8 Common Mistakes for New Cryptocurrency Traders and How to Avoid Them
Crypto. It is one of the hottest trends for investors over the past decade.
About 45 million Americans alone own some type of cryptocurrency. Across the globe, that number goes up to 420 million people.
However, those that have skin in the game know that crypto can be a volatile market to get involved with. Therefore, it is not an investment for the faint of heart.
This is why it is important to know the mistakes for new cryptocurrency traders to avoid.
What are these mistakes for buying and selling cryptocurrencies? Here are eight that we think you should know.
1. Not Doing Enough Research
The first mistake that you can make as a new trader is not doing your homework when it comes to the crypto you are investing and trading with.
You may be the type of person that heard about Bitcoin from a friend. Or, you could have gotten a tip from someone about a small crypto coin that could get hot in the future.
Before you put your own money on the line, you need to make sure that you sit down and understand the market trends that these crypto coins have. Then, you can get a better idea if a crypto coin is trending in the right direction or not.
2. Selling Too Low
With crypto being as volatile as it is, you can get some heavy losses quickly. An example is that at one point, bitcoin was worth over $60,000. Now, it is lucky to be worth half of that.
However, this trend has happened before with coins like this. Once in a while, you may get a trader that fell victim to buying the coin on the higher side. Then, they sold the coin before they saw it bounce back to an even higher value.
When it comes to crypto, it can be a long-term game at times. Remain patient if you are going to invest and trade in it.
3. Being Unaware of Platform Fees
Depending on what platform you use to trade crypto, you could find yourself getting hit with exorbitant fees to use that platform to trade. You need to make sure you are aware of these fees before you start trading.
The reason for this is not accounting for your fees could force you to alter your trading strategy and end up having thinner margins than you were expecting. Knowing about these fees in advance can give you a better idea if a trade or investment is worth it.
4. Trading on Tilt
There is an expression in gambling that someone can end up “playing on tilt.” This means that are playing emotionally and likely angry about a previous transaction.
This easily happens in the world of investing and trading as well because you could have made a bad trade recently. Then, you might feel the need to get the money you lost out on back all at once.
That is one of the biggest traps of trading because it causes you to think irrationally. When that happens, you can end up losing even more money.
5. Not Having a Strategy
Trading blindly can be just as dangerous as trading emotionally. If you want to get into this game, you need to sit down and stick to a consistent strategy when it comes to trading.
An example can be trading for crypto that has a 50% fall from its peak value. Or, it can be trading for crypto that fell by 20% in value in less than a month.
No matter what strategy you end up using, the important thing is to stick to it consistently if you want your formula to work.
6. Not Having Asset Protection
As a crypto trader, you are going to need a place to store your crypto until you are ready to sell it. A lot of crypto owners end up getting hacked, so it is important that you use somewhere reliable to do this.
An example can be using Etana Crypto Custodian, which is backed by Colorado Banking. The point here is that you want to use a platform with a good reputation to store your crypto.
7. Sticking to Main Crypto Coins
While you should not get into less common crypto coins blindly, that does not mean there isn’t any value with other coins. If you do your homework, you could see a potential crypto coin that stands to gain a lot of value in the near future.
Do not be afraid to look past Bitcoin and Ethereum when it comes to trading.
8. Investing More Than You Can Lose
Finally, the most important mistake you want to avoid is investing more money than you can lose. You want to make sure that you are only investing money that you will not miss in the near future.
It can not only ruin your investment if you overextend yourself, but you can also end up putting yourself in a much worse financial position than when you started. Sit down and take a look at your portfolio to get a good idea of what you can afford to invest in crypto without damaging your financial stability.
Avoid These Mistakes for New Cryptocurrency Traders
These are eight of the biggest mistakes for new cryptocurrency traders to avoid. You need to make sure you are trading rationally, doing your homework on crypto, looking at all crypto options, and, most importantly, knowing what you can afford to invest in the first place.
Do you want to know more about crypto trading strategy? See our other sections for related articles.
