Crypto trading is the order of the day, as many traditional investors have made the move towards virtual currency in view of the massive gains it offers. But a lot of newcomers make simple mistakes which might mean losing a lot of money.
For anyone new to cryptocurrency trading, here are the 7 biggest mistakes to avoid:
1. Ignoring to do research
Before you start trading cryptocurrency, understand the importance of your own research. Just blindly investing in popular coins or solely relying on ‘expert’ advice can land you in big trouble. There are paid promoters on the web and you could lose money if you believe them to be genuine.
Do not make investments based only on the hype around crypto prices and their movement.
2. Exiting and selling at the wrong time
Some newbies have no clue when to cash in their profits and exit. They stick with the market as long as they can, only to lose their previous gains. Selling when the price seems high enough is also a wrong approach. If you sell when the price seems high enough, you might regret later when it soars again. Buying cheap doesn’t always mean that the price will go up. It could easily drop and you might lose a large investment. The fluctuations in crypto prices are inevitable.
Don’t get manipulated by online hype, but give it some time to see a price surge.
3. Playing favorites with specific coins
Even the top cryptocurrency, Bitcoin sees significant price dips. Whatever advice you may heed to, remember that it is not realistic for any single coin to see a consistent rise. Price swings are unpredictable and it is not sensible to put all your investment into one coin. Sometimes, it may take months for a coin to do well in the crypto space.
Instead of getting emotionally attached to any coin, invest in multiple cryptocurrencies.
4. Not managing your expectations
As someone who is just entering Crypto trade, you must be realistic with your expectations. Your investment might take some time to earn gains on par with Bitcoin or Ethereum. Investing in a coin which is on its way to becoming the next top cryptocurrency is a wise move. But, if you expect a 2000% profit, then you will be majorly disappointed. For example, coins like Ripple are regulated to certain prices.
5. Lacking technical and analytical skills
You must be able to analyse the rise in crypto prices of your investment. You don’t need to have in-depth technical knowledge, but it is essential to understand the patterns in this highly speculated market. Sometimes, even the crypto charts fail, so it is crucial to learn about support zones, trend lines and resistance levels to improve your trading significantly.
Find a good learning community like Crypto Twitter, Cent, Decred Slack and /r/ethtrader.
6. Not following current events
If you are in crypto trading for profits, then technical analysis alone is not sufficient. You need to follow the current events in the market. Get the top cryptocurrency news from an authentic source. However, try not to be overwhelmed and stop grasping at every piece of information thrown at you.
7. Neglecting to keep records and double-checking tokens before sending funds
Make hard copies of private keys, codes and two-factor authentication. Store them in a secure location. If your wallet service crashes or it is compromised, you can restore it onto another computer. Before sending funds to a crypto-wallet at the exchange, check if it matches with the token you are about to send.
This technical mistake can be fixed easily, but it is better to double-check prior to sending. You can send many tokens to MyEtherWallet if it is on ERC20, but not on exchange wallet.
These are a few major things you need to know before you put all your hard-earned money into crypto trading. You must have immense patience to reap the rewards. Even if you are trading short term, ensure you always have an end-game for each crypto investment.