Trading has been a thing for several years now. Some people trade as a full-time job and others do it part-time. In recent years, especially during covid-19, a lot of people have explored trading to improve their bank accounts. However, it isn’t as easy as putting money into a stock and watching it gradually grow.
Trading stocks is timing, skill and a bit of luck. At the end of the day, you never know what is around the corner for a company. That is why it is hard to predict what will occur in the near future. Market research is key with stocks and it is very important before you start throwing your money into companies you know nothing about.
Cryptocurrency is another place where people have been investing their money. It has become incredibly popular since the launch of bitcoin back in 2009. However, a lot of people think bitcoin was the first cryptocurrency when in fact it was eCash, created by a man called David Chaum back in 1990.
There have been many attempts at creating cryptocurrency however, they have not been successful. Now, Bitcoin is the highest valued cryptocurrency that is currently on the market with others following closely behind it.
Trading cryptocurrency isn’t easy and it is something that people should be prepared to lose money with. It is one of the most volatile markets out there. Before you even begin to consider putting money into cryptocurrency, you must understand the risks you are taking.
In this article, we are going to give you some tips on how you can trade with cryptocurrency as well as tell you the common mistakes people make.
Set Up A Strategy Before You Start Trading
Before you begin trading, you need to have some sort of plan. Yes, we said earlier that you can’t predict what is in the future, however, you can have a plan.
There are a lot of cryptocurrencies out there and some are more genuine than others. There are some cryptocurrencies which are legit and others which will take your money and run. The last thing you want to do is invest your money into a cryptocurrency which doesn’t exist.
It is believed that there were around 7000+ cryptocurrency scams back in 2021, a 30% increase compared to the previous year. Furthermore, it is believed that the average loss was around £20,500 which is a lot of money for some people. That is a lot of money for the majority of the UK.
Social media will shove a lot of information down your throat about cryptocurrency. Furthermore, we can guarantee that over half of them do not know what they are talking about. Some people will say things because other people have. Moreover, once you read this information, do your research to see if what they are seeing is true. Try and avoid what the hype is saying and research the information that you read. Just because a few people have said the same thing does not make it true.
There are a lot of people who will be making suggestions without understanding the risks you are taking. There are many risks with crypto so you must understand that first.
Before you invest your money, you should set limits on how much you are going to invest. For example, do a small percentage of your wage before you throw too much money into the investment.
For example, invest 5% of your wage each month. If you are earning £1,500 a month, this would be a total of £75. If you would like to invest more than you can, however, keep in mind that you could also lose that money. Don’t invest too much if you are worried about losing it. There are more traders which lose money with crypto than those who make money. With all investments, there are pros and cons, especially with crypto. You must evaluate your options before you begin investing in crypto.
Spread Your Money Around
One of the worst things you can do when trading cryptocurrency is put all your money in one place. The same goes for trading stocks. A lot of people will put their money into one stock and if it goes bankrupt, they can lose all their money. Spread your money around so you can ensure you are not risking all of your money being lost in one go.
There is too much for all of your investment to be in one area. Just because one cryptocurrency lowers in value does not mean that they all will. One may have a bad day whilst another may thrive.
There are so many cryptocurrencies out there that you should never be stuck with one crypto. Do your research and spread your investment around to keep yourself covered.
Long Term Investment
The majority of investors want quick wins, the quicker we make money, the better. However, you need to invest your money with the mindset that it is a long-term investment.
With the cryptocurrency market being so volatile, you have to understand that there can be dips. These dips could lead to the value being lower than when you originally started. Whatever you do, do not cash out on a loss. If your investment is a well-established crypto coin, be patient with it as there is every chance it can return to its former glory.
Common Mistakes With Crypto Investors
Now, it is time to look at the mistakes that many crypto investors make. It is believed that around 2.3 million people in Britain own a cryptocurrency.
Don’t Buy When The Price Is Low
Low prices don’t necessarily mean you are getting a good deal. These prices could be low due to many people selling because they no longer believe in it.
Don’t Go All In
A lot of investors will say “the bigger the risk, the bigger the reward”. Although that is true, it does not mean you need to follow it. Don’t put all of your savings into crypto as it is too risky and you could lose it all.
Crypto is not easy money and is far from it. People will invest in crypto, hoping it will increase quickly so they can jump straight back out. Whatever you do, do not expect crypto to be a quick win. Investing in crypto can be a long-term investment so just sit back and wait for the right moment without expecting anything.
Falling For Scams
There have been many crypto inventors which have lost their money to cryptocurrency scams. Scammers are taking advantage of crypto investors that will easily put their money into something without wanting any information. Be wary of these crypto scams as you can lose money very quickly.
There are many cryptocurrencies out there that you can invest in. Furthermore, there are a lot more cryptocurrencies out there that can take your money and run. Be wary of scams as they are highly common in this market. Be wary of your online crypto wallet and make sure you know where it all is and you don’t lose money to scamming cryptocurrencies.