Top 10 Crypto Mistakes To Avoid As A Beginner
So you’ve been drawn in with all the exciting talk of Cryptocurrency and you’re ready to make your fortune by trading in crypto. But where to begin? Yes, crypto trading can be daunting, especially if you don’t have any form of trading background.
But while knowing what to do is very important, knowing what not to do and what what to be wary of is also very important. So, this article aims to address the top 10 mistakes that beginners should avoid, but even long-time crypto traders may learn a thing or two.
1. Not Doing your own research
Many beginners fall into the trap of depending on friends and acquaintances for advice and information on crypto trading instead of just going ahead and doing their own research. Rather learn to depend on yourself by going out and gaining your own crypto knowledge. You’ll far more confident when trading and you won’t need to rely on any one else but yourself. The good news is that there’s a wealth of crypto trading knowledge out there online, including hundreds of articles, blogs and even free Youtube tutorials and courses.
2. Not Understanding Basic Charts
This also falls under research, as if you don’t understand basic charts, you may need to do some research in order to gain deeper comprehension. Understanding charts will also give you that much-needed confidence boost to make your crypto trading decisions, knowing that you understand the state of the market place. Graphs can really assist you in your decisions as you can gain vital information from them in a matter of moments.
Panicking is not healthy in any situation, but it is particularly bad in crypto trading. If you panic, you’ll become flustered by the ever changing tides of the crypto world. Things change A LOT, so being easily stressed or spooked is not going to help you in the slightest. If prices start dropping it doesn’t necessarily mean you need to sell everything, as fast as you can and if prices are on the rise it doesn’t mean you have to buy up before it’s too late. Instead of rushing into things, rather wait for the most opportune moments.
4. Not having an Exit Plan
Winging it works in some instances, but when it comes to crypto trading, it’s better to be fully prepared. Knowing when to sell is absolutely crucial and holding out for too long doesn’t always work in your favor. Knowing when to book your profits and leave can come with experience. But its still important to have some sort of strategy in place even for your very first crypto trades.
5. Looking for the Next Best Thing
Many newbies waste their time thinking that they are going to discover the next Bitcoin, Litecoin or Ethereum. Unfortunately this is highly unlikely and its advised that they should rather spend their time researching more realistic plans. Researching individual coins can be beneficial but the belief that they’ll behave in similar ways to coins before them is unrealistic because of the forever changing crypto market.
6. Forming an attachment with a coin
This is where new traders get confused between trading and investing. If there is a coin you truly believe in with all your heart- by all means, invest in it. Buy a certain amount and don’t look back. Let it slowly build away fro you. But forming emotional attachments to certain coins where you are just trading short term can be very dangerous as you’ll want to cling to them even when they’re no longer making you money. Remember to trade with your head, and never with your heart! Each buy you make could turn into a sell within hours so if you love long-term commitment, trading may not be for you.
7. Spending Too Much Too soon
So, you have a certain budget for crypto trading, right? If you don’t, you really should! What many beginners end up doing is spending their entire budget right in the beginning of their crypto journey. This really is a silly thing to do because if your first crypto decisions end up being bad ones, you’ll have to dip into other funds to continue trading and this will not be a good way to start your crypto trading journey. Only spend about half of your budget on your first investments so you have a cushion for when times get tough.
8. Trading with just One Coin
This is another thing that newbies seem to just love to do. The crypto market, as we’ve mentioned before, is very volatile. So if you have everything in just one coin, you could lose it all overnight if you’re not careful. A much better, and more well-rounded idea is to spread your wealth. Trade in a few different coins so that you have a few things going on at all times and are not solely dependent and focused on a single coins. Trading in multiple coins will also give you a broader and more accurate perspective on the crypto market in general.
9. Not following what’s happening in the crypto world
If you read blogs and listen to crypto news and podcasts, you are bound to be one step ahead of the pack. It’s a simple thing to do and there are even apps available that can keep you up to date with the touch of a finger. Crypto news can give you hints into what the market may do. So following it gives you definite boost and will improve your general crypto knowledge.
10. Falling Prey to Pumps
Crypto pumps are groups that attempt to trick buyers and sellers (often beginners) by artificially creating surges and drops by operating as a group with a coordinating leader. Pumps send coin prices sky-rocketing only for them to plummet again. However, they are quite easy to notice as the graphs look unnaturally steep with sharp drop offs. Crypto pumps happen very quickly and by the time you’ve bought what you thought were steady increasing shares, they’ve dropped again.