Before you head off in search of a cryptocurrency or two to trade and invest in or even start checking into exchanges and wallets, there are some common crypto trading mistakes that you need to be aware of. As it can often experience significant variances throughout any given day, trading in the crypto world entices both the adventurous wishing to turn a fast profit, and those hoping to make a solid investment.
While it is indeed quite possible to make extraordinary gains in a short amount of time, it’s also extremely possible to lose everything in a matter of days or even hours.
Of course, just as with any new investment or endeavor, it’s almost inevitable that you’ll make a mistake or two as you enter the crypto trading sphere, but I want to try and derail some of those issues right up front with a few helpful tips.
Trying to be a Trend Breaker
After you gain a good bit of experience in crypto trading you may want to try going against the current trends in hopes of capturing lightning in a bottle or at least turning a decent profit, but until then you should leave it to the more advanced traders.
The crypto market can be quite volatile and unfortunately, other than a recent surge, it has been mostly bearish for the past bit of recent history. Until you have more experience, you shouldn’t try to outthink the market or attempt to get ahead of trends. In order to reduce the risk of being caught in the rain without an umbrella, you should wait for confirmation regarding any trend or change of direction on the currencies you’re involved with.
Of course, despite the recent overall bearish market trend, there have been some savvy day-traders that have been able to make short-term trades that garner 2-3 percent on a fairly consistent basis, but they are an exception to the rule and few and far between.
Find yourself a few industry news sources, don’t rely on a single entity, and stay within the trends until you have a much better understanding of the market and crypto trading.
Falling for Scams
Everyone wants to make easy or fast money and the allure can be so strong that many will push the limits of what they will and will not do. While things like fake ICOs, unscrupulous wallets and exchanges, hackers, thieves, and so much more are out there just waiting for you to make a rookie mistake, there’s a completely different kind of scam you should be aware of as well.
Pump groups, aka pump & dump groups, will attempt to entice you with “proof” of their success via reviews and “testimonials” regarding fantastic return on investments from previous transactions with the group, but most of those quotes are generally questionable at best.
These types of groups claim that they act in coordination in order to manipulate the price of digital assets. In order to do this, they massively increase the buying volume for the targeted currency before quickly selling to unsuspecting traders looking to jump into the action at the inflated price.
While this may sound appealing to some of you, the fact is that it’s almost impossible to turn a profit with one of these groups. Most of the time, prior to announcing the intended target, the people behind the pump group will purchase large amounts of the asset and then set their sell orders at a price somewhat significantly higher than their initial entry point, but while still low enough that it gets wrapped within that initial buy wave from the group members, making themselves a huge profit and leaving you with a losing investment.
Getting in for the Wrong Reasons
If you’ve decided to give crypto trading a go simply in an attempt to make an extreme amount of money in a short amount of time, you may want to rethink your thinking. Expecting to double or triple your portfolio in a matter of weeks is simply unrealistic and in truth, achieving the explosive growth seen in previous years is next to impossible these days.
However, there are indeed still plenty of opportunities out there that you can take advantage of, you just have to go in with realistic expectations and goals. Try setting realistic benchmarks that are relative to your total investment and rather than thinking in terms of absolute gains, think in terms of percentage improvement.
Crypto trading can be fun, educational, and most importantly, lucrative — You just have to avoid these easy-to-miss mistakes.