You may have found that investing in cryptocurrencies can feel a bit like tip-toeing through the DMZ between N. and S. Korea — frightful and full of landmines. You need to constantly watch out for so much: scams, volatility, hacks, exit-scams, panic sell offs, and everything in between.
This is why we’ve compiled a handy list of the 10 most common mistakes people make. So that you can let someone else burn their hand on the stove while you learn from their mistakes.
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Read the infographic and become a better, safer investor.
Infographic source: CryptoManiaks
Just in case you’d like a bit more info, let’s break down the reasons, shall we?
You put too much money in and panic sell
A common landmine is putting in so much money that it keeps you up at night or makes you miss rent if prices. Or worse, it might make you panic sell when prices go down.
Cryptocurrencies go through cycles. Not every coin bounces back at the same time -- and definitely not when you hoped it would. When you have too much money in a coin and it dips or stays low -- you might panic sell -- right at the bottom.
So when it bounces back -- you lost money! And hate yourself. Avoid all that by putting in only an amount that you won’t stress out over. It’ll keep you healthy and profitable.
Exchanges charge fees to trade. If you plan on doing a lot of trading -- make sure to investigate the fees you’ll incur. Also, keep in mind that almost every exchange charges withdrawal fees. Some can be quite a lot. Don’t let these sink your profits.
You don’t take your profits
Cryptocurrencies go up as surely as they go down. You may think you’ve made a great return on your investment -- until the coin suddenly sinks. May sure to have a profit-taking strategy and stick to it.
Cheap coins are cheap for a reason
There’s often a craze to buy “coins under $1” because they seem like a bargain, right? After all, Bitcoin used to be under a dollar.
This may be true -- but Bitcoin’s supply is capped at 21 million coins. Some other coins, like Ethereum, are uncapped. Some have a huge supply, like XRP (Ripple) -- which explains why its price is lower than the average cryptocurrency.
It’s important to understand a bit of supply/demand and basic economics before getting into cheap coins.
Don’t overthink and panic sell or buy
Some people overthink market timing and try to catch it at the lowest price or sell at the highest. Research better strategies (like dollar-cost average) and STICK TO THEM. Sticking to a plan you made while thinking clearly helps you prevent overthinking and panic selling/buying.
2-factor authentication is one of the best security options out there. If a hacker steals your password and login info -- they won’t be able to get in unless they have your 2FA device.
Also, make sure to keep your device safe. Don’t use a phone you carry around everywhere because if you lose your phone -- uh oh.
Panic sell or Overtrading
Don’t do it. Again, set your limits and stick to them. It may be fun and games when you’re on a hot streak and winning -- but then you start overtrading and all the profits evaporate. Stick to your plan. Always.
There are plenty of tools available for every type of investor. Plenty of Youtube and other instructional videos to learn how to use them -- for free.
Technical Analysis is your friend
It doesn’t take much to learn the basics. If you’re seeing wild sentiment in the news about the price going up forever -- but basic TA tells you that your coin is severely overbought -- maybe it’s time to cool off on the buying and start selling.
Listen to sentiment too
TA and sentiment go hand in glove. Each will tell you one side of the coin. Listen and read both for a more complete picture.