5 Mistakes To Avoid When Investing In Crypto
This is the age of crypto. It is all anyone can talk about.
Mistake #1: Buying High and Selling Low
This is the easiest mistake to make.
Sure, it’s (almost) impossible to time the market perfectly when buying and selling, but there are some clear patterns you can follow to maximize your gains and minimize losses.
The most common mistake people make is when they give in to FOMO (Fear of Missing Out).
They see a project skyrocketing in price, and they want a piece of the action. This is a mistake because investing in a project when it is pumping increases your chances of losing money as more and more investors will start taking out their profits.
Mistake #2: Following One-Sided Opinions
How did you get interested in crypto?
What are your sources of information? Friends, Twitter, YouTube, Reddit?
Regardless of who it is or how good that source may seem, it’s always a good idea to diversify your ‘news channels’ to get a better picture of the market situation.
What might be a good investment for one person, may not be suitable for another due to different risk tolerance, entry point, or goals/expectations regarding that investment. This leads to the next common mistake…
Mistake #3: Not Having a Plan
How much money do you want to make and how much risk are you willing to accept? When do you want to take some profit out or cash out completely (either to re-enter at a lower price point or just cash out completely)? Are you investing short-term or long-term?
All of the above are important questions and how you answer should go in line with your investment strategy.
Mistake #4: Either Not Having A Diverse Enough Portfolio Or Investing In Too Many Different Coins
This is a bit tricky because the content of your portfolio should depend on your objectives. If you want relatively safe coins to hold long-term, then you can pretty much just have Bitcoin and maybe Ethereum.
On the other hand, if you’re investing in much riskier low-cap altcoins and hoping for much greater returns, then it’s sensible to not be overexposed and lower your risk by spreading your investment into few projects.
Mistake # 5: Investing Money You Can’t Afford to Lose
This really goes without saying, but I’ll say it anyway.
You should only ever invest an amount you can afford to lose.
Of course, no one wants to lose money but you have to remember that crypto is extremely volatile and those amazing gains go in hand with the risk of huge losses. The lower the market cap, the higher the volatility and risk.
So, if you are someone who has been wanting to invest in crypto but was not sure it was safe or how to go about it, this is for you.
Not make the same mistakes as described above and you can be sure that you won’t be shooting in the dark.
I’m going to talk more about this, by the way, so stay tuned. Because if done right, crypto is one of the most amazing opportunities of this decade… and you’re still early.
Let me know if this helps you plan your journey in crypto-land.