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When the first cryptocurrency, Bitcoin (BTC), was introduced, many people were skeptical about it. However, as the years went by, the digital coin became quite popular. Today, many of the earliest BTC buyers have reaped significant amounts of profits from their investment.
As BTC continued gaining traction, several other cryptocurrencies were introduced, each coin promising to be better than the others. For this reason, it’s believed that there are thousands of digital currencies today, including Ethereum, Litecoin, Dogecoin, Tether, and Stellar, to name but a few.
What to refrain from as a cryptocurrency trading beginner
Regardless of the coin you invest in, cryptocurrency trading may be quite profitable. However, it would help if you went about it with extreme caution. In the same way, many people have gained huge profits, many have also lost their life savings by investing in digital coins.
If you’re interested in cryptocurrency trading, this article could be helpful. Here, you’ll find four mistakes you should refrain from as a beginner. This way, you could increase your chances of benefiting from the trade.
1 – Using an unsafe cryptocurrency exchange
Before you start trading in virtual coins, sufficient research is essential. A common mistake many beginners make is failing to search for a secure cryptocurrency exchange – a platform for converting fiat money into digital coins and buying and selling virtual cash.
Since cryptocurrency trading has become quite popular today, criminals have developed scam websites. You risk losing your investment if you trade on such platforms. Be more vigilant when it comes to choosing trading platforms. The best cryptocurrency exchange you should consider ought to be safe, reputable, and trustworthy.
Check what people are saying online when looking for a platform in your country. For instance, if you live in New Zealand (NZ), only trade on an NZ crypto exchange with more positive reviews, high trading volume, and charge low trading fees. Usually, sites with many actual buyers and sellers tend to be more trusted. Alternatively, ask for referrals from trusted friends or relatives.
2 – Investing in one digital coin
Another mistake many new digital coin traders make is failing to diversify their cryptocurrency portfolios. This means that they put all their money into only one type of virtual coin. While the idea may sound good, especially for the currencies doing well in the market, it’s pretty risky. This is because digital coins are highly volatile. Therefore, a negative market swing for a type of crypto one has fully invested in could make them lose all or a significant amount of their money.
Instead, it’s advisable to work with a variety of currencies and not put your eggs in one basket. This way, you’ll stabilise your cryptocurrency investments because if some coins aren’t doing well, the losses you incur will be balanced out by the profits you make from the other currencies with good returns.
3 – Ignoring cybersecurity measures
Securing your trading wallets or accounts is essential. This is because you risk losing your investment to hackers or scammers if you don’t ensure proper cybersecurity. One of the things you could do to safeguard your cryptocurrency is to secure your devices with a good firewall and antivirus.
Additionally, protect your internet connectivity with a virtual private network (VPN) that hides your browsing activity, location, and internet protocol (IP) address. Also, change your account and wallet passwords regularly and avoid disclosing sensitive details about your investment online.
4 – Trading with more than you can afford to lose
When buying digital coins, it isn’t advisable to invest more money than you can afford to lose. This means that you shouldn’t put all your cash in cryptocurrency trading. Instead, only use a portion of the amount you can manage without. This way, even if you incur losses, you’ll still have money to pay for your bills and take care of other necessities.
Also, it might not be advisable to borrow cash for cryptocurrency trading. Even though many people may be buying these coins for various reasons, don’t take a loan because you fear missing out. This is because you will be compelled to repay the money you borrowed, plus interest, even if you do not make the expected profits. Since there aren’t guarantees in crypto investments, you could end up with greater debt if you lose money.
Conclusion
Putting your money into cryptocurrency could turn out to be profitable. Since the first digital coin was released, some people have earned good cash from investing in crypto. That said, some individuals have also lost a lot of money in this venture.
Being unsuccessful in digital currency trading may be inevitably caused by unfavourable market conditions. However, investors’ mistakes could also cause losses. If you’re a new trader, this article provides some of the mistakes you should avoid making. Doing so could help you secure your investment and ultimately ensure success in cryptocurrency trading.
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