The Dawn of Cryptocurrency:
Being new and inexperienced at anything can make you feel vulnerable. While you may be able to understand a subject better through the mistakes that you make, mistakes can turn out to be costly, as well. If the area that you deal in is Bitcoins, every mistake that you make can end up in losses amounting to thousands. It is better, then, to learn from the mistakes of others.
What follows are 6 mistakes that traders inexperienced in cryptocurrency usually make, and ways to avoid them.
1. Neglecting to Do Your Own Research
You cannot get very far working in a field without in-depth knowledge to call your own. You may be able to get lucky a couple of times with tips from others, but your luck will usually run out. It can take considerable knowledge even to know which tips are worth relying on, and what tips are not. The sooner you get started building up knowledge of your own to do with cryptocurrency, the better. There are plenty of books and articles about cryptocurrency trading that you can read, and videos that you can watch.
2. Not Being Part of a Community
Many online communities have grown up around Bitcoin and other cryptocurrencies. They help with trader education. When there's something that you don't understand about coin trading, you get to discuss your questions on these forums. It's easy to find people who are eager to help you find an answer. Being a part of various communities can be about more than just having your questions answered, however. It can also be about sharing an exciting journey with like-minded people. It can be a terrible waste to neglect to take advantage of the communities out there to be more effective at cryptocurrency trading.
3. Storing Your Coins in the Wallet Provided by Your Exchange
Many people new at trading make the mistake of storing their crypto assets long-term in the wallet that their exchange provides. When you leave your coins with an exchange, however, you have little control over them. In the event that security at the exchange is breached in an attack, you could lose your coins. Such breaches have occurred at exchanges like Mt. Gox. Once you are done trading on an exchange, it's important that you move your assets to your own personal coin wallet
4. Storing All Your Crypto Coins in One Place
Moving your coins out of your exchange's wallet and into your own wallet is only one part of what you need to do to stay safe. If you've invested a large sum of money in your crypto coin holdings, and leave all your coins in one wallet, you run a high level of risk. In the event of a breach, you may lose everything. You need to distribute your holdings over multiple wallets and ensure that your wallets are properly secured.
5. Panicking When You See Values Fluctuate
Cryptocurrencies are not stable currencies. Their value can fluctuate by tens of dollars on any given day. It isn't uncommon for inexperienced cryptocurrency holders to make big moves based on anxiety over short-term fluctuations, however. It's important to take the long view, and pay attention to how your coins behave over a period of years. Cryptocurrencies like Bitcoin and Ethereum generally appreciate in value over periods of two or three years.
6. Not Making Up Your Mind About Which Cryptocurrency You Want to Invest in
New altcoins appear each month. Many people tend to get excited over them, buying and selling rapidly to make some money. It's important to be patient with cryptocurrency investments, however. You need to do your research, pick a coin, and stay with it until it appreciates.
Many mistakes that new traders make with cryptocurrencies come from the belief that these currencies do not behave in a logical fashion. While there is a certain amount of unpredictability that comes with the cryptocurrency trade, however, it does lend itself to logic and analysis. When you educate yourself in the cryptocurrency trade, you will make fewer mistakes over time.