The world of cryptocurrency is moving fast. Educating yourself beforehand can save you a lot of effort and grief later on.
Here are five of the biggest crypto mistakes to avoid in the crypto-trading field.
Not Making A Profit From Your Investments Early On
The most common mistake made by beginners in cryptocurrency is not making a profit from their investments as soon as possible. In traditional trading or even binary options trading, you can make a profit right away and then again and again, for that matter.
But in cryptocurrency investing, you will find yourself waiting until the coin gains value before it starts to increase in value.
Most beginners don’t understand that they should sell out of their investment when they get a profit. This way, they can secure some of their profits and move on to another coin before losing out on the opportunity.
Ignoring The News
The crypto world is a whole different ballpark from the traditional financial markets. In addition to research and analysis, news plays a vital role in trading Bitcoin (or any other coin).
Just like in traditional stocks, bad news can cause significant drops in cryptocurrency prices. Good news may also cause the price to increase.
So you need to follow what is going on in the crypto-world closely. This way, you will be ahead of the traders who don’t bother following the news at all. You can get a natural edge over the market that way.
Over-Relying On Artificial Intelligence (AI)
Artificial intelligence is a major buzzword in the crypto world. Most traders swear by its ability to predict whether a coin will increase or decrease in value and they invest heavily based on those predictions.
But remember, artificial intelligence is nothing but a tool, and like any tool, it must be used correctly and not excessively. Don’t become a slave to artificial intelligence but instead, use it as an aid in your trading.
Being A Part Of Pumps
Pump and dump is a scheme going on in the crypto world from as early as 2014. In this scheme, scammers buy a particular coin at low prices before exciting it up through various means such as social media, false press releases, or even paid articles.
When the price increases significantly, they sell their coins to make a profit. Afterwards, the price plummets and the latecomers are left with worthless coins.
It’s not difficult to be part of pump groups, especially since they are free to join most of the time. But remember, being part of pump groups is a risky business because you can lose out on more than you can gain if it fails.
Not Putting In The Effort To Keep Your Funds Secure
Yes, there are dozens of differences between cryptocurrency trading and traditional trading. Still, one major similarity is that both types of trading require a lot of effort for safekeeping your funds.
In crypto-trading, this means keeping your coins in a cold storage wallet or at least on a reputable exchange and having strict security measures. Many beginners prefer using web-based wallets, which are easy to use but not secure enough.
Remember, a lot of money is at stake in cryptocurrency trading. So never take the security of your funds for granted, and the biggest crypto mistakes to avoid should be carefully taken into consideration during trading.