My Newbie Cryptocurrency Trading and Investing Mistakes That You Can Avoid
Many people are entering the cryptocurrency market with the sudden rise in bitcoin popularity. Seeing its value double and triple within a matter of days is very tempting. Something similar happened with me during Christmas of 2020. Bitcoin had broken it is previous all-time high and suddenly everyone was talking about bitcoin. I also decided to jump in and make a quick buck but little I knew that all that glitters is not gold!
Here is a list of the many mistakes which are bound to happen with beginners.
Thinking of Bitcoin as a Get Rich Quick Scheme
Never consider bitcoin as a get-rich-quick scheme. I know when you look at the graph of bitcoin and see 100% gains and 1000% gains, suddenly you land up in a parallel reality and start imaging doubling and tripling your money. What a newbie doesn’t realize is once you put your money in to the trading app, suddenly fear and other heavy emotions start dominating you. I know, it doesn’t sound like a threat but, when you put your money to buy bitcoin or any other crypto asset for the very first time, a bag full of emotions suddenly get dumped on you, and your decision-making ability along with rational thinking goes out of the window.
Suddenly you realize that bitcoin is not for me. This transition from getting rich to crypto sucks took only a week for me. What I did wrong was I was expecting to get rich within a few hours. With time what I realized was yes bitcoin could make you rich but you need to have patience. If you want to earn from bitcoin, think of it as a job that will pay you at the end of the month or the week and you are going to accumulate wealth over some time.
Entering the Market without Knowing What I am Getting Into
Cryptocurrency is a highly volatile market and corrections up to 50% are common for bitcoin. Yes, if you are planning to invest in bitcoin then you need to consider the fact that one day your investment could drop as low as half of the invested value. Seeing a free fall in bitcoin can make you go mad! Within a matter of minutes, a huge downward red candlestick appears which can liquidate you. So yes, always keep in the back of your mind that BTC can fall pretty bad. Your investment should be such that you can sleep peacefully at night. Or if you are going in for a long term, then please do not keep opening your mobile to check the price of bitcoin after every minute. You need strong resilience and mentality to trade in crypto.
Trading Crypto Blindly, Without Technical Analysis
If you have no idea regarding where to buy and where to sell, then my friend you are gambling with your money. If you have no idea what is support and resistance of the crypto you are buying then you would be trading blindly, without having the idea of where can the price of your coin go. You will sell your crypto if the investment starts going down because you would not be having an end goal to look up to. I would give you a very simple example, I bought bitcoin at 27K and sold it at 28K. When I had made my purchase I had absolutely no idea in which direction it would go and what price it could reach shortly. If I would have known bitcoin keeps the potential to reach 50K or 60K, I would have hodled.
Now, many of you would be wondering that at that time how can you predict it would double? Well, that’s where TA (technical analysis) comes into the picture. If we would make an effort to play with some numbers and compare the ROI and Peaks of the previous cycles to the current cycle we would have a fair idea of how much can the bitcoin reach this cycle. And a decision being backed by historical data will not make you fear when the prices go down because you know that in the long run where it can go!
Investing in Shit Coins
Many coins come and go but bitcoin always passes the test of time. 2017 saw the rise of many altcoins which have disappeared now. So, as a beginner, you should always invest in top coins only. If you want to invest in an upcoming project, do thorough research on the project, its team, use cases, community, and make sure that you are not investing in a scam project.
Do not Jump and Learn, First Learn and then Jump
In my opinion, this is what every trader does. He/she directly jump into the crypto market, make a few mistakes and then learn by losing money. Ideally what should be done is, before entering into the market, one should practice on simulations and calculate the accuracy of their trades at least for a month before jumping into real trading.
These were some points that I wish I had known before jumping into crypto but as they say, you learn from your mistakes. I wish my mistakes can be a learning point for others who are planning to enter the crypto world. Ultimately, I would like to say that we are the crypto army and we should have faith in it!
Note- Cryptocase is not a financial advisor and the above is not financial advice. The information is solely for educational & informational purposes only. Cryptocase is and shall not be responsible for any profit or loss incurred by you