Cryptomarket is on a boom, and you would notice that the youtube feed is filled with people who are open to spreading their knowledge of how to invest in these cryptocurrencies. But there are various beginners too who end up making common mistakes and lose a greater section of their money.
Mistakes In Crypto Trading
So in this article, some popular mistakes in crypto trading and how you can avoid these mistakes, along with the ways to enhance your investing methods. You can switch to https://www.bitconnect.co/bitiq/ for using a reliable and safe crypto trading platform.
1. Trading Strategy
There should always be an investing strategy because you cannot take your money and start investing in Cryptocurrency without any plans or long-term goals. So the best way for the same is to begin by practising before investing with real money, as this will equip you with the required market experience.
Also, you can study the investments and strategies of pro investors and learn about the tactics they followed, which allowed them to make massive profits and their name in the market.
2. Backup Plan
There should always be a backup commodity that can save you when your all strategies backfire, either in Cryptocurrency or a fixed deposit. You can also manage two portfolios at once. The first one would be your main investing one, and the other would consist of all the stable and reliable cryptocurrencies that would give fewer profits but have the least chances of losses.
3. Market Knowledge
Knowledge is the best way to make a name for yourself, and this is not attained by some youtube videos or some investment genius who promises you with highest ROI. You need to rely only on yourself in the market, so you must read about all the case studies and various instances when the market was at the highest of all time; it is said that a hunch with the support of knowledge is the direct key to success.
4. Risk-Taking Edge
Investing is a field that requires a sense of faith and risk-taking factors, and if you are well equipped in it, then the market has wonderful opportunities for you. One must always be prepared for what the market has to offer, and if you have studied a lot and gone through a lot of case studies, then your faith in your decision strengthens, but you must be aware that it’s your faith or overconfidence. Because a lesson is important in life, but it must not come with massive losses.
5. White Papers
The documentation and white papers of cryptocurrencies are not a waste; these are the most important documents for earning profits; when you begin investing, you must know that these white papers contain all the scratch knowledge of that Cryptocurrency. After reading the white papers, you can understand the stability and reliability of Cryptocurrency in the market and invest accordingly.
6. Seed Phrases
There are various instances when the users forget the PIN to their online wallets, so for a backup, these online wallets come in with a concept of seed phrases, a 24 character random code typed in by the user. If a user forgets his PIN to the online wallet, he can type the seed phrase and retain all his cryptocurrencies.
You should create a hard copy for your seed phrases because there are many cases of people who can be millionaires only if they remember the PIN to their online wallets.
7. Typing Error
Sometimes typing errors create great losses in the market because the only difference between 300,000 and 30,000 is a 0, and if a user forgets to type this one 0, he can face a great loss. So double-check while typing and avoid making payments in a rush.
8. Wrong Address Payment
This might look like a rare phenomenon, but it is more common than you think; when you plan on making a purchase or you wish to sell your crypto, you are asked to enter certain wallet details. If there are any mistakes while typing the details, then it might result in a transaction to an unknown user. Cryptocurrency is a decentralised method of payment, so in this form of payment, there is no verification via a mediator party to verify if the details entered belong to the right user.
Sometimes, the common fear of missing out is spread in the market, resulting in greater losses; as you can see, Bitcoin was a massive rise. Due to which various investors invested all their savings in it, there is a continuous decline in its value, which led to its loss. The investors who invested before the increased value of bitcoin gained massive profits, whereas those who invested afterward faced losses.
10. Over Diverse Portfolio
The most efficient method to manage a portfolio is to split it into long-term and short-term investments, but sometimes investors confuse this small basic rule. So investors diversify their portfolios, which leads to multiple possibilities because it’s a rare event that all cryptocurrencies go into profit. Still, it’s common that all of them go for a loss. So you need to choose wisely because if you cannot make a decent amount of profit, then there is no point in paying the tax to withdraw your amount.
11. Stop-Loss Security
This strategy turns out to be very helpful when the market is in a loss, and your assets are posing a threat to even greater loss, so in such instances, the investors can set a certain price after which you can sell their security. This tactic allows users to reduce their losses and sell a security at a certain drop. But if you cannot set a loss security parameter at the right price, you can face a considerable loss.
The best thing a mistake has to offer is a lesson, so in this article, we discussed some popular mistakes people make when making crypto transactions. These common mistakes might not seem so common, but they are, and you won’t believe it if someone tells you that by mistake, he sent $5000 instead of $ 500. By taking the required measures and tips in mind, you can avoid these mistakes and invest to gain massive profits.