5 things to avoid when cryptocurrency trading

The cryptocurrency market is rapidly emerging as an industry for new investors to explore alternative assets. With the novelty and innovative nature of the market, there’s consistent news and updates that bring in an element of excitement to the headlines. 

For new investors, it can be difficult to pick out the genuine news from sensationalism in the space. Practicing the following strategies can help new and experienced trades from making mistakes in cryptocurrency.

1. Buying a crypto because it’s cheaper 

In cryptocurrency, just like in stock trading, a cheap token is not necessarily a sign of a good deal. Looking at a cryptocurrency’s price over the course of its history can give a better indicator of whether it has a good future or whether it’s set to decline. Cryptocurrencies that have consistently declining values - and declining trading volumes - require a fair amount of caution before you invest. 

Look for projects that have steady increases too; a project that surges isn’t a foolproof good indication either and its value might sink after you buy.

2. Taking the "all-in" strategy 

Some platforms suggest you go for the high-reward with maximum investment. But by placing high bets in one go, you’re risking a greater loss. Instead, look to buy small amounts and pull profits consistently. Bitcode Method Official CEO suggests:

“Putting the same amount of money on smaller investments across a diverse portfolio of crypto assets is a much savvier strategy than a lump sum on one. In crypto trading, taking the patience approach usually pays off more than the aggressive greed, especially when the market is uncertain.”

3. Trading with emotion and expecting easy money

In ANY investment, making money takes time and it’s not immediate. Thinking cryptocurrency is “quick and easy” money will set you up for frustration and ultimately probably making emotional decisions. Rather, set up a strategy - however basic that might be - and take small wins from it. Play the market with your head and not your heart and don’t expect massive results from your first trade.

4. Not taking security as seriously as you can

Cryptocurrency is immutable and a trade is irreversible. Unlike traditional banking, if you make a mistake, you CANNOT reverse the transaction in crypto. In the same way, if you lose your keys to your private crypto wallet, there is no backup that you’ll be able to rely on through another platform. If you lose your keys or make a mistake in transacting, you will lose your crypto with no remedies.

To avoid the worst from happening to your cryptocurrency, take the security of your accounts seriously and double check any and all transactions in the space.

5. Not being hyper aware of scams

If something sounds too good to be true, it probably is. Cryptocurrency is still an emerging space and as it gains attention, it has seen a rise in scams across the industry.

Take care when engaging with links sent to your inbox. Some scammers will use “phishing” links to get into your network and look to scrape your history for details to hack into your account or install malware on your computer.

Other scams are related to the type of project you might invest in. “Pump-and-dump” scams, for example, will see fraudulent projects create hype around a token which will bring the value of the coin up. Investors will be attracted by the latest project doing well and will buy in. When the price hits a certain point, the developers will sell their tokens (after pulling a profit from it) and leave the project with valueless coins.

At the end of the day, the cryptocurrency space is exciting and it yields some amazing opportunities for alternative investment to thrive. Going in armed with the right knowledge can make your trading as safe and risk-free as possible.