Cryptocurrencies and Bitcoin are the joy but also the pains for investors in this sector who often cannot avoid part of the pitfalls that lie behind. But knowing the basic rules of trading could make a difference.
But what are the mistakes to avoid when investing in cryptocurrencies?
Traders know that the cryptocurrency market is very volatile, the upward and downward price movements are on the agenda and it takes little for example a post by Elon Musk or other market gurus for prices jump to the maximum or to the minimum. Basically, it is very difficult to estimate when to get in or out without getting burned.
However, while prices are largely unpredictable, there are ground rules that can help less experienced traders maximize profits. There are also tools that can help you understand the market prices better. BestChange is a perfect example of the best satoshi to usd, Bitcoin and other currencies converter. You can try it to understand the current market exchange rates.
Here are some common errors to avoid when investing in cryptocurrency:
Not Defining Your Investor Profile
The first thing you need to know is that those who want to be part of crypto investors need to define their investor profile.
There are three types:
- Holders or those who invest and hope in long-term profits, therefore those who keep away from risks and bet in tokens that they consider reliable in the long term, regardless of the current price.
- Moderators, those who mix different types of strategies in their portfolio.
- Traders, those who focus on price fluctuations and rapid profit taking, even limited.
Not Having an Investment Plan
The second step is to avoid joining the fray without a reasoned investment plan.
Failure to Study Cryptocurrencies
An investor should never start investing their capital without knowing the basics of blockchain technology and cryptocurrencies or without being familiar with the logic of trading.
Reading articles, following blogs, tutorials and competent people to deepen the ecosystem of the blockchain is fundamental, as is knowing the history of the coin to understand what is the meaning of value and exchange.
You need to arm yourself with patience. Cryptocurrencies are not fiat currencies with banks behind them. The volatility, which distinguishes them, can lead to a profit or a loss of up to 30% in a day.
Don’t invest more than you can afford to lose. Set a figure that if you were to lose completely today would not change your life. Start gradually.
Do not be taken by the discouragement of a quick loss or the enthusiasm of a high and fast profit, but concentrate on understanding what are the dynamics that influence the quotations of the cryptocurrency on which you decide to trade.
All trading operations involve risk. You only risk the capital you are willing to lose. This is the personal reasoning that must be kept in mind.
Failure to Diversify Your Portfolio
Finally, since cryptocurrencies are so volatile, it is necessary to have a diversified investment portfolio. That is to bet on different tokens: Bitcoin, Altcoin such as Ethereum, Litecoin, XRP, Binance Coin, Polkadot, Dogecoin or Stablecoin such as Tether, USD Coin which are pegged to the US dollar.
Understanding which profile you want to belong to is fundamental since it is the first step to avoid getting hurt, and helps to develop coherent strategies with a good chance of success in the long term.
If you have decided to invest in cryptocurrencies, choose the best exchanges on which you can invest safely. Choosing the right currency converters is also essential in helping you understand the current market rates. Do click here for the best currency converter.