Cryptocurrency investing is a risky game. It's all too easy to lose money if you don't know what you're doing, so it's important that you do your research before jumping into this new investment space. If you're looking for some guidance on how to navigate the cryptocurrency world without making any mistakes, then we've got your back. Here are some common beginner mistakes people make when it comes to cryptocurrency trading:
Investing without understanding the asset
Before you invest, make sure you understand the asset.
Do your research and make sure that you know what you're buying.
Understand the risks involved with investing in cryptocurrency trading.
Buying without researching
When you want to buy a cryptocurrency, it's important that you research the market before making your purchase.
There are many different types of cryptocurrencies and each has its own set of pros and cons. To help determine whether or not one particular coin is right for you, keep in mind these tips:
Look at their current price. If it's low, then there might be room for growth; if it's high then don't waste time on this coin!
Compare their value against other coins in their category (eg, Bitcoin vs Litecoin). This will give an idea of how valuable they could become over time—and let's face it: everyone wants more money!
Focusing on hype, not fundamentals
When you're new to the cryptocurrency world, it can be tempting to get caught up in the FOMO (Fear of Missing Out) and buy into every bull run. But don't let yourself be a bag holder—you should always try to sell your position once prices have reached their peak. This will give you some money for retirement or for other investments that may make more sense for your portfolio at that time. Also remember: If a coin is cheap enough, there's no reason why there shouldn't be something better!
Falling victim to penny stock scams
Penny stocks are a type of security that is not regulated, not transparent, and can be manipulated. In addition to being risky investments, penny stocks also often have poor fundamentals and are often associated with frauds like Ponzi schemes or pump-and-dumps.
Worrying too much about volatility
The first thing to remember is that volatility is a natural part of the crypto market. It's important to understand that volatility doesn't mean a bad thing. For example, if you see an asset's price fall by 10% in one day, this doesn't mean it will never go up again—it could very well recover or even go back up by 10% on some other day!
So how can you use this? Well...it all boils down to knowing when to sell and when not to sell based on your risk tolerance and time horizon for investing in cryptocurrencies. If you have time on your side and are willing to wait longer than one month before selling (or holding), then chances are good that there will be more upside potential later down the line; whereas if you're looking for quick wins with less downside risk then maybe now isn't such a good idea after all...
Ignoring risk management techniques
Risk management is the process of identifying, measuring, and controlling risk. It's important for traders to avoid losing money by making sure that they don't enter trades with too much leverage or risk exposure.
The techniques used in risk management include stop loss orders, stop limit orders (SLO), and trailing stop loss orders (TSLO). A trader can place a TSLO order on his or her cryptocurrency portfolio if he/she feels his/her position has reached a certain point of profit-taking—and then decide whether he/she wants to close out the position at this point in time . This way you will not only minimize your losses but also ensure that you don't end up losing any more than necessary!
Only using stop-loss orders
Stop-loss orders are a way to limit your losses. They can be used to lock in profits or to limit your losses from a position. A stop-loss order is an instruction to leave the market immediately once a certain price level has been reached, regardless of price movement after that point.
Stop loss orders can be used for both long and short positions (buying and selling) as well as for both buy and sell orders across exchanges in one single transaction without having to open multiple accounts at different exchanges and transfer them back into one account after each trade has been completed successfully.
Over-leveraging on trades
Over-leveraging is a term used to describe the act of taking on more risk than you can handle. If you over-leverage on trades, then it means that your margin is too high and will likely lead to losses in your account if something goes wrong.
To avoid this problem, try trading with only a few percent of your total portfolio as leverage when possible. For example: If you have $10,000 in crypto but only want to trade $1 per day for each coin (or more), then set up 5% of your funds as margin so that when there's an increase in value or decrease in price movement during market hours (which happens often), only half of those gains go towards paying off debts while half stay with yourself until they are paid off or rolled over into new positions later on down the line!
Chasing the pump and dump
Pump-and-dump scams are illegal, and they're common in the cryptocurrency market. It's easy to spot because a pump will be followed by a steady decline in price, rather than just a drop-off. If you see this happening on your favorite exchange, it's likely that someone is selling large amounts of coins before nabbing their profits by buying back those coins at lower prices than they sold them for.
Avoiding this practice requires careful research into what makes up an altcoin or token—and how its value will change over time (ie, whether there's any potential for growth). If you want to avoid being fleeced by scammers who sell off their positions at inflated prices, learn as much about crypto as possible!
Conclusion
We hope you've enjoyed this article and will be able to avoid the common mistakes that new cryptocurrency traders make. We also encourage you to check out our other articles on cryptocurrencies if you're interested in learning more!