Never is the term “learning by doing” is never more appropriate than in crypto trading. New traders need to nail down their money management. This can help improve their chances of long-term success in the markets. But, there are mistakes that brand new traders should avoid doing.
In the world of cryptocurrency, there are many mistakes that can be made. Some of these mistakes are common to all investors, while others are unique to the crypto space. For example, some traders do not go into details about choosing the best exchange. You need to perform comparative studies. For example, compare CoinSpot vs Swyftx with Coin Culture.
Now, let us move to some of the most common mistakes I see people make when investing in cryptocurrencies:
Mistakes you Must Avoid
Not Having a Clear Plan Before Investing
The first and most important step is to make sure you have a clear plan for how much money you want to invest, how long you’re willing to wait for it to grow, and what your exit strategy will be if things don’t go as planned. If you’re not prepared to lose all of your money, then you shouldn’t invest in cryptocurrencies at all!
Buying too Much at Once
If you’re making a big investment in cryptocurrencies, don’t put all your eggs in one basket — spread out your purchases over time so that if one coin or exchange goes down, it won’t affect your entire portfolio.
Not Knowing what the “Market Cap” is
Knowing how much money has been invested into a given crypto asset before buying it is important because this number determines its value on exchanges and other platforms where traders buy and sell coins. The more people who own it, the higher its price will tend to be.
Not Having a Strategy
The most important thing to remember is that trading isn’t gambling. You can’t just throw money at a coin and hope for the best. You need to have a strategy and stick with it. If you don’t know what you’re doing, then you could end up losing all your money in a very short period of time.
Only Trading when Prices are Going Up
This is one of the biggest mistakes people make when they first start trading cryptocurrencies. It’s tempting to think that if you buy when prices are rising quickly and then sell them when they’re at their peak, then you’ll be able to make lots of money quickly – but this isn’t necessarily true. You can make lots of money by selling high and buying low, but it doesn’t work if you only do this once or twice before selling everything again at a loss! The key to success here is patience.
Cryptocurrencies are highly speculative assets, so it’s essential to research each before investing. This means reading news articles, watching videos and learning about its history. You should also check out the team behind the coin and its roadmap for future development. If your coin doesn’t have any long-term goals or plans for how it plans on reaching those goals, then it might not be worth investing in. Make sure that you research well before investing in cryptocurrency.
Jason is the Marketing Manager at a local advertising company in Australia. He moved to Australia 10 years back for his passion for advertising. Jason recently joined BFA as a volunteer writer and contributes by sharing his valuable experience and knowledge.