5 Mistakes Every New Crypto Trader Should Avoid
The crypto industry is relatively new. Because of that, people need time to adapt to it. You will find people that are skeptical about this subject. They believe that cryptocurrencies will never replace fiat money. More precisely, you will hear them saying that investing in digital currencies would be a bad move.
Still, many real-life examples confirm this statement is wrong. First of all, nothing in the business world is certain. See the consequences that were caused by the Coronavirus crisis. Countries that were living from tourism won’t have equal chances to make a profit from it. Because of that, uncertainty is not something that should scare you.
However, this doesn’t mean that the cryptocurrency world is not complex. On the contrary, you can’t participate in this industry without skill and knowledge improvement. Every single day, more and more people are getting interested in this industry. This means that being successful requires time, patience, and hard work.
When you look closer, many beginners are making common mistakes. These mistakes do not allow them to achieve the goals they have. Because of that, it is necessary to talk about them and make a certain analysis. Learning from the mistakes that others made is the less painful lesson.
So, let’s find out together the mistakes every new crypto trader should avoid.
1. Cheap Is Not Better
The first thing that you start researching as the beginning is the most affordable cryptocurrencies. However, if 1 coin worths less than 1 dollar, that doesn’t mean this is a good time to invest. Indeed, the value of that digital currency might jump in the future. Something like that can happen even for 2 or 3 weeks.
Still, that is not the point of trading with digital currencies. Experienced investors never buy coins because they are cheap. They know very well that this is not proof of profitability. Something that you should analyze is why that coin is so cheap. Despite that, you need to find proves that current currency promises a price improvement. When you have enough evidence, then you should start investing a certain amount of money.
2. Panic Selling
Panic selling is something you can see quite often in the crypto world. The examples of panic selling we could especially see during Coronavirus pandemic. People were massively selling BTC and other currencies because they were afraid of losing money.
However, experienced investors have a completely different vision. More precisely, many of them believe that purchasing BTC now would be a smart move. The price went down and it probably will reduce more. However, when things return to normal, people will once again get interested in BTC.
The price change is not something that will stop. This counts even for the most popular digital currencies. You are not a psychic and you do not know what is going to happen in the future. A coronavirus crisis is a good example of that.
Yet, doing things that you can control is a smarter move. For example, if the price of your digital currency goes down, do not start selling immediately. Analyze why these price changes happened. When you see the reason, try to check if there is potential that everything will get back to normal in the near future. These activities are something that will split you from the mass of other average investors.
3. Starting to Invest without Necessary Education
You need to understand that trading with digital currencies is not a game. It is a complex system where you need to act responsibly. Many beginners have a wrong approach from the very beginning. Because of that, they lose their money quite quickly.
Education is everywhere around you. First of all, most of the universities do not educate students about this subject. As we said, it is relatively new and education programs won’t adapt soon. Despite that, some governments do not accept digital currencies as a legit payment method. However, that doesn’t mean that education does not exist.
Many blogs and e-books have been written so far about this subject. There are websites like thebitcoinloophole where you can get familiar with this subject. Despite that, networking/connecting with more experienced investors is also a good thing. Logically, you will have to find those that are willing to share their knowledge.
4. Starting with Big Investments
We understand the desire to improve your financial stability. Still, making fast moves is not going to help a lot. As we said, panic selling is bad and that also counts with “panic buying” (if we can name it that way).
Beginners hear different stories about people that made a lot of money thanks to digital currencies. They get inspired by those stories and they want to achieve that. Indeed, you have equal chances to do that as anyone else. But, no one told you that you can achieve that immediately.
The point of what we are saying is that you should start small. Investing 100% of your capital is never good. This counts for all the investments that you plan to make. Our recommendation is to invest up to 50% of the money that you have. In this way, you will primarily see if you truly understand how the system functions. If your investment was good, then nothing stops you from making another one. On the contrary, if your investment was bad, you will get a second chance to fix the mistakes you made.
5. Believing In Rumours
This is probably the main reason why people make decisions without good analysis. One of the most important things to do while analyzing is following the news in this world. The news that you hear can give you some directions on when you should sell or buy.
Still, you already know that this world is full of fake news. People use them for different purposes. Well, something like that exists in the crypto world as well. Because of them, people sell/buy digital currencies at the wrong moment.
Do not believe in rumors! You need to carefully pick a reliable source of information. In this way, you will protect yourself from making wrong moves.
The message that we want to send is that education is the key to success. The prices of different digital currencies will go up and down. However, your knowledge will remain and help you to predict those changes.