The cryptocurrency craze has become the biggest hype of this year, same as the last. More and more people are developing an interest in Blockchain technology and are looking to profit from it. After Bitcoin’s peak last year, everyone’s curiosity is piqued when it comes to cryptocurrency. Therefore, it is not surprising to know that the market is full of new traders and investors who are just beginning to understand the ropes. The problem is that the burgeoning crypto space is not easy to navigate for people who are not familiar with the basics. A lot of newbies end up making huge mistakes because they are unware of how the market functions.
Obviously, no one wants to lose their hard earned money in the cryptocurrency market. Instead, you want to reap huge profits that can aid you in the long term. But, how can that be done? This is where this guide comes it as it provides you with a list of trading strategies and mistakes that beginners should know when they step into the market. They are easy to understand and follow and can help you in keeping your investment secure. Let’s take a look at the trading strategies first:
Learn as much as you can
It is a given that when you don’t know something, but are interested in it, you should focus on learning about it as much as possible. These days, it has become incredibly easy for people to learn anything about any subject. You can use Google for learning all sorts of things about blockchain technology and cryptocurrencies, including the latest happenings in the space. You need to dedicate yourself to learning about these cryptocurrencies and it is best to start with industry jargon. You can also find detailed videos on YouTube about cryptocurrency and blockchain and this can be useful in expanding and building your crypto knowledge. This is the first and foremost step that can help you in the future.
Follow crypto news and crypto leaders
There are certain influential crypto investors and leaders that you need to keep an eye on such as Guy Galboiz. They often provide tips and guidance about how to navigate this market, which can be quite valuable. Next, you need to pay special attention to crypto market news because positive news can affect the prices and demand of a cryptocurrency whereas negative news can lead to FUD (Fear, Uncertainty and Doubt). Following the latest news and leaders can also give you useful insights into the market.
Analyze the cryptocurrency you are planning to buy
If you have decided to invest in a particular cryptocurrency, you need to learn certain things about it. First, you need to figure out what market is it disrupting like cloud storage, virtual payments etc. Next, you also need to ensure that cryptocurrency is scalable and accessible. Conduct some research on the minds behind the cryptocurrency in question, look into its market potential and read about it from various sources to know everything you can. You also need to check the acceptance ratio of the cryptocurrency in the market. Last, go over its USP i.e. unique selling point and see what distinguishes it from its peers.
Invest in a price ticker
A price ticker is designed to alert a trader when there is a fluctuation in the price of cryptocurrency. Therefore, it is a good idea to install one on your smartphone. Knowing the price of a cryptocurrency can be immensely beneficial because it can help you make wise decisions. It is also important to remember that price is not the only factor that you should watch out for before you make an investment. Market capitalization should also be observed because this can also have an impact. This strategy is used by a number of investors and traders in the market.
The technology behind cryptocurrency can be difficult to grasp for some traders, especially those who don’t have any background in it. However, just because you don’t understand blockchain technology doesn’t mean that you shouldn’t invest in the market. The good news is that there are trading bots, which are API enabled, and can take on the trading tasks on your behalf. Amateur traders can take advantage of these bots and enjoy considerable profits.
In the cryptocurrency world, HODL means holding onto your cryptocurrencies, even when things are not going as planned. The cryptocurrency market is a volatile one, which means that prices tend to go up and down very frequently. If the trade doesn’t go in your favor, it doesn’t mean you should sell right away. Experts and professionals like Guy Galboiz advise that it is better to hold onto your asset and study the trend before making any hasty decisions.
These are some excellent steps that novices should follow when they have just entered the crypto arena, but now let’s talk about the mistakes they should avoid:
Chasing pump and dump schemes
When you have decided to put your money into the cryptocurrency market, there is one rule of thumb you should never forget; don’t follow anyone’s recommendations about what cryptocurrency to invest in. Always do your own research and then make up your mind or you will become a victim of a pump and dump scheme. This is when the price of a cryptocurrency is boosted through misleading, false and greatly exaggerated statements so it is a better idea to not fall into these traps.
Not protecting your portfolio through diversification
Diversification is considered to be one of the most effective strategy for minimizing your risk. A well-diversified portfolio is one that comprises of different types of securities from various industries, each with varying degrees of risk. While there is no way to guarantee against a loss, even via diversification, it can certainly reduce the chances. Plus, it also allows you to reach your long-term financial goals.
This is one of the biggest mistakes that people are making these days. FOMO refers to the Fear of Missing Out and traders are letting it control their emotions, which can impact their decision making abilities. It is best to think and feel logically when it comes to your investments. It prompts people to enter the market at the wrong time and this can lead to losses in the future. Take things at your own pace and don’t rush due to FOMO. Crypto investors like Guy Galboiz constantly remind traders not to let emotions control and influence their activities.
Not using 2-Factor authentication for account protection
The purpose of 2FA, or two factor authentication, is to add an extra layer of security to your account. There is no shortage of hackers and other cyber criminals who are more than ready to take advantage of even a small vulnerability, which can cause you to lose everything you have. Lots of cryptocurrency exchanges have been hacked in the last few years and a large number of traders had their data compromised. If you don’t want to end up the same way, you need to set up 2-factor authentication when setting up your account.
How does it work? When you have opted for 2FA, you will not just have to enter your email and password for accessing your account. In addition, you will also be required to enter a code that will be generated by an authentication app on your smartphone. In this way, you will be able to keep your account secure.
Falling for phishing and email scams
Anyone can fall for an email scam and this can actually be a frightening concept that can often lead to panic. Also referred to as a phishing scam, it involves the use of emails and fraudulent websites or stealing sensitive and confidential information such as credit card numbers, passwords, addresses, account data and more. The number of cryptocurrency scams has risen because a lot of people are not aware of the ins and outs of the market yet and can easily be fooled. Thus, you need to be on your guard in order to ensure you are not just another victim of such scams.
Losing your private keys
This is one of the greatest mistakes that can happen in the cryptocurrency community. You store your cryptocurrency in wallets, which are designed especially for them. These can be software or hardware wallets and you need private keys to be able to access them. If you lose these, it is not very different from losing your password, which means your cryptocurrency will be lost. As a result, you need to be very careful and not lose them or else your money will go to waste.
These are the cryptocurrency tricks that can be handy for every trader because they allow them to become an informed investor. Knowing the common mistakes can stop you from making whimsical decisions that can lead to huge losses in the future instead of the huge profits you are after.