Crypto assets are among the most exciting financial developments of the twenty-first century, and they represent an appealing financial revolution and investment opportunity. Bitcoin, for example, has outperformed many other financial assets due to its uncertainty, reaching nearly $33,000 in January 2021. Many analysts believe bitcoin has a good chance of outperforming gold. Other crypto assets are also doing well, attracting millions of dollars in annual investments.
Large profits, on the other hand, come with high risks, which are amplified in the case of novice traders. Some traders, due to a lack of experience, make costly errors in their investments.
Insufficient personal research
Until investing, some investors do not spend enough time reading and studying the market. Most investors don't study the assets or tokens they choose to sell, and they don't look at historical and current data.
Many investors, on the other hand, depend on knowledge from other investors and experts. Some people, for example, purchase BTC and ETH based on expert predictions of future value. Others prefer to get their knowledge from social media platforms such as Medium, Twitter, and Slack. Buying coins based on the opinions of others has a significant disadvantage because the consumer would require the same expert's opinion to sell the coins.
To be secure, novice investors should conduct research and make purchases based on their findings. Understanding the fundamentals of crypto and each coin is essential for potential income as a beginner.
FOMO trading and FUD
Fear Of Missing Out, or FOMO, is another rookie trader's error that will result in significant losses. A trader sees price spikes in tokens and the economy and does not want to lose out on the chance, so he spends blindly without hesitation.
While FOMO may benefit traders on occasion, it often results in losses when the tokens begin to fall in value.
FUD stands for Fear, Uncertainty, Doubt. As negative (fake or true) news or blogs circulate in the crypto community, it instills fear in beginner crypto traders. Reacting quickly to rumors can have a negative effect on traders' investments.
Wrong Coins Sent to Exchange Wallet
Some cryptocurrency traders can send coins to the incorrect exchange wallets; for example, a bitcoin cash investor may send bitcoin to a bitcoin wallet. Some platforms find it difficult to reverse the process because it is an individual's duty to search and validate their wallets before sending funds to them.
Inaccurate Pricing
Some investors make errors when setting prices and, in some cases, set extremely low prices for properties.
A small error, such as adding an extra zero after the decimal point, will cause the asset to lose ten times its value. An asset that has been devalued to that extreme would sell out quicker, allowing the trader to lose money in a matter of seconds.
The lack of double-checking the prices set before executing them causes mispricing problems, and it's a common mistake made by crypto newbies.
Poor selection of exchange
Rookies in the crypto market may fall into the trap of using exchanges with a bad reputation or high trading fees because they are new to the market. Using an exchange site with excessive fees results in lower returns for the investor. As a result, an investor should choose an exchange platform with low fees.
Furthermore, some exchange platforms have a bad track record when it comes to security, while others are rife with market manipulation. Using exchanges with a poor track record can be disastrous, especially for long-term traders.
Revenge trading
Revenge trading occurs when a trader is unable to accept losses and thus engages in continuous trading in an effort to minimize losses. As a result, traders make a series of poor decisions, resulting in losses and, in some cases, even higher risks.
Since no one has a flawless business run, every rookie should realize that losses are unavoidable in all trade types.
Multiple Pairs Investing
A novice trader can decide to invest in and trade multiple currency pairs. This is dangerous because the trader's skills will not be sharpened and they will get overwhelmed by the numerous pairs.
To perfect long-term trading skills, an investor should first concentrate on a single pair, learn the ins and outs of trading, and then expand to other pairs.
Conclusion
Despite the fact that the crypto market offers a wealth of opportunities, some new traders often make costly mistakes. The article has covered some of the most common blunders made by investors, such as going into the market blind. Some investors rely on expert opinion instead of performing personal market research and asset analysis, which is misleading.
Another blunder is not taking advantage of both pump and dump tokens out of fear of losing out. Other inexperienced investors fail to double-check the exchanges and coins they're dealing with, resulting in low rates and coins being posted on the incorrect exchanges. Following a loss, some investors become fearful and frustrated, and begin revenge trading, losing even more money.
To avoid making any of the above mistakes and potentially losing a large portion of their wealth, a novice trader should be extra cautious of what, where, and with whom they are dealing.
