Although until this point the crypto market has been anything but predictable; sometimes a celebrity can nearly crash the crypto markets with a silly tweet and other times big adoption news can hardly tick up the price, crypto trading should be organized and based on sound practices and statistics, exactly like any other type of investment.
While the crypto world is known for two things; eye-watering volatility and scam projects. That is exactly why you should be super careful where you put your money.
If you feel overwhelmed and want some explanations of trendy crypto terms, check out ? ? 14 Crypto Terms You Must Know Before Trading!
Whether you're a new investor or looking to invest in crypto and you want to make sure you reduce your room for error, here are 5 mistakes to avoid in order to not lose your hard-earned money.
Top 5 Common Mistakes Crypto Traders Make
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Poor Research about the crypto project
Doing your own thorough research is our mantra, so you might wanna learn a few things about any coin before adding it to your balance sheets.
There are more than thousands of crypto coins that are active now with different projects and use cases. With Bitcoin being the most popular among them all, there are also Ethereum, Cardano, Ripple, and Dogecoin among others.
So instead of buying under the influence of family or videos on YouTube, read what the White Paper promises, the total market cap of that coin, project behind the coin, its use cases, developers and team’s reputation, underlying technology, and timeline or roadmap.
The best advice before buying any cryptocurrency is to read and learn about the technology. This will help you stay calm throughout the sudden market turmoil and ready to absorb a great deal of volatility, don't worry as you'll build up risk tolerance before one can say 'Jack Robinson'.
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Bad Choice of Crypto Wallet
Just like you pocket your dollar bills in tangible wallets, if you want to invest in cryptocurrencies you need to securely store them in a crypto wallet.
Another important thing you should know is that crypto wallets are also classified in terms of where they store your wallet’s private key (which is practically your password) if they’re stored online it is called a "hot" wallet and if they’re stored offline they’re called "cold" wallets.
Of course, cold wallets ensure the highest level of security for your crypto.
Here are 5 Best Crypto Wallets of 2022
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Poor Choice of Crypto Exchange
Picking the right reputable crypto exchanges is a very important step to ensure that your money is actually safe and secure. A crypto exchange is a business that provides a marketplace in which users can buy, sell, and trade their crypto assets in exchange for fiat money or other cryptocurrencies.
There are a lot of crypto exchanges out there so you should check a few things like transaction fees, and geographical restrictions for support purposes, founders, the variety of cryptocurrencies offered and security of the platform.
Here are our very hand-picked 5 of the best crypto exchanges that allow you to buy Bitcoin and other altcoins in the MENA region.
Keeping in mind that crypto exchanges get hacked a LOT, we advise that you keep your crypto stored in cold storage (not connected to the internet). Lastly, there's no such thing as ‘safe bets‘ in crypto trading, as a beginner we recommend that you be extra careful and don't put all your eggs in one basket.
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No Trading Plan or Target
Crypto investing has two types of strategies: speculation or HODLing. Speculation means trying to make profit out of the daily volatility or price change of crypto. On the other hand, HODLing is a long term investment in which traders mitigate the volatility risk by storing the coins for a longer period of time and patiently lurking for prices to tick up hitting all-time high to cash in their profits quickly.
The biggest downfall for rookies is buying crypto with money they cannot afford to lose. Another mistake is buying in times of high and selling low, while you should do the other way around.
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Giving in to FOMO and FUD
Although no story of crypto success would be complete without alluding to the Fear of Missing Out or FOMO. This inelastic buying habit has been pivotal in escalating prices even higher to unforeseen ceilings. While some crypto has made life-altering gains, other coins made eye-watering dips.
Many new and veteran cryptocurrency traders have caved in to FUD (fear, uncertainty, doubt) because they didn't have a good exit strategy or one to stop-loss and believe it or not this can turn bulk of profit into grave losses.
Considering the fact that all the major crypto indexes are just below the all-time highs, it's almost a plausible scenario that maybe a little wise risk can pay off.
