Bitcoin, the OG cryptocurrency, have become extremely popular in the recent years, making waves in the market. It has also been popular among private investors as the potential for high returns is higher than in any other asset class available today.
On the flip side, Bitcoin trading is also a risky investment. In this article, we’ll talk about the biggest mistakes one can make when trading Bitcoin. You must avoid these mistakes.
Not Doing Research
Investing in something you don’t understand is a huge mistake, even though a lot of investors still do this.
When it comes to investing, it’s highly important to only pour your money in something that you fully understand. If, for example, you want to invest in a new altcoin, you must spare some time and sit down to do some deep research on that coin.
That way, you wouldn’t be tunneled vision or trading blindly. You can be wiser in your decisions when it comes to the future potential of this investment.
There are people who go 100 percent on Bitcoin, meaning they invest all of their money solely on Bitcoins. However, the majority of really smart investors diversify their portfolio holdings to incorporate a range of different assets. They do that to minimize the risk of having just one investment.
Diversifying across different kinds of investment is much like a golden rule in any financial market. It helps you lower down your overall risks while still propping up good levels of profits.
Finding the Next Bitcoin
This is very much observable among many investors. These people know the history of Bitcoin and how it made a small bunch of men who were the first ones to invest in Bitcoin rich. They spend their time seeking “the next Bitcoin.”
In other words, they’re trying to spot the next most promising coin among the sea of 1,500 digital currencies that are currently available in the market. Of course, it’s obvious that that’s next to impossible.
What a smart investor should do is build a well-diversified portfolio of promising cryptocurrencies with practical real-world applications.
Having No Plan
Not having a well-defined investment plan is one of the biggest mistakes one serious investor can make. This is also very much common among investing rookies.
As a cryptocurrency investor, you need to plan every step you’ll take in your investment career. You need to know how much money you need and how much you will invest in what cryptocurrency. How much risk can you avail on your portfolio?
And, more importantly, once you have set up an investment plan you need to stick to it. No matter which market you’re trading in, you need to have a plan and the discipline to stick to that plan.
Even though everyone knows that cybersecurity is very important, a lot of people still downplay the threat of being surrounded by scams and cybercriminals. Therefore, it’s important to take basic cybersecurity measures that can ensure your trading accounts and wallets are secured.