The best trading technique comes from years of investing in cryptocurrency markets. With this short guide any beginner can learn how to avoid common Crypto trading mistakes.
In this article, I'll explain:
- Cryptocurrency guide and trading strategies
- Common cryptocurrency mistakes and how to avoid them
Cryptocurrency Tips
1. Always have a strategy for crypto trading
Separating genuine cryptocurrency recommendations from the scams isn't a easy task, there are lots of sharks out there waiting to swindle your money.
Reports showed that, Crypto investment scams rose to 7,115 in the first nine months of 2021. It increased 30% compared to 2020, according to Action Fraud, there's an estimate of average loss per victim at $30,000.
So most times when you're approached with a lot Information about a cryptocurrency, be cautious and have patience from all the hype.
Do some research about the project. How many users does it have? What problem can it solve? Does it have any connection with any industry? Avoid coins that promise Huge amounts when nothing have been delivered yet.
2. Manage Risk
There are some people that offer crypto trading tips but might not have your best interest at heart. So don't go making the same mistakes as others. Instead, set limits on how much you want to invest in a particular cryptocurrency and don't be tempted to trade with more money than you can afford.
Crypto trading is a huge risk business and most traders lose rather than gaining profit.
3. Diversify Your Crypto Portfolio
It's not a good idea to put all your eggs in one basket, investing your all in a single cryptocurrency is a huge risks.
The same goes with Stocks and Shares, spread your money out among cryptocurrencies.
By doing this, you don't risk being over exposed should one of them devalue overnight- especially as the market prices of these investment are highly fickle.
There are Hundreds to choose from, so perform some research.
4. Trading For The Long Term
Prices are fickle which can rise and fall dramatically day to day, and amateur traders are often tricked into panic selling when prices are low.
Cryptocurrencies aren't going away and leaving your money in the market for months or years at a specific time could offer you the best rewards.
5. Automate Purchases
Just like regular stocks and shares, it helps a lot to automate your cryptocurrency purchases to take advantage of pound-cost averaging. A number of cryptocurrency exchanges, including Gemini and Coinbase, allow you to set up concurring buys.
This is where crypto traders tell the platform to purchase a fixed amount of preferred cryptocurrency every month, for example, $200 worth of Bitcoin. It means they get a bit less of the currency when prices are Up and a little more when prices are down.
This takes the stress out from trying to time the market by either buying a currency at what you think is the lowest possible price or selling at the highest price. It's something that even trading experts struggle to get right.
6. Make Use Of Trading Bots
Trading Bots are useful in some circumstances, but they aren't recommended for beginners looking for crypto investment tips. At times, they are just scams in disguise.
If a real algorithm existed that timed your buy and sell trades to perfection, everyone would be using them!
Five Common Crypto Mistakes
It's a usual case to get caught up in the hype of cryptocurrencies news. Surprisingly, Crypto mistakes are common and here's a list of them below.
1. Buying Because The Price Is Low
Seeing low prices doesn't always represent bargains. Most times prices fall low for a reason. Look out for crypto with falling user rates. Sometimes, developers leave a project and it stops getting maintenance and updates, which makes the Cryptocurrency unstable and insecure.
2. Falling for scams
Getting scammed is one of the unfortunate mistakes novice trader perform. There are numerous ways to get scammed through cryptocurrency, here's a list of the major ways.
I. Multiplier Scams
Fraudster mostly contact their victims by email or text with an "Investment Opportunity". They promise to give the investors double or triple the amount they put into Bitcoin or Ethereum if they send their crypto to a particular digital wallet.
Note: Offers of free money should always be viewed with great incertitude.
II. Spoofing
Also, fraudsters can easily inflate or delfate the price of very little or unknown cryptocurrenciea, creating a fake buy or sell orders and sending the value of the crypto multiplied by hundreds of percent at a time.
When inadvertent traders rush in to try and obtain a piece of the action, the fraudster cancel the orders - which they were never going to execute in the first place - and in some circumstances that can cause the price to collapse.
Often, the fraudster will own a lot of a particular cryptocurrency ( mostly through pre-mining before it gets to the general public). And there after, they pump up the price by promoting it on social media, then selling it on crypto exchanges at the highest price. Then they disappear.
III. Malicious wallet software
The best crypto advices will tell you to stick with big names in crypto wallets like Trustwallet, Metamask, Trezor etc.
Dodgy or unknown wallets on the App Store or Google Play Store can steal your cryptocurrencies funds with dodgy code.
IV. Fake coins
Cryptocurrencies are rapidly growing and with so many different types of currencies on the market, it can be difficult to differentiate between the real and fake.
When you invest in fake coins, fraudsters can steal your identity and often your hard-earned money. This is done through phishing- convincing you to click on links in emails that install spyware on your computer.
Don't believe such words and Make sure to to your own research first.
3. Investing/Going ‘All-In
Some novice investors attempt this because of the platform in which they trade on said "Maximize Your Profit By Staking More Of Your Money". This is a shortcut to becoming broke.
Quality crypto investment tips would be only to use a certain amount of your capital- let's say 5% and always keep an emergency cash funds that never gets invested In crypto market.
4. Thinking Crypto Is Easy Money
There’s nothing easy about making money through trading of any kind of financial asset, whether stocks and shares, gold and silver, or cryptocurrency.
Anyone who says different is probably trying to trick you into falling victim to crypto scams or mistakes.
5. Forgetting your crypto keyphrase
Misplacing/ Forgetting your keyphrase is like losing the keys to a bank vault. If you use a hardware wallet for storing your crypto offline,
Without your keys, all your cryptos will be unrecoverable. Make sure to store your keys in a safe and memorable place.
Conclusion
I've come to the end of today’s topic on Cryptocurrency Tips and I hope with these few explanation we all learn something new or have a different view on how to trade better with cryptocurrency.
Thank you all for reading see you soon...