15 mistakes that deprive you of profit.
You have registered an account on a cryptocurrency exchange, set a wallet, bought the first cryptocurrency, started trading, watching all the news and following the market tendencies, ... and you are still losing money? Most probably, you’re making the same mistakes as all newcomers do.
Users of the portal Quora have decided to join forces and created a short guide on the most popular mistakes people make when entering the cryptocurrency market.
Lack of fundamental knowledge on blockchain and cryptocurrencies
At first glance it may seem that such knowledge is not required for trading. However, it’s the exact opposite. You will not be able to successfully trade an asset, if you don’t know anything about it. In case of traditional assets, such as precious metals, stocks and currencies, experienced investors conduct a fundamental analysis of their value to be aware of all the nuances. The same goes for cryptocurrencies. It’s essential to know from where they come from, how they work and what’s their history. First, read the popular blogs on this topic, watch some videos on YouTube, and then move on to technical blogs. Prepare yourself!
Zero experience in trading on exchanges
You have studied the basics and opened an account on the exchange, here you may get confused by principles of trading. Therefore, once again, go back to training. Learn about the types of applications, the book of orders and technical analysis (completely unfamiliar concept for most of the beginners). Dig into common abbreviations, ticker symbols and security issues.
Being too careless about security
If the secret key is lost, all the cryptocurrency savings will also be lost. Alas, this is an indisputable fact. Do not store your digital assets on the crypto exchange account even it has two-step authentication. Put them in a cold wallet, the keys you will precisely control. The best suited for this are hardware and paper wallets
Ignore characteristics of different cryptocurrencies
The fundamental features of a particular cryptocurrency, such as storage and transfer of value, depend on its popularity. You can buy an incredible number of coins at a low price and "hang along" with this investment, since the cryptocurrency is not used anywhere and is not in demand. Thus, before investing in a particular project, evaluate its popularity and prospects.
Bitcoin (EXANTE: Bitcoin) has made cryptocurrencies mainstream. But in recent years, many new projects with characteristics exceeding the first cryptocurrency have appeared. For example, litecoin (BITFINEX: LTC / USD.BITFINEX) allows for faster transactions than with bitcoin. Ethereum (BITFINEX: ETH / USD.BITFINEX) offers a unique concept of blockchain and smart contracts. Do not get obsessed with just bitcoin, look for new technologies with high potential.
Being too greedy
The profit goal is achieved, you feel like an almighty lucky person, but instead of selling the asset, you are dragging out the time hoping for continued growth. The next morning you wake up, and the market collapses. Do not be greedy!
Ignorant in making up a portfolio
The purchase of only bitcoins or only altcoins expose the investor to extra risk. The portfolio should include both bitcoin and alternative currencies and be sufficiently diversified.
Making decisions without looking at overall market picture
When deciding on a deal, always start with a global picture. Do not base your conclusions solely on short-term charts. Consider the behavior of the cryptocurrency market for at least the previous seven days.
Mistaken to believe that all ICOs are scams
With so many ICOs on the market it's hard to understand which ones are real and deserve a place on exchanges. Some projects will disappear, while others will make a huge profit. Promising start-ups can be determined by analyzing the purpose, scope, market capitalization and total circulating supply.
Don’t be subject to panic sale-off’s
Let’s assume you are successfully trading, earning some money, but suddenly, the cryptocurrency market sees is a collapse (like what happened in January this year), governments of some countries impose bans on crypto trade, or the cryptocurrency community is sweeped away by a wave of negativity. As a result, you sell all your assets at a loss and allow another investor to buy them at an attractive price. You exit the game, while they enter it. Remember: there is nothing wrong with keeping project tokens that you believe in, even if they became significantly cheaper in short term.
Keeping assets on an exchange
The secret key protects savings from intruders, so store it in a safe place and make backup copies. Cryptocurrency exchange - it's just a place to exchange cryptocurrency, not to storage them.
Sending crypto to a wrong address
Yes, this is also a very common mistake as well. The address of the wallet is difficult to remember due to the large number of characters, so always check it carefully.
Investing more money than can afford to loose
Do not invest in cryptocurrency money you are not ready to lose. Otherwise, you risk becoming emotionally dependent on the market and making wrong decisions. This is a vicious circle. Losses entail emotional tension, that are usually followed by even more losses. Do not invest more that 10% of your personal wealth into cryptocurrencies.
No trading plan
After studying the market and conducting your own research, come up with a trading plan, which will set out the strategy and a ‘toolbox’ that will help in analyzing decisions. But don’t just leave it at that, stick to the plan til the end!
Choosing all-or-nothing transactions
Some leyman traders tend to open a position on all available funds and close them all at once. An experienced trader enters and exits the deal gradually. For example, he can sell 10% of bitcoins, making a profit of 50%, another 10% when the profit is 100%, and so on. In this way, they capture greater profits and earn capital for purchases during short-term falls. Inexperienced traders are influenced by greed and can sell everything way too early.
Mistakes are made by all people, the main thing is to learn from them and prevent them from repeating.