Top 6 Cryptocurrency Investing Mistakes to Avoid
Today we will talk about the top 6 cryptocurrency investing mistakes you need to avoid. This article is mainly for new cryptocurrency investors. When investing in crypto there are a few common mistakes people intend to make. In this article, you can learn how to avoid those mistakes and make better decisions.
Lack of a proper plan or strategy
Nighty percent of people just want to go into cryptocurrency because they want to make money and better their financial position. Now there is absolutely nothing wrong with that. But you can not just have an objective like that. You need to have a proper plan or strategy. Do not mistake objective with strategy. You can’t just I will make more money by investing in crypto you will also have to have a proper strategy for that.
After you have selected your plan you have to follow through with it. Do not make decisions based on emotion. You can not ensure the long-term effectiveness of your plan If you break it in midway. Also if you constantly changing and chopping your plan then you won’t be able to isolate why it’s not going according to plan.
Always invest what you can afford to lose. You always have to keep in mind that cryptocurrency can go zero tomorrow. And please do not invest in cryptocurrency with debt. No matter how promising the crypto is. This is the worst idea ever. Start with a good strategy and you are already a mile ahead compare to others.
Not doing your own research
Most people actually don’t do any in-depth research. They are mostly influenced by friends and YouTubers. This is not a good sign. This is very unfortunate because you should always know why you are investing in certain crypto whether it’s bitcoin, Ethereum, or Litecoin.
You can find many hidden gems by doing your own research. If you can invest in that properly you can make a lot more than all the other investors. This will not only help you invest in the right crypto it will also increase your confidence. And if you research properly it will always help you in the long run.
Taking too much risk
Investing too much of your money in crypto is never a good idea. As I said earlier always invest what you can afford to lose. Too much investment will leads you to make sub-optimal decisions and go against the strategy that you defined initially. In simple words when you invest too much money you tend to take an emotional decision. And please trust me on this one, you never want to make an emotional decision.
To manage your risk you will need a risk management strategy. However, your risk management strategy will depend on many things. If you are a long-term investor meaning you will buy and hold your crypto then it a rather easy. However, if you are an active investor then you really need to hone your risk management. Remember the crypto market is way too volatile. It reacts faster than you so it’s best to start things slow.
Not making the backup drive
This is another mistake crypto investors always do. They do not make a hard copy of their id and password. It is very important that you make at least one hard copy of your wallet. Let’s say you are holding all your information in encrypted software on your laptop. You are thinking well it’s in encrypted software so no reason anyone can steal it. But what happens if you lose that laptop or someone steals it. He may not get your wallet access but at the same time, you can not get it either.
So it is very important that you make a hard copy of your wallet or exchange account. I can’t tell you important it is. Just write it down on a piece of paper store it somewhere safe. If you happen to lose your laptop or mobile phone you can rest assured that your wallet is completely safe.
Not considering tax
It’s a common misconception of many cryptocurrency users. They think that don’t have to pay any kind of tax on their profit. Which is completely false. IRS has heavily invested in blockchain editing software and they also have a dedicated team to monitor tax evasion. You might lose a lot more than the tax money if you get caught doing this. Prison and heavy fines are not worth the risk. Find out what you owe to the government and pay it.
Bragging about your cryptocurrency
You never should talk about how much crypto you have. This is something absolutely for your own benefit. What you need to understand is that cryptocurrency is very easy to steal. Easier than then your bank account. Because just by knowing your bank account and password a thief can not steal it but if a thief somehow knows your crypto wallet or password then bye-bye your money.
Talking online or posting something is not a good idea either. You will be shocked to know how much information someone can gain from your online profile. If you are not careful people can easily trace you and find your real identity. After that, it’s just a matter of time.
That’s it for my 6 cryptocurrency investing mistakes to avoid. This article is mainly for a new crypto investor who has a pretty good chance of making these mistakes. I do hope you guys learned at least a few things from here. Even if you are not a crypto investor take these lessons to heart. It will help you in the long run always.