Here are seven cryptocurrency trading blunders you should absolutely avoid at all costs:
1.
Frankie goes bankrupt
FOMO is the main thing that fuels bad investments.
Rule number one is to never invest more than youre willing to lose.
It’s free, every week, in your inbox.
Investing all your money even in seemingly stable coins can be extremely risky.
We saw this just months ago when Bitcoin hit anall-time highof $19,783 in December and subsequently burst.
Next thing they know, they find its up in value, doubling, or tripling their investment.
Yes, this can happen but theres also a big chance it wont.
Then youll know what Im talking about.
Consider it Grumpy cats virtual f*ck you.
Falling victim to crypto gossip
The markets volatility isnt just because of normal market fluctuations.
In the unregulated trading world,pump and dumpschemes are common.
But beware of shilling.
If you get an interesting tip on a forum or social media, always check it out first.
How legit is the company backing the coin?
Check for a well-written white paper, founders, and a team of real people with digital footprints.
Next check the coins historical data.
Do you see a high fluctuation in buying and selling walls?
These are good indicators of a scam waiting to happen.
If it looks like a pyramid…
Yes, pyramid schemes, also known as Ponzi schemes, have infiltrated the world of cryptocurrencies.
There is one main red flag which can help you spot a typical Ponzi scheme.
If theyre offering guaranteed returns, its too good to be true.
In a fluctuating market, its impossible to guarantee returns unless they operate in a pyramid scheme style.
One of the most infamous of these wasBitConnect.
The company guaranteed 40 percent return on investment per month or one percent compound interest per day.
This is done by taking a snapshot of the original chain.
This means that anyone holding coins will then get a duplicate amount in the new currency.
Not safeguarding against hackers
Virtual currencies will naturally be a target for hackers.
Just this past January cryptocurrency exchange site, Coincheck,lost over half a billion dollarsafter a cyberattack.
One rookie mistake is to keep all of your coins in one place.
Instead, divide your crypto treasure between hot and cold wallets.
Hot wallets are connected to the internet, usually through exchanges, and are used to make regular transactions.
Think of it as your checking versus savings accounts.
Theres always that one that got away.
Its difficult to set rules on when to buy and when to trade.
