Cryptocurrencies are becoming an increasingly popular phenomenon and their popularity is only growing with each passing day. In this regard, more and more newcomers appear on the crypto market. It is for these newbies that this article is written because there are common mistakes that all beginners make.
In our article today, we will describe such mistakes. Also, you will be helped not to make some beginner’s mistakes with top crypto funds existing at the moment. Check out the list on the Chain Broker website to stay up-to-date!
Investing in Unexplored Instruments
Many newcomers do not pay attention to basic economic drivers (i.e. factors that can affect the quotation of cryptocurrencies). Therefore, they open erroneous positions.
When it comes to cryptocurrencies, be sure to pay attention on:
- Regulation. Most types of digital cash do not have one. Therefore, coin creators and those who have a lot of them can manipulate the price to their advantage.
- Scalability. As a cryptocurrency grows in popularity, the strain on its network increases. If it can’t adjust to the changes, it will begin to lose demand. Cryptocurrencies like Bitcoin have faced a scalability problem. And it’s holding back their growth.
- Technology. Cryptocurrency creators can promise anything. The task of the trader is not to take their word for it but to understand whether they can attract the target audience. The success and price of tokens largely depend on this.
It is also necessary to determine whether the cryptocurrency is able to adapt to supply and demand market dynamics.
Trading at Random
Because of the unpredictable nature of the market, novice investors think that dealing with foreign exchange assets is a game of chance. They ignore analysis and risk management. Because of this they invest money in a single asset or give it to swindlers. In both cases, they are left with nothing. It is necessary to approach the question carefully and to understand that although there is a share of chance, it is necessary to work thoughtfully and pay attention to the regularities.
Fear of Joining and Loss of Profit
Crypto investors often miss the opportunity to enter the market when it is really profitable. Instead of immediately investing capital in a promising asset, they start to doubt, weigh the pros and cons, and postpone until the last moment for fear of being left at the bottom of the barrel.
Then they are haunted by the fear of lost profits. It is expressed in an attempt to buy an asset after its quotation growth.
Such investors indulge in the hope that the trend will continue. And they decide to buy the instrument only when it reaches its peak value. In this case, the chance of profit tends to be zero.
There are a lot of such people. When an instrument reaches its peak value, they generate such a volume of demand that quotations freeze up, and big players start to fix their profit by selling the assets which have soared up.
Exposure to Outside Influence
Most private investors are lured through social media. They read the propaganda articles posted there and sincerely believe every word. It does not even occur to them to check or at least skeptically evaluate the information.
Scammers are especially good at convincing those who do not understand the specifics of investments in general and cryptocurrency in particular, but want to rip a huge score by investing a very modest amount.
Unreasonable Greed
Some investors can’t stop. They fall into the trap of inflated expectations. Here is an example. A trader buys an instrument because it started growing in value and has not stopped for two months. He does not even think that the trend can reverse. And he waits for the growth to continue. And he interprets the reversals as correction and continues to hold the instrument even during the slump.
As a result, the trader loses money. And his institutional colleagues start to fix profits by selling huge volumes of crypto, which leads to a drop in quotations.
Unreasonable Fear
Beginning investors perceive natural market movements as an alarm signal. And they begin to quickly get rid of all their assets. The result is a drop in prices, which causes widespread panic. This is how the market collapses and becomes oversold. When crypto quotes are at the bottom, the big players quietly buy them up and change the trend.
Holding Bad Positions
When some traders encounter a market decline, they do not sell the asset but start buying it in the hope of a quick reversal and additional profit from the rebound. But often their behavior leads to the fact that there is not enough capital to wait for the reversal. This is especially true for margin trading in cryptocurrency.
Disclaimer: This article contains sponsored marketing content. It is intended for promotional purposes and should not be considered as an endorsement or recommendation by our website. Readers are encouraged to conduct their own research and exercise their own judgment before making any decisions based on the information provided in this article.
Disclaimer: This article contains sponsored marketing content. It is intended for promotional purposes and should not be considered as an endorsement or recommendation by our website. Readers are encouraged to conduct their own research and exercise their own judgment before making any decisions based on the information provided in this article.
