Did you know that there are around 315980.0 Bitcoin transactions every single day? And, this is just one type of cryptocurrency. What about all of the rest?
We’re seeing more and more people get involved with crypto trading because they see the great potential it has. At the same time, you need to make sure you don’t simply dive in without any strategy or research.
To help you make sure your crypto trading efforts are a success, below we’ll divulge some of the most common crypto trading mistakes people make so that you can avoid them.
- Messy data and no data discovery
There is only one place to begin, and this is with a lack of organization when it comes to managing your data.
Nowadays, cryptocurrency traders have more data available to them than ever before. They can source live trading data, historic results, forecasts, their own trading performance, financial reports, and much more.
However, if you’re going to be using data, you need to ensure it’s structured and secure.
One of the best ways of doing this is with data discovery. What is the purpose of data discovery? Well, most investors and businesses have data spread across multiple systems, which makes it very hard to manage. With data discovery, all data is effectively…
If you don’t organize your data effectively, you won’t be able to make intelligent trading decisions. Plus, you may even find that you’re in breach of some of the regulations in place.
- Only purchasing Bitcoin when you can buy ETH and other coins
A lot of people have a tendency to assume that Bitcoin is the best cryptocurrency to invest in. But is it? There are more than 12,000 crypto coins available for purchase, so you need to choose one that best fits your investment goals. Of course, many investors will spread their risk across a number of different cryptocurrencies.
If you don’t want to invest in Bitcoin, but you’re looking for something that’s just as prominent, you may want to buy ETH. Ethereum is an open-source software platform that gives anyone the chance to create decentralized apps and run smart contracts. Users can utilize ETH to run decentralized apps and get exposure to thousands of different cryptocurrencies. A lot of investors see ETH as Bitcoin’s main rival.
- Ignoring fees and overlooking purchasing with a debit card
As is the case with most online transactions nowadays, cryptocurrency investment does involve fees. It’s important to factor these fees in when making your investment decisions. If you don’t, you could be wasting a lot of money and diluting your profit potential without even realizing it.
A lot of new investors are so excited to begin that they don’t take the time to understand how fees work. For example, if you purchase cryptocurrency with a credit card rather than a debit card, you may face large surcharge fees, as big as 3% or even more. Your card company may then lump on some charges as well.
This may not sound like a lot, but it quickly adds up, especially if you’re investing large sums of money. Instead, it makes more sense to buy crypto with a company that accepts debit card payments.
So, make sure you take the time to learn about different cryptocurrency exchanges and the fees they charge. This will help you to hone your strategy so you can determine which payment method is going to be the cheapest and most convenient for you, enabling you to fully maximize your potential.
- Buying Bitcoin from an untrustworthy source
Next, it’s imperative to make sure that you only ever purchase Bitcoin and other cryptocurrencies from reputable sources.
As cryptocurrency is hugely popular, it’s a breeding ground for hacks and scams. Therefore, you need to approach every exchange and payment company with great caution.
Make sure the business has a reliable and trustworthy reputation. Find out where they’re based and when the company was set up. Discover what rules they’re bound by and make sure there is evidence that others have had a good experience with the company in question.
- Overcomplicating your trading strategy
If you’re just getting started with trading cryptocurrency, there really is no need to complicate things.
Yes, you may have seen some YouTuber raving about a strategy, but if there was a foolproof approach, we’d all be rich. What these YouTubers don’t tell you is about all of the money they’ve lost along the way as well.
Plus, as is the case with anything in life, when you’re inexperienced or learning for the first time, you should never run before you can walk. Instead, start off with the basics. After all, it can take quite a bit of time to learn about how the crypto markets operate, conditional orders, and technical analysis.
This doesn’t mean you need to spend a year with your head in a book. You can start off with simple strategies instead. You can dollar-cost average when trading cryptocurrency without the need to trade actively or be glued to a cryptocurrency chart all day long.
- Getting scammed
Of course, no one wants to get scammed, and we all like to think that we’d never be so foolish to get scammed ourselves. However, let us tell you; there have been some incredibly intelligent and street-wise individuals who’ve found themselves getting scammed.
The trouble is, hackers and cybercriminals are getting more sophisticated all of the time. And, with cryptocurrency booming at the moment, it probably doesn’t come as much of a surprise to learn that there are a lot of cryptocurrency scams floating around.
In fact, back in 2021, almost $700 million was stolen in crypto assets alone. Such criminals utilize advanced phishing techniques so they can access your cryptocurrency wallet and convince you to then send funds to their wallet.
A lot of these scams occur through messaging and email apps, with the hacker pretending to act with your best interests in mind. If you simply connect an online wallet to an application and accept the permission request, you could end up being scammed. It really can be that simple.
To make sure you don’t end up being the victim of a scam, you should never connect your online wallet to an application you cannot trust! We also advise keeping the majority of your cryptocurrency funds in offline wallets.
Finally, never, under any circumstances, give out private keys, seed phrases, or wallet passwords.
- Mistyping your wallet address
This is a simple mistake, but a very damaging one. We’re sure you may have even experienced it before in other walks of life, such as typing a PayPal address incorrectly or transferring money to the wrong bank account.
When you trade cryptocurrency, you’re going to take custody of crypto from an exchange in your digital wallet. You can also send cryptocurrency from your digital wallet to another one.
One mistake a lot of people make is simply mistyping the wallet address. It’s a careless error that happens more than you’d expect. When this happens, there’s no guarantee that you’re going to be able to get your cryptocurrency back.
While there are some recovery services on the market today that you can use, they’re very expensive, so it may not even be worth it.
- Overcomplicating your trading strategy
A lot of people think that they can get rich quickly by investing in cryptocurrency. Sadly, this is the mindset many individuals have when they look to invest or make money in any way.
Now, that’s not to say that there’s no big earning potential in cryptocurrency or that you cannot make a quick return. It’s entirely possible. However, it’s also entirely possible that you may end up making a terrible investment move and losing all of your money.
This is why we always recommend that you have a long-term view when you’re investing. This will enable you to select your cryptocurrency investments more carefully. You should focus on selecting higher-quality projects that have long and proven track records.
It’s like when people try to lose weight: those who go for quick fixes often end up putting all of the pounds back on. In the investment world, those who try to get rich in ‘x’ days often end up going broke. Cryptocurrency investment is best viewed as a multi-year process.
- Falling to acquire the necessary knowledge
Last but not least, because there’s a lot of hype about cryptocurrency, many people end up diving right in and getting started without taking the time to learn about it. Big mistake.
You need to understand this asset class and how it works in order to invest effectively.
If you don’t take the time to learn about cryptocurrency, you could be on a fast track to financial disaster.
Avoid these mistakes and achieve crypto trading success
So there you have it: some of the common mistakes that beginners tend to make when trading cryptocurrency, and sometimes experienced investors fall into these traps too.
However, If you can avoid these errors, you can give yourself the best chance of making sure that your trading ventures are a success. Of course, nothing is guaranteed, though, and so we must always remind you never to trade with more than you can afford to lose.