Cryptocurrency has seen a rapid rise in popularity in recent years with masses of people joining this digital currency phenomenon. It all started with Bitcoin which was created after the 2008 Great Recession when distrust of banks started to spread amongst the people. Since then, a wide variety of coins have been developed and if you are new to this world, it can be overwhelming and complicated. This is a world where computer science meets finance and if you want to get started, you can use simple investment strategies. There are also mistakes you need to avoid when starting and this article will list these mistakes to make your crypto journey run a bit smoother.
Not doing your research
If you have decided to invest in the crypto market, you must do your research. If you’re a new investor, you must get a feel for the industry by understanding how digital currency works. You also need to learn about the various currencies on offer and not just focus all your attention on the biggest names like Ether, Bitcoin, and Ripple. Additionally, you need to be familiar with blockchain technology and how it links to crypto. Finally, you should research crypto trading bots. Using a free crypto bot can come in very handy if you’re a beginner, as the new experience of trading can be a bit overwhelming at the beginning. By gaining information about cryptocurrency and blockchain, you will be able to determine which investment opportunities are worthwhile and which should be avoided.
Not having a goal
Having a goal is important because this acts as a sort of blueprint for how you will move. Ask yourself, how much money do you want to make with cryptocurrency and how much money are you willing to accept? You also need to have an idea of when you want to take some profit out or if you will want to cash out completely. Is your goal to invest in the short term or long term? Asking yourself these questions will help you formulate an attainable goal and each answer needs to align with your investment strategy.
FOMO ‘Fear of Missing Out’ and we have all been there. In the crypto world, people always want a piece of the action when they see a project skyrocketing, especially if they have a history of missed opportunities. It’s natural not to want to miss out on opportunities; however, you should always remain calm and not be too excited. When you invest in projects that are popular and doing well, there is a much bigger chance of losing money because early investors will eventually begin pulling out their profits which can result in you having to wait a significant amount of time before breaking even. You can lose money because of increased slippage and you can also experience failed or stuck transactions.
Not taking profits
Any wise investor knows that it is not a good idea to hold onto your cryptocurrencies for too long because this puts you at risk of your gains being wiped out by a big correction. Many people use their earnings on luxury items such as cars, designer clothes, and luxury bags however, these are not ideal ways to spend because they often depreciate over time. Instead, take your profits and reinvest them so that you can receive a significant return in the future.
Not being secure
Crypto is unregulated so if something goes wrong, you have a slim to no chance of recovering any lost coins. This is why security is very important. You must be aware of the many fake profiles of crypto influencers on social media as well as scammers on Telegram where “admin” and “tech support” make many people unsuspecting victims. These scammers will offer people insane offers and giveaways that they claim will double your crypto almost instantly. Avoid these people at all costs! Many people have lost significant amounts of money from this. Besides scammers, you also need to keep your private key, password, and seed phrase protected and never save this information on your phone, computer, email, or cloud. Instead, write it down old school on paper. You can also enable more security by using Two-factor authentication on all your wallets and exchanges.