You may be new to cryptocurrency trading or you could be a seasoned trader, with so many attractive and irresistible trading options and opportunities it is quite common to make mistakes. Some mistakes could be the result of poor decision making, while others could make you a victim of cryptocurrency scams and frauds.
No matter how careful you are, mistakes are bound to happen. So the question is how do you stay safe? The trick is to be aware and stay alert.
To help you spot the mistakes before you make them here are a few DON’Ts of cryptocurrency trading that you must not ignore.
Never invest too big at the beginning
Seasoned traders know better but investing big is a common mistake that many new traders make. It is very important for new traders to proceed carefully; invest small amounts and get the lay of the land. There will be many occasions when an opportunity may seem too good to pass but remember, cryptocurrency is still a volatile market, which requires you to invest carefully and not put all your assets in one place in one go.
Don’t fall for the good old Pump and Dump
The basic instinct of any trader is to invest in an asset that starts to go up in value; in cryptocurrency, this may become a bad investment move. When a relatively unknown coin suddenly starts to see a drastic increase in value it could very well be a Pump and Dump, which is a coordinated effort to drive a coin’s value high by using fake and false reviews and forecasts and then sell it to those who are looking to make some fast money. This is mainly done to sell coins, which were bought cheaply, at an inflated price.
A group decides to inflate a cheap coin’s value and the members start to purchase that coin from each other; meanwhile, the same group starts to spread false news about the coin’s value. The outside traders read these statements and rush to invest in the coin and end up buying them from the Pump and Dump group. That is why you should never invest in an asset without careful research; especially the one that rises from the ashes.
Not staying informed
A trader needs to stay updated with the latest trends in the market; otherwise, you may end up making uninformed decisions that could cost you money. You must do your homework even when the investment option is an obvious one. You must study the past and future trends of the asset you want to invest in so you can get an idea about how it reacts each time it goes up or down in value. The cryptocurrency market is very volatile; therefore, you need to keep yourself informed of each new development in the sector.
Don’t fall for brokers that promise unprecedented profits
You may come across many brokers who promise to offer opportunities that could help you earn a fortune overnight. Your job is to stay away from them!
As a seasoned trader you may feel this is your big break but insanely high and instant profits with minimum or bigger investments may only be just a marketing gimmick or fraud. You need to proceed carefully and invest with caution.
These are a few very common mistakes that many traders, even the experienced ones, make. Remember, trading requires patience, information gathering and experience; you need to weigh your options, do your homework and then make an informed decision.