Crypto Investors Buyer Beware: Here’s The Most Common Mistakes Bitcoin Newcomers Make
New Crypto Investors Beware: These Are The Most Common Mistakes That Newcomers Make
Crypto space is slowly but surely attracting more and more attention, and with popularity, new investors continue to enter the market. However, in order to make proper investments and not experience huge losses through trading, these newcomers need to properly understand cryptos.
While many believe that the basic knowledge of finances will be enough to get them started, this is usually not the case. Crypto market is extremely unpredictable, and it takes a lot of patience, time, as well as dedication before investors can properly understand it.
This is why it is important not to get discouraged if you make mistakes at first. Instead, embrace these mistakes, share knowledge, and gather experience that will be useful for future trades. In order to help you avoid at least some of these mistakes, we have compiled a list of the basic errors that new investors are known to make.
Common Mistakes That Crypto Traders Make
1) Not Caring About Security
Without a doubt, security is the most important aspect of trading cryptocurrencies. It involves everything, from properly researching coins, to choosing the right wallet or exchange. The problem is that new investors usually do not care much for security, which puts them and their funds in a lot of danger.
Hacking attacks, scams, and other threats are a constant threat of the crypto world. This is why a lot of services like wallets and exchanges offer two-factor authentication and similar measures. However, newcomers do not take advantage of these benefits by falsely presuming that they are unnecessary. The same is true when it comes to keeping hard copies of private keys and passwords and storing them in a safe place.
These are important measures that are there for a reason, and ignoring them can only lead to investors losing their money.
2) Investing More than You Can Afford to Lose
Investing can be an exciting activity, which fuels the excitement even more when you make gains for the first time. While a lot of investors are careful at first, as soon as they start making a profit, they think that they have the market figured out. This is usually their first large mistake that they are not yet aware of. Soon enough, they start investing more and more, believing that gains will increase. This is when the market turns on them, and they lose all of their money.
This is why the second big rule is to never invest more than what you can afford to lose. Always be prepared for the possibility of your investment failing, as it is the safest way to keep what you need, and invest what you can live without.
3) Not Researching Enough
Another very important rule in the crypto world is to always do as much research as possible. When making an investment, there is a large difference between knowing a bit and knowing enough. Usually, knowing enough can prevent you from making a bad call, while insufficient research can, once again, cause nothing but losses. If you are extremely lucky, you might make gains without doing a proper research, but most investors that have tried this method have a lot of regrets.
4) Relying On Emotions While Trading
Considering how dynamic crypto world is, it can be easy to forget that you need to remain cold-headed while trading. There are often situations where a certain currency will experience a large spike in its value, which might attract numerous investors. You, as a new trader, might think that this is an excellent investment opportunity, and you just jump into it without doing any research. Then, the tides turn, and you lose your money.
While it is very hard to be patient in these situations and do your research while everyone else is investing, it is still the best way of doing things. The value of crypto skyrockets like this all the time, and there will be many other opportunities for you once you learn how to do these things properly. Being logical and careful is still the best way to go.
5) Selling Early
Once you have done your research and bought a certain amount of coins, you may fall into another well-known trap, which is selling early. This is one of the biggest differences between traders and investors, as investors aim to hold on to their coins for a longer period. This is ultimately the best way to work with cryptos, and you should stick to your plan, regardless of market behavior. As mentioned, it can be quite attractive to make a sudden decision due to a value increase (or drop), but this is not a wise thing to do.
While your chosen coin may have gained value right now, it will likely become even more valuable in the future, once the market is properly regulated and more stable. At that point, your coins might have a lot more worth than what you would gain now. The best example of this is when an individual used 10,000 BTC in 2010 to pay for two pizzas. If they were to hold on to their BTC for all these years, they would be able to afford a lot more than one meal.
6) Being Impatient
It all comes down to patience when you deal with cryptocurrencies. We have mentioned this several times already, but it cannot be stressed enough how large a role patience plays in crypto trading and investing. It might take months or even years, but a smart investment can make you rich. All you need to do is wait for the right conditions.
Making gains via crypto should be viewed as a long-term process, as buying and selling quickly will not help you earn much in most cases.