5 common mistakes Cryptocurrency newbies make
5 common mistakes Cryptocurrency newbies make
Up front, I need to let you all know I'm pretty new to cryptocurrency trading myself. And, I wouldn't be in it if it weren't for a friend who ended up paying for my photography services with some alt coin (LTC which I flipped into TRX). But since that first transfer to my brand new wallet a month ago, damn have I jumped into the deep end. Watching the rise and fall of coins in minutes where millions are made (and lost!) was just too tempting to pass by. As a creative who's trying to make a living in Los Angeles, any way I can make money, the more the better, I'm going to be all for.
I jumped into cryptocurrency with a bit of a background in currency trading so I thought I'd be okay. I knew the basics - candlesticks, buy/sell orders, a few buy/sell signals, you know, trading.
But, I had forgotten the even more important elements of trading. The mistakes all newbies to investing make. I've made 3 mistakes since that first dollar I made. They've cost me thousands of dollars, countless hours of stress, and I'll never forget them. Ask any trader who's been doing this for a while and they can give you a categorized list of where they've f*ed up.
So I decided to make a list of what I felt were the 5 biggest mistakes new cryptocurrency traders make after they've gotten that first deposit in their wallet. Hopefully they'll help you avoid making the same mistakes I made.
Investing on a rumor/tip So your buddy just told you to buy an alt coin, or you saw something on Twitter, or a buy recommendation from any one of a thousand articles circulating here on Steemit. Your heart rate rises, you flip to your exchange platform, you look it up, and 'holy shit!' is it banging. Your finger hovers over the buy button, order ready to go. You have no idea what this currency is, but you're gonna invest, because, damn, look how well it's doing. Thirty seconds later your wallet is worth half as much and falling. WTF just happened? You sit back, trying not to cry, and Google the currency. ...vegetables...the currency is a secure way for produce companies to buy and sell goods. The white sheet looks like crap, and there's like maybe 2 articles about it and neither are good. You just got stuck in a pump-and-dump and odds are you got screwed on the wrong end of the swing. Why? You didn't do your research. It's called due diligence. Don't be an idiot, do your due diligence.
Jumping in Back to that situation from #1. You're watching this currency go up, and up, and up, and up, and...well you get the idea. You think to yourself, 'I'd better get in on this or I'll miss out.' Then, like before, suddenly the currency takes a dive and you're down 50%, again. It's called FOMO (fear of missing out). It will steal from your wallet and leave you broke. Do your research, know buy/sell signals, watch the trends. Jumping into an alt coin just because it's breaking out is a huge gamble and only a somewhat good idea to do if you're an experienced day trader. Be safe, follow consistent strategies, be calm. We're in the early days of the cryptocurrency market, so there will be a lot of opportunities with a rocketing currency in the coming year. Study, learn, listen, and you'll figure out how to be one of those who buys low and sells high.
Jumping out All the candlesticks keep turning red and the price keeps on falling, like your heart. All those clever moves you thought you made seem to be not so clever right now. Minute by minute things rocket downwards. Your finger hovers above the sell button. Do you, don't you? You pull out a bit on the trend lines, from 5 minutes to 1 hour, to 1 day. Something seems amiss. The drop doesn't fit the pattern. The buy pressure is still super high, but why is everyone selling? But you can't take it anymore, you sell at a loss. Five minutes later things are going back the way you predicted they would go based on the trend information. It's a miracle! Well, not for you, for the people who were betting the patterns and trend lines and not panicing, realizing that a sudden big price drop was going to make the newbies sell, so they could pick the coin up at a lower price. Don't panic, don't sell premature. Do your research, follow your plan, for better or worse, HODL.
Gambling Never, never, NEVER, put your whole wallet on a single investment. It's just plain stupid. It's straight up gambling. If you're into that all-or-nothing, strategy, go for it. But if you're new to cryptocurrency trading, remember that the house always wins. You do not know enough to be doing stupid things like investing 100% into stuff. You might win some, but you'll definitely lose some, and at 100% IN-OUT, that's everything.
Investing what they don't have Are you investing or are you gambling? Yes, lots of money can be made in the market right now, but if you lose what you can't afford to lose, you're really screwed. Only invest spare money, the stuff you have after all your bills are paid. Use the money you'd spend on going out, on going to the movies, on the fun stuff you normally do. Make some sacrifices in your fun money, but never touch money needed for bills.
BONUS!
- Not taking out anything as you make profits This is the lesson my friend recent learned during the major market correction. He had bumped his wallet to 6 figures using some solid strategies, but on that rise he hadn't taken anything out. So, when it dropped by 70% he kicked himself in the ass for not having taken anything out. Treat this like a business and pay yourself. Yes, if you keep it all in your have more to invest with, but if things drop like they did this week, at least you'll have some fiat sitting around to pay the bills.
Thanks for reading! Stay safe trading out there friends! :)
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