When a person decides to invest in cryptocurrency, they do that with full optimism that they are going to make money. To them, it’s easy money, “what do I have to do, I just buy a coin and wait for it to make me rich”. They get overwhelmed by these feelings and they rush into it. While some are rushing into it, some are scared to take the action. Some people want to invest in their minds, but are too scared to take the first step because they are scared of losing money. They never take any actions. This is very bad attitude and mistake most people make.
One mistake common to most new crypto investors is not knowing the basics. You sell them jus learning how to install a crypto exchange app without trying to learn the basics of crypto. They forget there is something called education. They don’t know what a blockchain is, what is smart contract is, they don’t know what a market cap is, they don’t know what circulating and total supply means. Some of them don’t even know how important their private keys are. Then nonchalant attitude of not knowing the technology or understanding the technology is very risky.
Understanding the trading fee is an important thing to know when trading crypto. A lot of people trade with less regards to the trading fees. Most times when you trade, you lose all your profit through trading fees. You think the trading fee is low but when you add them up, they are worth a lot. So putting trading fee into consideration when investing is also important.
Over trading is common in new traders because of the excitement of trying to make money. Sometimes they make more than 10 trades a day hoping to make a lot of money from it. This is a really dangerous act because most of them lose some of their profit on fees, when they notice this, they will keep making more trades to recover the money lost in trading fees. This will lead to them making poor decisions.
Do not invest more than you can afford to lose is rule number one in investing. Most people make the mistake of investing their life savings, some go the extra mile of taking out loans into investing. You should know that crypto investment is very risky. While some people risk it all and make it big, but your mind will rationalize and normalize the profit to be less significant.
UnderDiversification and OverDiversification of Portfolio is also a problem. You have to always diversify responsibly. While it’s not good to put all your eggs in one basket, it’s still right to know that is also bad to put all your eggs in a lot of baskets. Have a minimum of 5 portfolios and maximum of 10 portfolios.
Always learn to Cut Your Losses, this is very important because sometimes you might be a little stubborn, because you want to be right. But the market doesn’t care about you or how right you want to be. When you don’t believe in a coin anymore, take your losses and exit the coin.