So now that you are a new bitcoin investor, you must be having a lot of doubts as you are new to the cryptocurrency world. Many bitcoin investors and traders had made countless mistakes at the initial stage when cryptocurrency started a decade ago. Since you are a new investor, you surely do not want to make these costly slip-ups yourself. Therefore, we have listed down some of the slip-ups that you should avoid.
1. Not Taking Your Privacy Seriously
When you create a cryptocurrency wallet, make a note of the public and private keys. Do not store your passwords or private keys in the computer as your electronic device can be hacked or breakdown. As there is no option for ‘Forgot Password’ in the cryptocurrency wallets, if you lose the private keys your entire investment and crypto portfolio will be lost as well.
2. Investing More Than You Can
While investing in Bitcoins or even in share market, you need to remember that you gain huge profits if you invest wisely. A wrong investment, and you can lose it all in a blink of an eye. A responsible investor will analyze and plan their weekly, monthly or yearly budget. Being aware of your income and expenses, you can determine a solid budget to use the leftover money for other investment such as Bitcoin. Start with small investments with less risk and less loss. It’s better to lose a little than losing it all and having nothing to try again.
3. Poor Research
No matter where you invest, you need to research before investing in any type of investment. As a beginner, you can just surf the internet and find a vast amount of information related to Bitcoins. First learn about the developers, their project goals, and the roadmap. You can find some details in white papers, projects, websites, and blogs related to Bitcoin investment. Research a bit about some famous personalities who have invested in Bitcoin and their articles for the same. Doing your own research can make you familiar with how it works and what you are about to invest in.
4. Making Your Trades Based on Emotions
Many people are emotionally attached to their investments. Therefore, any certain changes in the crypto market can drive strong emotions. Fear-driven decisions can lead to making hasty decisions. Don’t be scared of the fluctuations and try to keep your feelings out of it. Many investors have made poor decisions due to the volatility in the cryptocurrency market and sold their Bitcoins when they notice a decrease in the value. A few weeks down the road, the prices rose again, leaving their investors devastated. If you see a dropping token, take some time to think calmly and track the market trends for a while and ask yourself if you are making a sound and reasonable decision. Successful traders remove emotions from their trading. They are very well aware of the consequences caused by fear and greed.
5. Mining New Coins
As a new investor, you might have come across the word ‘Bitcoin mining.’ Mining every coin from your computer is time-consuming and costly process. Setting up mining for Bitcoin put a lot of load on your electronic devices. The more the device performs the process, the sooner it will develop faulty components and overheating issues. If you are serious about pursuing this option, conduct a further and intensive research on it to be prepared to shell out some serious cash for hardware and energy costs.
6. Not Considering the Risk
The concept of risk management should be understood carefully when it comes to investing. If you don’t have any risk management strategy, you can face an extremely high risk and very low probability of success. You need to make sure when to get out with minimal damage and maximum profit. Start using a stop-loss rather than avoiding it. Stop-loss is a friendly tool to help you limit your losses according to your risk strategy.
7. Avoiding the Taxes
You may have come across in many ways that the government of every country tried to exploit the cryptos. In which, even taxes (such as Goods and Services Tax in Singapore) are one of the strategies used to make profits out of this technology. Keep track of taxes that you are paying while earning profits through Bitcoins.
8. Considering Others and Following Them
Listening to what others have to say or agreeing to what they order you to do can be risky. If they are knowledgeable and experienced in terms of Bitcoin trading, you can go ahead and take their advice. However, relying entirely on them is not a wise decision. Try to do your own research as your first mistake can cost you more than it will to them.
Avoid making the mistakes as mentioned earlier and be mindful of the in the future. There is no doubt that there are a lot of traps for you to fall and make a mistake, but even if you do be careful, calm, and take the wise decision.
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