With the new bull market in 2019, crypto trading is becoming popular once again.
Here are some things you shouldn’t do if you’re looking to be a cryptocurrency trader!
- Not Doing Research
The crypto market is quite different from traditional markets and before entering you should learn about the special characteristics of the market.
You should take a look at the philosophy of cryptocurrencies, traits like volatility, liquidity, supply, volume and why they matter. This is key to becoming a successful crypto investor.
On the other hand, analyzing the specific coins that you’re looking to invest in will save you a lot of time, money and problems in the long run.
- Investing too much
Although research is crucial, experience shapes a good investor/trader. At first, like all other investors, you’re going to make mistakes. Hence, it is wise to not invest most of your investing funds during your first trades. Play around first, try to understand the market from the inside.
At the same time, some beginners invest their life savings into cryptocurrency, certain that they’re going to become the next crypto millionaire. Unfortunately, most of the time these people end up with major losses.
It is important to be rational when trading or invest the money that you can afford to lose.
- Not Using Tools
Crypto coins can be hard to trade, store, track and manage. It is highly encouraged to use a secure cold cryptocurrency wallet that is not connected to any exchange to store your long-term holdings. Due to recent exchange hacks, you need to be extra careful with your funds.
Using newly created exchanges also isn’t encouraged because of their low liquidity and volume. Use trusted and safe crypto exchanges and always stay cautious.
Moreover, to always stay on top of your holdings start using a crypto tracker. These tools will enable you to access your portfolio at any moment, see its analytics, follow cryptocurrency news and much more.
- Investing in Shitcoins
Shitcoins are crypto coins with low value, market cap, volume and liquidity. These coins are very dangerous investment tools, as they are targets for market manipulation and fraud schemes.
These coins have brought experienced investors much money in a short period of time. Yet, beginners shouldn’t try their luck with these types of coins. Although they offer high rewards, the risk is always much higher, especially for someone who doesn’t know the market well.
- Investing only in one cryptocurrency
Even though shitcoins are very risky, all crypto coins are high-risk investments. By owning only one crypto coin you can easily lose all your funds if anything happens to the coin.
In contrast, buying multiple crypto-assets ensures your portfolio’s safety. This strategy is called diversification and is utilized in both the traditional market and cryptocurrency.
By diversifying your assets you also achieve more gains when the market goes up. In short, it boosts returns as well as reduces risks.
Of course, controlling a diversified portfolio can be very complex and time-consuming. To find out how to manage your portfolio effectively check out this informative cryptocurrency tracker guide.