If you want to invest your funds in cryptocurrency then you can start your investment by opening an account on an exchange. But crypto trading is not an easy task, and you have to manage high volatility, intra-day price movement and unethical hackers. Stay ahead of the curve with premium information in your reach! Get in touch with dailytrendingstocks.com for daily stock analysis, investment strategies guidance, and trading bot review. Read on and stay updated!
Crypto trading and stock trading are almost similar, but you cannot get success in crypto trading unless you know how to manage the risk associated with this market. Here, you can find some common mistakes that you can avoid while you trade cryptocurrencies.
Table of Contents
Common mistakes that you need to avoid while you trade cryptos:
Do not invest your funds in crypto coins when they are at the highest price. For example, investors who invested their amounts in XRP and TRX in 2017 has faced a huge loss in 2018, because the market crashed between 2017 to 2018. So, do not invest your funds in these coins or tokens where their price is high.
Crypto coins are known as hot coins when they are at the highest price, and you can use a trading bot available on different exchanges to identify such hot coins. You should not invest your funds in these coins and you must wait at least a year to buy such coins at a lower price.
- PnDs: You can find some unknown coins skyrocketing all of a sudden. You can invest your funds in these coins and lose everything after a few months. These coins are part of the PnDs scheme, and developers intentionally pump these coins to sell them off. It is better to check the trading volume of such coins, and if you find any crypto that has more than $1 million trading volume in the last 24 hours then you must avoid such coins to be invested. These coins will fade away from the market soon.
- Avoid celebrity promotion: Some investment experts are paid to promote some crypto coins. John McAfee admitted that he was paid to promote some crypto projects. You should never fall into the trap of any promotional campaigns and choose to invest. You must do your research before you choose a crypto coin or token. For example, you can check the trading volume of a coin, its developers and advisors, and the background of such coins to invest your funds. You can find some false claims on Google where numerous websites claimed that their coins can be treated as gold or expensive commodity. Do not invest in these coins and tokens, because these are gimmicks and part of a crypto scam.
- Sell your cryptos at the right time: You must keep your emotions controlled while you sell your cryptos. Many investors think that selling such coins can lead to a huge loss because they can hold such coins for years to get the best return. But you must have an exit plan when you enter this market, and you must sell your cryptos before they start to drop.
- Do not invest more than 10% of your portfolio: According to the experts, you should not invest your funds in cryptos when you cannot afford to lose. As a crypto trader, note that cryptocurrency is a volatile market which can make you lose your hard-earned money overnight. When planning to invest in cryptocurrencies, it is better to diversify your crypto investment portfolio. As per the expert investors, you should not invest more than 10% of your total income.
- Stay informed: It is not a good decision to invest your funds in crypto or start trading in this market due to any influence coming out from your friends and relatives. There are plenty of resources available on Google, from where you can learn about cryptos, and you can also find such information on Twitter, Reddit and Telegram channels. You must keep your eyes on the recent news in this market and you should trade crypto by choosing the right trading strategy.
You must avoid the above mistakes while you trade cryptocurrencies. If you are a citizen of China then you cannot invest your funds in crypto coins because cryptos including BTC are banned in China.