The cryptocurrency market is arguably the most volatile market in the industry. Cryptocurrency prices can potentially go up by 1000% in a matter of days, which equates to a ludicrous amount of money if you trade at the right time. This is the primary characteristic of the crypto market.
As profitable as it may be, it's also equally challenging to enter the scene, and for several reasons. One, the crypto market is not as secure, regulated, and stable as the stock and forex markets. And two, while it has been around for several years, the crypto market has yet to be fully developed.
For that reason, it's highly likely for beginners to make several mistakes when first entering the market. With that said, below are five beginner mistakes you must avoid when trading crypto.
1. Disregarding The Security Of Your Crypto
Before buying or selling crypto, you must first find a platform that will provide you with the necessary tools to buy and sell crypto. You must first look for a platform that has relatively high security and is legitimate, like this site here. This should always be the first step to your success as a crypto trader.
It's pretty similar to how you must look for a stockbroker before entering the stock market. And unsurprisingly, a lot of beginners tend to jump right into the market and use the first platform they can find, and that's a mistake you want to avoid.
Keep in mind that not all platforms are trustworthy. Some will try to scam you out of your money, while others simply have inadequate security measures to protect your assets from hackers.
2. Relying Solely On The Advice Of Influencers
Nowadays, a lot of influencers use their following to promote everything. Of course, taking the advice of influencers is not an issue in and of itself, but make sure you do your own research as well, especially if the influencer in question is not a financial expert.
For example, a certain content creator with a massive following revealed what kind of crypto they are currently holding. Upon the announcement, a lot of their fans invested in that coin for some reason. And to no surprise, most of them failed to get back their investment, even until now.
There are no issues if they only stick to promoting physical goods, like beauty or sports products, but some influencers have recently transitioned to promoting even financial services.
3. Buying Cheap Crypto Coins
Another mistake beginners often make is treating crypto like any other physical product. If you focus on investing in cheap coins, you're most probably wasting your money on coins that will never see the light of day. Similarly, you don't want to invest in only one crypto coin.
Unlike groceries, it's not advisable to buy crypto coins simply because they're cheaper than they usually are. Instead, you need to consider its other factors, such as its maximum supply. Remember, not all crypto coins are bound to increase in price, unlike the renowned ones.
4. Investing In Too Few Or Too Many Crypto Coins
A common mistake among beginners is putting all their eggs in one basket, and by that, it means investing in only one asset. The same holds true, especially in the crypto market, where there are hundreds, if not thousands, of coins to choose from. After all, if you only invest in Bitcoin, for example, you may end up potentially losing a lot of your money if its price drops.
On the contrary, if you invest in several crypto coins, you may lose money on some assets, but you can still potentially gain a profit from your other coins. But remember, don't invest in too many crypto coins, as that would only result in negligible profits.
5. Sending The Crypto To The Wrong Address
Everyone who owns crypto has their respective wallets where they store their coins. Before sending a massive amount of crypto to your wallet, consider sending meager amounts of your assets first to make sure you're sending them to the correct address.
Most transactions occur in these wallets, and if you want to trade cryptocurrencies, you’ll most likely need your wallet address for most, if not all, of your transactions. One of the many mistakes a beginner can make during transactions is typing the wrong address.
When that happens, there's no going back since transactions made on the blockchain are irreversible. While it may be avoidable, it's also not too farfetched to lose crypto this way.
Final Words
Your first purchase of cryptocurrencies will undoubtedly be an incredibly tense moment, but once you get rolling, you'll get used to the risks of crypto investments in no time. Sure, you’ll make some mistakes here and there, but what's important is to learn from them. And seeing as how you already have an idea of what those mistakes are, it's highly unlikely you'll struggle in this regard.
