Top Trading Cryptocurrency Tips and Mistakes to Avoid
Do you buy coins just because they are priced low? Do you research about the crypto to invest in before actually investing your money in it? Are you aware of the various scams going on in the crypto world? Do you have a portfolio tracker application installed on your device? If not, you may be making some of the biggest mistakes that an investor can commit. Such mistakes may act as a bed of thorns in your path to becoming a successful crypto investor. So, here we have accumulated a list of some of the crypto mistakes and some beneficial trading cryptocurrency tips to help you amplify the gains in your portfolio.
5 Horrible Crypto Mistakes You Might Be Making
Cryptocurrencies are often considered easy money. Keeping that in mind, most beginners take the market very lightly. After a few days, all we know is that they lost all or some amount of their money in it. The worst part is that the fate of their money roots in some very silly mistakes. On that note, here we are mentioning 5 horrible crypto mistakes that you may be making and should stop immediately.
Investing Without Identifying Personal Investor Profile
Let’s begin this list of horrible crypto mistakes by asking yourself a question.
What kind of investor are you?
Do you prefer holding on to your investments for the long term and steer clear of risks?
Are you someone who likes to keep a balance between trading to earn quick profits and holding the assets to keep a scope for long-term gains?
Or are you a trader who likes to use the crypto market fluctuations to your advantage and make giant and rapid profits?
If you don’t have an answer to this question, you are bound to lose in the larger game of cryptocurrencies. Not knowing your investor profile exposes you to a lot of risks related to your money and investments. So, investors should dedicate a good amount of time to identifying their investor profile and planning a strategy well ahead of their entry into the crypto market.
Investing in One or Many Different Projects
Some investors, on one hand, put all their money into a single project. This poses a great threat of investors losing their money in case the value of the project degrades. This is why we suggest that all the investors diversify their portfolios. Then there are some investors who, in order to diversify their portfolio, invest in so many different types of coins.
While there is nothing wrong with doing that, it can create a good amount of hassle for the investors. They will need to keep a close eye on several different price graphs and spend a lot of time researching the project. Also, this limits the potential for gains. Therefore, it is advisable for investors to diversify their capital among four to five different projects, not more than that.
In addition to this, if the investor invests in many different projects having high-risk profiles, the chances of losses are higher than ever. So, the investors must always maintain a balance between high and low-risk projects by investing only in a few projects.
Going After Cheaper Coins
Some investors, especially the new investors, steer away from buying high-valued coins. Little do they realize the reasons behind such a high value of cryptocurrencies. As a result, they turn to the cheaper coins in order to increase the number of their holdings without giving a good thought to the value of their holdings. This leaves investors holding the coins having no real value or practical use cases. When the prices of cryptocurrencies fall, it is usually because the project is no longer making improvements or the developers have abandoned the project. This, in turn, leads to a declining user base and hence, falling prices.
Therefore, it is very important for investors to refrain from buying coins just for the sake of low prices. On the other hand, it is better to invest money in coins that are highly-priced and offer great scope for improvements in the future. You can refer to the blogs on the best cryptocurrency to invest in to find out the coins you must buy. Another one of the best ways to identify the potential of a project is to look at its whitepaper and the roadmap.
Not Maintaining a Strategic Plan
Most of the new investors we know enter the crypto market without a well-defined plan highlighting when to enter, exit, or trade-in the market. They have no strategic plan that describes their risk potential, their profit potential, or the action plan in case the markets become rough. They have no clear vision about their plan, whether they aim for long-term investments or wish to make short-term gains and exit from the market.
This doesn’t only create a lot of confusion and worry among the investors but also makes them feel uncertain about their investments. As a result, they have no idea when to take their securities out of the market and make profits and hence, incur losses. So, a strategic plan must be a part of your guide on how to invest in cryptocurrency.
Taking Quick Actions Based on the Market Sentiments
Without a clear strategic plan in place, the investors do not know how to behave when the markets change sentiments. Therefore, some investors act desperate and sell their assets when the markets go up and start buying assets when the markets face even a slight dip. Such quick actions can push investors towards witnessing limited gains and considerable losses. For example, if the investor sells his coins when the price increases by 4% and in the next hour or coming few days, the prices increase further by 10 or even 15%, the investor ends up losing money. Hence, it is very essential for investors to maintain a plan and act accordingly.
Falling for Scams
With every new technology, comes a full range of scams and the same goes for blockchain technology and cryptocurrencies. There are thousands of scammers reaching out to people on texts, email addresses, phones, and cloud-based messaging applications about deals that are too good that investors give in to them very easily. However, such deals that sound too good to be true are often scams and serve the only purpose of ripping people off their money. Here are common scams that are currently going on in the world.
In such scams, scammers approach people via texts, emails, or social media accounts about a possible investment opportunity where they claim to double or triple the number of their Bitcoin holdings. Such opportunities are nothing but scams and investors must never give in to such opportunities.
Malicious software-based wallets
Just like fake exchanges, there are malicious wallets present on Google Play and App Store that allow you to store your assets, and then the assets are no longer available to the user. Such wallets steal the user’s identity and their assets, leaving them with nothing.
Pump and Dump
Some people with criminal intentions may pump and dump the prices of some coins just to generate profits for themselves. They can do so by promoting the coin on social media or other platforms. This is a trick used by criminals to make people invest in projects for their own benefit. So, it is important to stay alert about coins that are witnessing a sudden rise or drop in their prices.
There are hundreds of projects that get listed on exchanges every day. In addition to this, some projects ask you to buy their tokens from their dummy websites. They are not genuine projects and are designed just for the sake of stealing money away from people. This is why it is so necessary for investors to stick to the big exchanges to find and buy coins and do their due diligence to research the project and its authority.
5 Crypto Tips to Take Your Crypto Portfolio to the Next Level
Now that you are aware of the mistakes that you be making, let us pitch in and offer some crypto tips.
Trading Cryptocurrency Tips #1: Don’t be Another Sheep in the Herd
Following other investors and trade patterns blindly is one mistake that most investors make. FOMO is something that you should never give in to. You may have heard cases of investors investing in assets just because everyone else was doing it and ending up losing money, just like everyone else was losing it! Therefore, while investing in cryptocurrencies or choosing projects that you are interested in, be rational. Follow your own instincts. It is okay to take references from fellow investors but you must never follow them blindly. Trust your intuitions. It is necessary that you believe in the project that you are investing in.
Trading Cryptocurrency Tips #2: Implement Dollar-cost Averaging in Your Crypto Investments
Not all investors are loaded with money that they are willing to invest or lose in a crypto market. This is where the dollar-cost averaging method helps the investors in building their portfolios bit by bit. As the investors invest a fixed amount of money at regular intervals, it allows the investors to make profits and balance the previous losses, if any.
What is Dollar-cost Averaging?
Dollar-cost averaging refers to the process of making investments in the form of pre-decided dollar amounts. In this, the investors distribute the capital that they want to invest in cryptocurrencies, across a number of time periods. This helps them to reduce the impact of crypto price fluctuations on their portfolio. Since the investor invests a fixed amount of money in crypto, this helps them in buying more during a bull market and even more during a bear market because the prices drop during a bear market.
Trading Cryptocurrency Tips #3: Diversify Your Portfolio
Diversifying your portfolio may sound difficult. However, once you have diversified your portfolio among quality cryptocurrencies, you can sit back and see your portfolio gains going up the graph. It doesn’t only help in balancing your portfolio but also helps in ensuring profits over time. Now you may ask how to do it. Read this article to read a strategic plan for diversifying your crypto portfolio.
Trading Cryptocurrency Tips #4: Understand the Crypto Jargon
Do you know what it means when the market goes bearish? Do you know why green cryptocurrencies are called so? Are you aware of the difference between Proof of Work and Proof of Stake? If you said no to even one of these questions, it’s time for you to put on your reading glasses and begin learning the crypto jargon.
A variety of new terms have emerged in the world with the rise of cryptocurrencies. To be a successful trader, it is necessary for you to understand each of them and resume your crypto investment journey. It is the first and the simplest change that can make a big difference to your crypto investments.
Trading Cryptocurrency Tips #5: Use a Portfolio Tracker to Track the Developments
The decentralized feature of cryptocurrencies and their market has allowed beginner as well as advanced investors to enjoy crypto trading and earn huge profits without having to worry about paying taxes, etc. The investors are free to open as many trading accounts as they want, as many wallets, as they want to possess, and as much money as they want to invest. However, this diversified and expanded nature of cryptocurrencies has introduced hurdles and a lot of hassle for managing so many accounts, wallets, and assets.
This is where the portfolio tracker for crypto comes into the picture and saves the day for all the investors. A portfolio tracker helps to keep track of the money that you have invested, the gains you are making, the losses you are incurring, and the assets that are performing great and those that aren’t. In addition, some trackers offer you a complete guide on how to invest in cryptocurrency to help you get started.
Trading Cryptocurrency Tips #6: Try Copy Trading (Bonus)
Copy trading is the process of mimicking the trading patterns of a professional trader or someone who has a history of successful trading in terms of minimum losses and maximum profits. There are platforms that let you copy the trading routine of other investors in your own portfolio. The process is extremely simple. All you have to do is set up your account, select the trader that you want to follow, and link your account with them. In addition to this, you can also select multiple traders and allocate a percentage of your portfolio to follow their trading patterns. This is a very simple process and takes a lot of burdens away.
Have you been making these mistakes before and lost your money? It’s okay if you said yes because each of us learns from our mistakes. However, you can always stay aware and alert about anything that sounds suspicious about a crypto project and prevent yourself from committing another horrible crypto mistake in your investment journey. Plus, the crypto tips we mentioned here will help you to manage volatile cryptocurrencies and build a profitable investment portfolio. Now wait no more and implement these strategies on your crypto investments.
A passionate writer, seasonal poet, and feminist, I am trying to wrap my head around all the topics under the sky. You can often see me talking about crypto, social issues, traveling across the globe, how I am trying to change the world, and how you can be my ally!