Mistakes You Can Avoid While Investing In Cryptocurrency

The past few years have made it very clear that cryptocurrency is here to stay. Sure, it is a highly volatile space and investors need to constantly be an active part of that world but the returns cryptocurrency gives are worth putting in that extra effort. While crypto does give high returns, the field can be quite confusing to navigate especially for first timers. But this should not be a deterrent for people interested in investing, all it takes is some knowledge of finance and technology and you’re good to go. To make matters simpler, here is a list of mistakes you can avoid, as beginners.

Mistake 1 : Buying High
One of the most common mistakes people make is buying high because a cryptocurrency is suddenly doing very well and they don’t want to miss out on the profits and then having to sell low when prices dip, just to break even. Furthermore, when a cryptocurrency is pumping hard, it’s very difficult to buy in because most of the investors will start taking out their profits, and especially if you’re dealing on a decentralized exchange platform. It’s also highly likely that you will end up losing a lot of money in gas costs, like on the Ethereum network (ETH to INR) and lose money owing to greater slippage, or transactions that become stuck and fail. Avoid the temptation to make impulse buys and follow tried and tested patterns of crypto investing instead.

Mistake 2 : Selling Low
When a coin’s value starts declining fast, it becomes highly tempting to sell it just to get out of a negative situation. But before you decide to up and sell everything you’ve invested in, stop and check if the cryptocurrency is a solid one like Bitcoin (BTC to INR) and if none of the fundamentals have altered, it’s highly likely that it will recover in the long run and you will be able to come out of the dip unscathed. It might get stressful to your stocks in red but have patience as a lot of things change in the long run. It would feel even worse if you sold it and then saw it gain value after a few days. You should keep in mind that you will only incur a loss if you sell your stock; otherwise, the stock is simply a number on the screen.

Mistake 3 : Not Having A Tangible Plan
When you start investing in crypto, it’s very important to ask yourself certain difficult yet important questions. How much to invest? What kind of money do you want to make? How much risk can you afford to take? Are you investing for the short or long term? So on and so forth! All of the points raised above are critical, and you should plan according to those. A lot of newbies enter the market thinking that they’ll learn as they go but it’s very important to understand the technical terms, the functioning of the market and the patterns that occur. The best thing to do would be to take things slow and make short term plans and stick to them. If you’re investing in crypto long term, then plan accordingly.

Mistake 4 : Not Securing Your Investment
One of the disadvantages of being your own bank is that you must constantly keep your private key, password, and seed phrase safe. you should never ever save them on a computer, phone, or other device or in any other virtual storage space. Instead, have them written down where only you can read it. Always opt for 2 factor authentication and only choose wallets that you know are secure. You can always check reviews when it comes to wallets and talk to your peers for suggestions as it’s always better to go for a wallet that you know someone has vouched for. Do your due diligence when it comes to security or you’ll fall victim to cybercrimes and will end up losing your investment. In the case of cryptocurrency, it’s always better to be safe than sorry.

Making sure that you don’t make these rookie mistakes does not guarantee enormous profits but it does help to minimize risk to a great degree. In the long run, going slow and steady will definitely put you ahead.