Everyone wants to trade crypto because it’s so lucrative. Though it’s still new (only about a decade old), most people thought it was going to end within a few years, and it’s just grown stronger.
Therefore, you may want to invest in it now, but you aren’t sure how to start. While you may have heard horror stories about crypto investors losing it all, those are just a few bad experiences. Every market has them. Remember the stock market crash in 1929? You may not have been there, but it’s in the history books to remind us that nothing is perfect.
Still, here are the top bad experiences that most crypto investors fall into and how you can avoid that situation:
I’m Smarter than Everyone Else, So I Won’t Make Their Mistakes
While everyone isn’t going to fall into this line of thinking, most people do at some point. It’s usually when they’re starting out, and they have all that fresh knowledge about the crypto market. You may have done well in math and go perfect scores in all of your classes. In fact, you read up on the market and understand everything.
The goal is to become an expert, but the problem is you may think you are one when there aren’t any. Many investors fall into the trap when things suddenly click, and they understand how things are done. Still, that doesn’t mean there’s no room for advancement because there is!
Trading isn’t just what you know; it’s psychological. Anyone can learn how to read indicators, make charts, and gauge the market cycle. However, you have to go a step further and learn the concepts to try them out.
The challenge with accepting any market strategy is that they’re all counter-intuitive to how a human thinks. You may want to buy, buy, buy, but good traders don’t use that strategy. Doing that means you may avoid a particular cryptocurrency because it is new or unknown.
Smart people often beat themselves when trading because they’re resistant to using proven market strategies. You may think you’ve come up with the perfect solution, but volatility is going to bring you down. We aren’t saying that you should never test out something new, but you have to put in the study and research (indicators, charts, and market theory) to do well.
Don’t Join a Pump and Dump Group
A pump and dump (PnD) group is a platform that promises significant returns without any work involved. Many investors have tried this and failed miserably. Everyone wants that “quick fix” because it’s in our nature to get what we can without much effort.
Typically, these PnDs have low market caps, so they bump up the price quickly, and you think you’re winning. You join a group to follow their “calls” to get easy money.
Unfortunately, that rarely happens. Most PnD groups work like this:
- They have many stakeholders with a lot of capital.
- Those people decide which coins to pump up.
- Every one of those people gets a position in the crypto before pumping the coin. This can take weeks to do.
- When they accumulate enough coins, they move the price up slowly and get rid of the finicky people.
- When they announce the coin to the public, they’ve gained all of their money back or more.
- Then, they generate buyers so that people purchase the crypto, but they’re only buying what the pumpers want them to.
- When these people sell off everything they put in and get a nice chunk extra, they leave, and no one hears from them again. You’re left holding all the dumped coins without making anything.
That’s not to say that some new platforms aren’t worth their weight in gold. Check this crypto platform I find worthy if you want to have regulated trades and security tokens with backing.
Losing Tons of Money (Entire Life Savings, Home, Car, Etc.)
Everyone is going to lose money when trading because that’s part of the game. Even market experts who have been doing it since Bitcoin came out are going to lose money.
It’s impossible to get each call right, and there’s going to be times where things just don’t go your way. You have to learn how to accept those losses and continue moving forward.
There are tons of stories about people who have great success with the market and lost it all later. You don’t want to become one of those because you are going to practice good investment strategies. However, you still have to be disciplined in this risky and volatile crypto world.
We aren’t saying that you aren’t going to lose a lot of money because you might if you’re investing a lot. However, there are ways to avoid losing so much. For example, you should never invest more than you have to lose. Don’t gamble with your life savings or your retirement fund. Make sure you can cover all of your bills before putting a cent into the crypto market. That way, that money can be considered something to play with. If you lose it, darn the luck! If you win, you have more money to play with or remove from the platform.
Think of your favorite team sport and player. They don’t win every game or play they make. It boils down to net profit, and that’s what you want to see over the course of six months or a year.
Don’t use emotions in trading. They are going to be at their peak levels. If you make a perfect trade, you’re going to feel on top of the world. However, that can lead you to make a bad trade. From there, you may panic and drop everything, which can come at severe losses.
Do a little research on some of the past crypto investments people have made. That way, you can learn from them. These tips are also sure to help. Once you’ve done that and are ready, it’s a good idea to go with INX. This trading platform is going to be fully regulated, so it’s safer. However, trading anything comes with risk, so be careful and mindful.
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