Cryptocurrency’s popularity is increasing due to the countless stories people tell about how they made fortunes from investing and trading crypto. Not only that, the two leading digital coins, Bitcoin and Ethereum, are all on the news platforms due to hitting new all-time high prices.
When these keywords are mentioned on social media and news platforms, it gains the attention of people with little to no knowledge about digital coins and would initially lead them to jump into trades.
Immediately jumping into trades without prior planning and sufficient research about what you’re dealing with could lead to traumatic experiences of losing your assets the moment you begin.
The reason is that the crypto market’s unpredictability and extremely volatile nature means you will either make a profit or have a huge loss due to your transaction.
However, there are a few things you should be aware of for your crypto investing journey to bloom, and that is knowing what’s right or wrong. Thus, Here are three major mistakes you must never make when investing in cryptocurrency.
Buying A Digital Coin At A High Price
One of the biggest mistakes you could ever make when wanting to invest in a crypto is buying a digital currency when the price is high or at its all-time high. One phrase you will repeatedly see when seeking tips or advice about investing in cryptocurrency is that the crypto market is outrageously volatile. It means that the price of the coin you’ll be buying can be high at a point in time but will plummet by 50 percent in a couple of days.
A common reason why people buy digital coins without knowing they’re at a high or highest price is the fear of missing out or FOMO. Since the growth in popularity of cryptocurrency is blooming, more investors and industries are turning their heads to cryptocurrency. Consequently, people will always want a piece of the money-making opportunity without considering the possible risks of losing money early on or over time.
No one can predict where the price of digital currencies will go; the coin you’ve invested in can even crash in price. People tend to forget that what goes must also come down. Looking back at the digital coin’s project and history means there is a high possibility that it can get back up to its feet again.
If you are interested in cryptocurrency and want to know more in the right way, visit one of the renowned trading platforms and services that are fan favourites amongst many crypto users: Kraken, and Bitcoin Profit website are just some of them.
Ignoring the Golden Investment Rule
Investing in cryptocurrency, compared to other kinds of investment, is no joke since the spectrum of risks that digital coins offer is far worse due to their unpredictability and volatility. It’s without a reason that the only way you can survive in this risky venture is to create a strategy with proper risk management that would help you minimise loss while aiming to maximise gain for every transaction.
However, before you end up with that mindset, you first have to overcome the temptations of over-investing or putting everything on the line that you’d end up with nothing in your account. Biting off more than you can chew is many mistakes in cryptocurrency investing and trading.
Financial planners or advisors say that the most you should allocate from your net worth to your crypto portfolio is between two to five per cent.
Suppose you aim to enhance your overall investment portfolio. In that case, it isn’t wise to allocate more than five per cent of your portfolio, especially if you’re not in a stable financial position. The crypto market volatility can significantly impact your portfolio if the percentage of net worth goes beyond the advised amount.
Also, it’s best to seek the help of other professionals to get a clearer picture of what you should be doing before you invest in crypto. The reason is that other financial planners would even advise you to only allocate one per cent of your net worth, given that cryptocurrency is relatively new compared to other forms of investment.
Not Laying Out Your Plans
We’ve all encountered endeavours planned on the spot and would usually find ourselves in a tight spot due to external factors that hinder us from continuing. Like any activity, failing to plan means you’re planning to fail.
In the realm of crypto investing, there are a lot of things that you have to consider when creating a strategy that would help you make gains and even secure profitable transactions in the long run, despite the market’s volatility.
Knowing the right time to invest in a digital coin is also a significant part of planning since it all goes back to not buying a coin while it’s at a high price. The right timing can only be achieved if you create a plan that will help you achieve not only your short-term goals but also the long term. Indulging in crypto trading is never easy; research is a critical part of the planning phase that would determine your ability to make profitable transactions.
Another point you should consider during the planning phase is the tools you’ll be using along the process that can keep you updated about anything crypto. Tools include digital wallets, trading platforms, news channels, portfolio managing, and the like. These tools should never compromise the security of your information and your assets since various cybersecurity risks can destroy your crypto portfolio.
Takeaway
Mistakes are unavoidable when doing things you’ve never done before, as well as learning various terminologies and techniques that are fairly new. Planning your every move and activity doesn’t mean you won’t make a mistake along the process. It’s vital for beginners and experienced crypto investors that it’s alright to make a mistake, so long as you’re able to learn from them.
Also, never be afraid to ask crypto enthusiasts and other crypto investors about different strategies because you can gain plenty of insights from them and learn from their mistakes.
