Did you know that more than 59 million people in the United States of America own some form of cryptocurrency? Exploring your different options for cryptocurrencies is a great idea if you’re looking for ways to grow your wealth and diversify your investment portfolio. On the surface, it might seem like a great way to get rich in a hurry.
Cryptocurrencies look like they’ll continue to gain strength in the future thanks to the many applications for blockchain technology, so it’s best that you stay ahead of the curve and learn about the common crypto trader mistakes. Making the wrong move with your crypto trading strategy could leave you with nothing to show for your return on investment. To avoid falling into common crypto trader mistakes, it’s crucial to stay informed about market trends and utilize reliable cryptocurrency API software or real-time data analysis and decision-making.
The good news is that you’ve found the right place to learn all about how to find the right crypto trading platform and make the most of your investments. Keep reading to learn about the 10 mistakes to avoid today!
1. Lack of Knowledge
If you plan on getting into investing and trading with cryptocurrencies then you owe it to yourself to do your due diligence. It’s difficult to earn a great return on investment even with an in-depth knowledge of the crypto market. You need to take the time to learn what drives the market in order to come up with a good trading strategy.
You’re making a big mistake by investing in an asset that you don’t understand, and it could result in you having nothing to show for it. Start by looking at the different crypto projects in the works to see which crypto options hold the most potential going forward. Having this knowledge will set you up for success since you’ll be equipped to make informed decisions.
2. Forgetting About Fees
Another area that many new crypto investors and traders forget about is the fees that they’ll face on the crypto trading platform of their choice. You’ll find a number of routes that you can take to purchase crypto, and one of the most popular is through a trading platform. You need to remember that you’ll face gas fees if you choose this method for buying or trading.
If you decide that you want to purchase crypto with a credit card rather than with cash then you could be looking at a fee of up to four percent of the transaction. That might not seem like much, but a purchase of $20,000 worth of crypto will result in an additional $800 in fees.
Always take the fees into account, especially when purchasing crypto like Bitcoin through a crypto trading platform. They’ll add up in a hurry if you’re not careful.
3. Short-Term View
Gaining a big return on investment through crypto with a short-term view of the situation is close to impossible. Many new investors tend to miss the forest for the trees and fail to understand the reasons why they’re not making big money from their crypto investments.
Sadly, many people view the world of cryptocurrencies as a way to get rich in a hurry. There are great opportunities to grow your wealth with crypto, but it takes shrewd investments through plenty of research. If you rush into things with a short-term view o your investments then you could find yourself broke.
4. Using Hot Digital Wallets
There are certainly perks to using hot digital wallets for storing your crypto coins, but you’re opening yourself up to some big-time risks. Storing your coins in a hot wallet is great if you plan on using those coins to actively trade or make a purchase. The convenience goes up, but it also leaves your coins in a risky position since hackers can gain access to your digital wallet.
The reason that they’re referred to as hot wallets is the fact that they’re online. It’s easy for skilled hackers to work their way into your wallet to access and steal your coins for their own purposes.
Your best bet if you plan on holding onto your coins and letting them gain value is to invest in a cold wallet. These wallets allow you to store your coins in an offline location so that you can access them when you need them. Until that point, the coins are safely stashed away so even the most skilled hackers can’t take them.
5. Forgetting Your Wallet Password
A shocking number of crypto investors lost their coins due to forgetting the password to their digital wallets. It’s one thing to accidentally lose a ten-dollar bill at some point during your day, but losing access to tens of thousands of dollars in crypto is a total disaster for most people.
It’s extremely important that you write down your password in a secure and safe place. If you end up forgetting your password, you might find that it’s impossible to recover the coins that you were storing there.
6. Choosing the Wrong Wallet Address
Another common mistake that those that are new to cryptocurrencies make is sending the coins to the wrong digital wallet address. You need to double and then triple-check the address to which you sent your coins in order to ensure that they go to the right person. Since crypto is unregulated you’ll find that there is no protection for your money should you send it to the wrong location by accident.
The same principle applies to transferring your crypto to your own wallet. Getting your wallet address wrong is a one-way ticket to making someone else’s day by sending them your own personal fortune. It’s a good idea to get the details about Bitcoin ATMs near you for the best results.
7. Falling for Scams
As with any industry where tons of money is involved, you’re sure to run into your fair share of scammers when you start making crypto trading profits. The crypto market is filled to the brim with scammers that are looking for people to dupe out of their hard-earned money.
Many of these thieves use phishing scams to get ahold of your password and transfer the coins that you’re storing there to their own wallets. The two most common places where crypto scams happen are through emails and instant messages. Remain vigilant, especially if you’re receiving messages from anyone that you don’t know.
8. Overcomplicating Things
Yes, cryptocurrencies are quite volatile. That doesn’t mean that you need to draw up a strategy on par with Einstein’s Theory of Relativity. Overcomplicating things is one of the worst paths you can take if your goal is a great return on investment.
Many people see TikToks and YouTube videos that talk about extensive and confusing trading strategies. These strategies are even more difficult to follow if you haven’t taken the time to educate yourself on the cryptocurrency market. You need to give yourself time to learn the analytical side of your crypto trading strategy.
A great starting point is using a dollar-cost average. This strategy makes it easy to earn a tidy profit from day trading with cryptocurrencies.
9. Failure to Find Balance
You need to find a balance with your investments if you plan on finding success with crypto investing and trading. Some trades might have a shorter lifespan but you also need to dedicate the majority of your investments toward long-term holdings. A balanced portfolio is one of the most important parts of any successful crypto trading strategy.
Try to find a balance where 60 to 70 percent of your crypto assets are ones that you plan on holding onto for a longer period of tie. Move these crypto assets to cold wallets if you want the most security possible for them. Leave the remaining as a mix between cash savings and cash for making new trades and investments.
10. Following the Trends
It’s almost impossible to get ahead when trading cryptocurrencies by following the herd. By the time you get on board with the new trends, you’re already too late. All of the big money has been made and by the time you get there you’ll set yourself up for poor investments that will yield minimal returns.
Don’t let that feeling of fear of missing out take control over you. The best investors know how to leave their emotions at the door when it comes to making moves with their coins or capital. The expert traders will already be on their way out by selling their coins, which means that the value is not far from dropping.
The worst mistake that you can make as a crypto trader is taking trading advice from someone that you don’t know on the internet. It’s a perfect recipe for financial ruin and disaster.
Avoid These Common Crypto Trader Mistakes Today
Investing your money into cryptocurrencies is a great move if you’re seeking ways to diversify your assets, but it’s important that you take steps to avoid common crypto trader mistakes. Educate yourself on blockchain technology and the crypto market before you put together your crypto trading strategy. You should also avoid following the herd, and always keep a record of your wallet’s password.
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