Cryptocurrency has attracted a lot of attention and investors, especially over the past year. However, just like investing anywhere else, investors must follow some practices and principles to get the best out of their crypto investment.
If you are starting on crypto investment, or even if you have been in the field for some time, some mistakes to avoid include:
1. Trading without a goal
Do not buy cryptocurrency because everybody else is doing it or think it is an excellent way to make a fortune.
You need to have a short-term and long-term goal before you get into trading. That way, you can choose how much you want to invest and the best investment strategies.
If you trade without a goal, you will find yourself investing more money than you can afford to lose, and when things do not go your way, you are left with nothing.
2. Thinking short-term
Since cryptocurrency is relatively new, the market is highly volatile, and there could be drastic changes over a short period. The market could achieve an all-time high within a few hours and drop to an extreme low within the next few hours.
When trading, you should always look at cryptocurrency’s current prices and trends on sites like OKX.
3. Not researching
You need to research different types of coins and analyze how they have performed in the market. Do not just jump into buying cryptocurrency and buy coins because they are cheap.
Researching also helps you have a good entry and exit point strategy. An entry point is where you buy your cryptocurrency, and the exit point is where you sell your cryptocurrency.
This strategy will help you maximize your profits when you decide to sell your coin, and with sound research, you can predict a good exit point. During the research, consider using trading simulators to practice.
4. Falling into scams
People know that cryptocurrency is attracting many people right now. Scammers have devised many scams to trick people who want to get into cryptocurrency or who are not careful.
Some of the scams include:
- Cloud multiplier scams – Scammers email victims with investment opportunities guaranteed to give them twice or thrice their investment money.
- Spoofing – Scammers deflate or inflate the prices of unknown or small cryptocurrencies and create fake sell or buy orders. They sometimes send the values of the skyrocketing cryptocurrency, and when traders try to be part of the trading, they cancel the orders.
- Fake coins – There are many upcoming cryptocurrencies, and it’s hard to tell the real ones from the fake ones. If you invest in a fake coin, the scammers will steal your money and possibly your identity.
- Malicious wallet software – When buying cryptocurrency, stick with the known crypto wallets instead of the new unknown ones on AppStore or Google Play Store.
5. Thinking that cryptocurrency is easy money
You may have heard of people who have invested in cryptocurrency and come out with loads of money. While that happens, there is nothing easy about investing in cryptocurrency. You have to learn how to analyze the coins’ movements and master good trading tactics.
Thinking that it’s easy money will tempt you to go all-in with all your money, and you might end up losing it all.
6. Forgetting your password
Whether you have a digital or store your crypto offline on a hardware wallet, forgetting your password or key phrase means that the coins in your wallet are lost, and you can’t reclaim them.