10 Most Common Crypto Mistakes

Key points

  • Buying Without Research and Knowledge
  • Having no Goals
  • Maintaining the Privacy of Data
  • Over Diversification
  • Buying at Low Prices
  • Following without Understanding
  • Not Keeping Track of the Investment
  • Getting Intimidated and Panic
  • Investing Wisely and Within Limits
  • Stop Loss Method

Cryptocurrency has attracted a lot of attention around the world and everyone is looking to have a “piece of it”.

But, it is not that simple, Crypto market is highly volatile and is changing every day. A small mistake can result in huge losses. There are few common mistakes which can be avoided in the crypto market and will also help in getting a better perspective of the crypto market.

Buying Without Research and Knowledge    

It is one of the most common mistakes that is usually made by beginners. It is important that before investing in any crypto a complete research about the crypto should be done. It is important to understand that not all cryptocurrencies are the same; some may yield only losses, while some prove to be profitable.

Using all the capital to invest in one crypto is a big mistake as there is no possibility of risk mitigation.

Having no Goals

It is essential in all investments to have goals; same is the case with crypto. IT is important to have long term goals and pursue them accordingly. Goals prevent an investor from getting swayed by the market sentiments and also save the investor from FOMO (Fear of missing out). FOMO is when an investor tries to make an investment in crypto every time the prices go high.

Maintaining the Privacy of Data

It is essential that the privacy of the information of investors is maintained. Investors should be aware of the private key used to encrypt their data. If an investor has no information about the private key or the type of wallet he is using, it can be a great risk to their investment.

Over Diversification

Even though diversification is a risk mitigation technique, over diversification can also be a mistake. Diversifying your investment into too many cryptocurrencies will be difficult to track; even the cash will get tied up in cryptos, will not be exchanged easily, or may show limited growth, thus slowing the overall growth of the investor in the market.

Buying at Low Prices

This is another common mistake that is made in the crypto market, if the prices of a cryptocurrency fall; we will try to buy it as soon as possible at low price without researching the reason for this price fall.

Following without Understanding

It is common for beginners to follow popular names in the crypto market and act as per their advice. It is good to have expert opinion, but what can be dangerous is to just listen to one expert and perform actions without understanding and doing proper research. It is advisable to listen to a few experts and then articulate their viewpoints into your understanding and act accordingly.

Not Keeping Track of the Investment

Regular check-ins on the investment will help the investor in identifying any potential threats and opportunities.

Getting Intimidated and Panic

Crypto market is very volatile, hence, changes every second. When there is a fall in the market, beginners shouldn’t panic at this situation. They should look for opportunities to bag profits at this time if possible. Panic is the biggest enemy of the market, and it may lead to panic selling. For investors it is essential to remember that if there is a fall in the market, it would also rise back.

Investing Wisely and Within Limits

Investing in crypto can be very addictive and can be compared to gambling in some manner. It is advised that a person should only invest with the extra cash in hand and shouldn’t go all in.

Stop Loss Method

It is important to control your emotions while investing in the market. One should have the ability to accept loss and move on. By setting a stop-loss method, an investor will be able to determine the point up to which he is willing to lose before letting go of an investment.

Disclaimer: The article is just to provide information and shouldn’t be considered as any financial advice. It is advisable to conduct thorough research before investing in any cryptocurrency.

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