swyftx Learn quiz.

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Question 1

Dollar-cost averaging is the practice of buying a dollar’s worth of Bitcoin every week.

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Dollar-cost averaging is a strategy that helps minimise the risk of investment losses by breaking down the total amount to be invested across periodic purchases over time, regardless of the price fluctuations. It is regarded as a useful strategy because it allows you to not make decisions based on emotion.

Question 2

What is an important factor when choosing a reputable exchange to buy cryptocurrencies from?

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There are tons of cryptocurrency exchanges out there, but it is important that you choose reputable exchanges to buy your cryptocurrencies from. These exchanges will generally offer great security, customer support, low trading fees, multiple withdrawal options, and a user-friendly interface.

Question 3

Buying the dip is when you purchase a strong cryptocurrency that has dipped at least 5% in price.

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Correct/incorrect – Most traders and investors consider buying the dip when a strong digital asset, such as Bitcoin or Ethereum has dipped at least 20% from its recent highs. This dip is generally seen as a short-term correction within a longer-term uptrend, and it is regarded as a “discount”.

Question 4

Why is it important to diversify your portfolio?

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Setting up a well-balanced cryptocurrency portfolio can greatly reduce your exposure to risk and help you invest in a range of strong projects. There are no specific tax benefits from holding multiple digital assets. And although you can potentially earn more by owning multiple currencies, it is never guaranteed.

Question 5

Every cryptocurrency will go through its own market cycle.

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Although the market cycle for Bitcoin is the most widely publicized and influential on other markets, each market (or coin) actually has its own market cycle. When choosing to invest in new coins, it is always important to know where it is within its market cycle.

Question 6

What is demo mode on a cryptocurrency exchange?

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Demo mode is a version of a trading platform that allows users to make practice trades using fake money. It is a fantastic resource for beginner investors to test out their strategies without any risk of losing money.

Question 7

Crypto is a better investment than stocks.

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Both cryptocurrencies and stocks are popular investments. Neither is necessarily better than the other, as there are major benefits and drawbacks to each investment type. The most important thing is to figure out whether crypto, stocks, or a combination of both works best for you.

Question 8

What does a strong, diversified portfolio look like?

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A highly diversified portfolio will generally consist of a decent portion of the biggest cryptocurrencies, Bitcoin and Ethereum, as well as a number of strong altcoins such as Litecoin, XRP, Solana etc. While owning 20 different meme coins may spread your investment out a lot, if the market becomes volatile, meme coins are likely to plummet more than most other cryptos, which defeats the purpose of diversification.

Question 9

All financial markets experience market cycles.

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While market cycles are most well known in the stock market, they are experienced in all financial markets. The biggest difference is that crypto market cycles are often far more extreme than in other markets.

Question 10

What is the benefit of investing in cryptocurrencies?

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Investing in crypto has a range of benefits, such as 24/7 trading, unlike other financial markets that have trading hours. Crypto is also accessible globally, rather than only select countries. Crypto networks are autonomous and decentralized, which means they don’t require an intermediary in order to operate. The crypto market has also shown potential for huge profits, larger than any other financial market, which attracts many investors.

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