After a few years of major ups and downs, cryptocurrencies finally entered a peaceful period and proved they were here to stay for a long time. Powered by the blockchain, also known as one of the most promising technologies of the 21st century, digital coins earned their place in the financial sun relatively quickly.
Reports reveal that only about 3% of people have already invested in cryptocurrencies, but the figure has been growing steadily in the last few years. If you are thinking about joining the game, you should learn the basics of cryptocurrency investing and understand the most common blunders in this field.
We will help you to design an effective cryptocurrency investment strategy by pointing out 15 mistakes you need to avoid in 2020. Let’s take a look!
1. Trading without a strategy
The biggest mistake of cryptocurrency investing is to start trading with no clear strategy on your mind. Do you want to invest in new coins or play safely with Ethereum or Bitcoin? You need to answer this and many other questions before entering the cryptocurrency universe.
2. Not setting a trading limit
Do you know your real power? How much can you spend on crypto investments? You need to be clear about that if you don’t want to end up losing the entire life savings.
3. Not learning about crypto investments
Engaging in any kind of investment without learning all there is to know about it is like choosing an assignment help agency without reading the MasterPapers review. You have to be smarter than that and check out tons of learning resources prior to making any moves.
4. Trusting random investors
This mistake goes hand in hand with the previous one. Instead of doing their own research, way too many investors sell or purchase cryptocurrencies guided by opinions of other random investors.
5. Trading too much too frequently
While it is true that the price of a given coin can skyrocket quickly, it doesn’t mean you should go all-in and trade too much too frequently. Try to make a long-term plan that can help you generate the profit gradually.
6. Making decisions based on emotions
It’s easy to drown in the whirlpool of emotions while making financial decisions. This is, however, a very poor practice as you are not supposed to make judgments based on feelings such as optimism, pessimism, euphoria, and similar.
7. Not learning to admit a loss
No one is perfect and no one can be right in 100% of the cases. The sooner you learn it, the easier it will be for you to trade digital coins successfully.
8. Failing to diversify your portfolio
Another rule you have to remember is not to put all your eggs in one basket. What does it mean? Well, it means you ought to diversify the investment portfolio and work with multiple cryptocurrencies to avoid major losses.
9. Not keeping an investment journal
One more thing you need to learn is to always keep an investment journal. It should be your personal reminded of crypto-related ideas, investments, doubts, and other details that could help you to bring better decisions in the long run.
10. Hoping to make a fortune instantly
The days of Bitcoin frenzy are long gone, so you shouldn’t hope for a major win instantly. The cryptocurrency market is much more stable now and it demands patience from investors.
11. Entering the process without substantial capital
Let us be clear about one thing here – you can experiment with cryptocurrency investments with very little money, but it won’t make you a major market player. It takes money to make money and you should be aware of it from day one.
12. Make decisions based on unclear patterns
If you cannot explain your investment decision very clearly and concisely, then you might as well skip it. Crypto deals require a fair share of time and analysis if you want the plan to work.
13. Following the herd
Fake news is not a novelty in cryptocurrency trading. After all, some investors deliberately place fake news to fool other investors and cause major spikes in coin prices. Your job is to investigate information before taking any concrete steps.
14. Panic selling
Similar to the fake news issue, panic selling is a mistake that beginner-level traders make too frequently. Price swings are common among cryptocurrencies, so do your best not to sell a worthy asset just because it lost a little bit of its current price.
15. Getting attached to a particular coin
Digital coins are not your friends. You are not supposed to love them, but rather to buy or sell them when appropriate. Therefore, do not get attached to a particular coin and make sure to bring data-driven decisions.
The Bottom Line
Cryptocurrency investing is not exactly rocket science, but it could cost you a lot if you fail to prepare for it thoroughly. In this post, we showed you the 15 most common mistakes you could make while investing in digital coins. Remember our tips and avoid the blunders we mentioned above – it will make you a better and more profitable cryptocurrency investor!
Jennifer Sanders is an essay writer at professional writing services like Assignment Geek and UK Assignment Help. Jennifer is a dissertation help expert who specializes in business and finance. Jennifer lives in London, but she spends a lot of time traveling and exploring new cultures.