People have been increasingly investing in cryptocurrency, a form of digital currency. Some reasons behind its popularity include the near impossibility of counterfeiting or double spending, cheaper and quicker money transfers, and decentralized systems that don’t collapse due to central issues. Given its quick rise to fame, the market remains volatile, leading to several costly errors. Here are some mistakes to avoid when selling or investing in cryptocurrency to avoid losing money with these investments.
Ignoring trading costs
Market traders make several trades in a day. However, all these trades are not free; they often have a transaction fee. Some payment portals may also charge more for every deposit or withdrawal. Keep an eye out for these costs, which could add up over time and affect profits.
Not working with a trading strategy
Without a pre-set trading strategy, one is more likely to run into losses. A trading strategy lets one define how to pick tokens and when to buy or sell them. What’s more, this makes trading much easier in the long run.
Forgetting about portfolio tracking
Another common mistake people make is leaving their investments. Keep tabs on the portfolio by tracking returns regularly. Study the state of the market as well to edit trades as needed and maximize returns.
Overlooking the importance of research
Unfortunately, the world of crypto is fraught with scams and misinformation, resulting in major losses for some investors. To avoid falling through the cracks, traders must take the time to conduct in-depth research. Several crypto companies also use celebrities and social media influencers to pull buyers. Exercise caution and learn about these practices at length before trading in crypto.
Falling for rug pulls
Continuing with the above point, many crypto developers practice “rug pulls.” Essentially, these are scams where the developer abandons the project and escapes with investor funds. This causes the token price to drop to zero, resulting in huge losses for traders. To avoid falling for these, vet the website and social media channels and check that the founding team is reputable. Additionally, check the age of the tokens and steer clear of any that were only created in the last 24 hours.
