Driven by investors’ enthusiasm, cryptocurrency market recently crossed the $3 trillion mark for the first time. This puts in perspective the craze around digital currencies, which have emerged as a lucrative investment tool. However, along with massive returns, cryptocurrencies come with their fair share of difficulties too. The asset remains extremely volatile, which often discourages investors from putting their money on it.
Considering the pros and cons of cryptocurrencies, as a crypto investor you need to be mindful of avoiding these mistakes if you intend to be make big money out of it:
Trading without any knowhow
Cryptocurrencies are more nuanced than they might seem. It is not advisable to enter the crypto market as a complete novice without any knowledge of how it works. To begin with, one must have fundamental knowledge and technical analysis of cryptocurrencies before investing in them. Paper trading, where a novice investor can learn the basics through trading simulators, can be a good way to start. Similar simulators are also used for learning stock market trading.
No investment can yield returns overnight. Not even cryptocurrencies. Like any other investment instrument, crypto investors need to be patient. The volatile nature of the nascent market compounds the need for treating cryptocurrencies as a long-term investments to make the most them.
Investing without a goal
Investing without a goal is equally pointless as traveling without a destination. Setting a goal for you cryptocurrency investments will help you to make sense of the market that goes up, down and sideways in a matter of hours. Having a clear, long-term target in mind will help you to understand how much profit you need to make in within what timeframe. This will keep your select coins in a more organised manner.
Jumping without a plan
In a market as volatile as cryptocurrencies, the importance of having an investment plan grows manifold in importance. Investors need to have well-defined entry and exit points before investing in cryptocurrency. Entry point is the price at which an investment instrument is bought, and exit point is the level at which it is sold to realise a certain profit margin. Never invest on the basis of belief as then you would then be busy chasing higher values.
Trading on non-secure platforms
Amid all investment assets available digitally today, cryptocurrency was the one born in that space. This doesn’t mean it is any more secure from cybercriminals than other asset classes. There have been several successful attempts at hacking cryptocurrency wallets and entire platforms. The market is also rife with fraudulent tokens, as was the case of the Squid Games token, and hoax platforms. Be wary of these fraudsters before you put your hard-earned money into cryptocurrencies. Always opt for trusted platforms and currencies, or it will be a bitter lesson you learn the hard way.
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