In a previous article, we talked about cryptocurrency and how it started when you read about the cryptocurrency market and how you can make a high profit. Have you really thought about joining the cryptocurrency market? Of course, I've done that before. Let me help you to know the important information and the most common mistakes of beginners in the digital market, where the cryptocurrency or cryptocurrency market is known for its rapid and sudden volatility, so it can be described as a dangerous market. And you should always remember this, as it will remind and discourage you from risking your money that you may need, so we are going to list some important points for you
First, let's know what a blockchain is
Blockchain - The Technology Behind Digital Currency Unlike traditional transactions, digital currency transfers are not exchanged through banks or other financial institutions. Every time someone pays with electronic money, the payment is recorded in a digital record called the blockchain
What is a blockchain? It is a list of transaction records, called blocks, that are encrypted and linked together. Blockchain is constantly evolving and is completely open to anyone. Each block in the blockchain contains:
1. The data of the sender and receiver and the amount of the cryptocurrency
2. “Retail”, which is the group that acts as a unique fingerprint
3. The hash of the previous block in the chain When a new block is created, it is sent to all users in the network. Then, each user validates the block, which is then added to the blockchain.
What is the Tangle technique?
The biggest problem with the blockchain is its reliance on miners. This is why IOTA is called Digital Currency (Internet of Things Application) and was created in 2016. IOTA also struggles against increasing transaction fees and network scalability. The IOTA blockchain is called Tangle. It is a blockchain without blocks and without chains. In this system, users are themselves responsible for validating transactions. This means that there is no need to obtain approval from miners; Users enjoy zero-fee transactions and increased processing speed.
To help us, a digital wallet is created and it tells you a little bit what a digital wallet is ...
What is a cryptocurrency wallet?
It is a small program or device that enables you to store and exchange your digital currency. Each cryptocurrency wallet is encrypted and unique. When you send money, you are actually sending an encrypted message to the recipient. Only the recipient's wallet can encrypt the message and thus receive the funds. Coin Wallet Hardware Features Compared to other hardware wallets, Digital has key features:
Immune to viruses or malware
His private key will not appear on your computer
No PC software required
Safer and more interactive
Use open source software that allows you to verify that the device is fully functional
It can host many cryptocurrencies
The most famous mistakes beginners in the cryptocurrency market and how to avoid them?
Mistake #1: Impatient
This is one of the most difficult mistakes to avoid. The cryptocurrency market is very volatile and it is difficult to predict where the market will be, so you should not give in to your impulses and desire to trade, trading is not a game. If you are not an experienced trader, you will find it difficult to be patient, however, it is the patience that will pay off in the long run.
Impatience can make you make hasty decisions, it can undermine your strategy, but worst of all, it can make you fear getting lost.
Mistake #2: Not realizing the risks
Since cryptocurrencies are more volatile than the stock market, the potential gains and losses are also greater. So you must have good risk management. Therefore, when investing in this market, you should always keep in mind that you could lose all your money.
The cryptocurrency market is not yet a regulated market and the value is purely speculative. Most reckless investors resort to bank loans worth thousands of dollars to get more cryptocurrency and expand their portfolio, so the risks are very high here, especially if these investors are inexperienced.
Our advice here is to avoid getting into debt and maintain your usual pace of life. Cryptocurrencies should not be a dangerous bet to your financial ability.
Mistake 3: Sell the lowest price and buy the highest price
Since the cryptocurrency market is very volatile, as we indicated at the beginning of the article, it is common for large price swings to occur. If you are afraid to fall a little, you will lose money. If you decide to sell when you panic, or the abbreviation FUD (FUD, Uncertainty, Doubt in English), despite its simplicity, is wrong. common. In this case, the mistake was to enter the market without doing the necessary research.
Then, in the face of a sudden drop or bad news in the cryptocurrency you want to invest in, you rush to sell your position to cut your losses.
The problem with this approach is that once you sell, you make your loss a reality. While reducing capital losses may make sense in some cases (such as activating stop losses), the decision here is unreasonable. The cryptocurrency market is known to be a long-term bull market, so taking action and selling on the first drop is a wrong move. Here the same can be said when the same people see a rise, buy back at higher prices and repeat the cycle.
People who buy at a high price, are afraid of missing out, also known as FOMO, once you buy, within a short period of time, the price starts to fall to the lowest price. Here feelings of anxiety and fear turn, which makes you sell out when you fall which means a real loss.
Mistake 4: Not securing open positions
Stop losses are very popular in the cryptocurrency trading market and other financial markets in general. However, unfortunately, many traders and investors ignore it and do not feel its importance until it is too late.
Stop loss is very important for capital preservation. This ability offered by many trading platforms translates into protection and automatic application of sell orders. However, if the currency price drops, you set a limit at which you want to place a sell order.
It is usually placed at a support or retracement level, especially since setting a stop loss will allow:
Save money.
Prevent deterioration of bad posture.
Profit guarantee.
Mistake 5: Stop learning and raise awareness of the latest developments in the cryptocurrency market.
Everything that touches on the blockchain and cryptocurrencies, directly or indirectly, is developing at an astonishing rate. Between ICOs and changing regulations, or important team announcements in such a modern and dynamic market. Therefore, it is essential to stay current, and it is essential to improve your basic knowledge of blockchain and cryptocurrencies in general (check out our article on cryptocurrencies) and to understand the projects you are investing in.
Fundamental analysis and increasing knowledge is just as important as technical analysis. Good reliance on proven facts, not just numbers and predictions, helps in trading.
What we are trying to say is that you also need to deepen your education in technical analysis to learn more. The bottom line is that knowledge is power.
You can always follow the next developments in the cryptocurrency market
Cryptocurrency analytics
Cryptocurrency news
Cryptocurrency rates
Mistake 6: Ignoring important events and news
If you have been in the cryptocurrency market and have done so for a while, you have definitely come across one piece of advice and one sentence: buy the rumors and sell the news.
To illustrate what this means, we give the following example:
There have been many rumors about Coinbase's plans to include the cryptocurrency BAT. The price of the coin rose sharply when the rumors spread, and fell sharply when the news was confirmed. The list of cryptocurrencies on platforms like Coinbase and Binance is very encouraging and motivating news. But normally it wouldn't be smooth sailing without pumping and deflation.
So we recommend the first step and that is to buy rumors as rumors often spread on forums and social networks that talk about the possibility of listing cryptocurrencies on major platforms. Nothing has been formalized yet, but investors and traders have started hoarding the cryptocurrency. He made some noise and carried on. Cycles last for days or even weeks. It went ahead without any known details.
The second step is to sell the news:
The listing is officially announced and the exchange issues a public press release. Sometimes the price goes up with the ad, and sometimes it starts to go down when merchants start selling what they bought during the rumor.
Of course, cryptocurrency prices are also affected by possible deletions from known exchanges, blockchain attacks or hacks, team scams, or miners’ reluctance during hard forks.
Mistake 7: Emotional interference with cryptocurrency
Some traders and investors fall in love with their cryptocurrencies, and this is no joke, but it is very dangerous. Since the trader is tied to his cryptocurrency, although it brings a certain profit and it is time to reap the rewards of profit, these sentimentalists cling to the coin and will not give it up easily, because they see it as an integral part of your investment portfolio.
But this situation is dangerous. The reason is simple, lack of objectivity.
In fact, getting out of the trade and selling at a loss will be much more difficult. Sometimes you have to put your feelings aside to keep your green wallet.
Mistake 8: Blindly trusting analysis and asking for advice
You should always do your own research or DYOR, it just means that you have to validate the investment and entry advice yourself, which can be found in any social network. So you should always ask yourself how much you know about the project. In a way, your investment choices are your own initiative, and that really is the best fundamental. Therefore, it is advisable to avoid blindly following the published predictions.
Newcomers tend to rely on the advice of others with more experience, and that's okay. But investing is an important personal decision.
Here are some avenues to consider before making any deal on social media:
Check out the different forums, Telegram groups, Public Discord, Medium..etc to get a general idea of how other traders view the coin.
Read the project technical document.
Does this project meet the needs? Is it necessary to use cryptocurrency?
How is this project different from other projects? How does his strength compare to his competitors?
What exchanges are available to trade this currency?
Is the team still active on social media? Do they follow a predetermined roadmap? Are the professional experiences of project members conclusive and specific enough?
Remember, as mentioned above, knowledge is power. So spend some time researching before investing. You will be more experienced and successful in the long run.
Mistake #9: Not diversifying your investments across different cryptocurrencies
Whether you are an investor or a day trader, you cannot put all of your money in one asset. Even the most active and risky cryptocurrency can suffer sharp declines.
Investing in many different cryptocurrencies to reduce risk is essential. Other ways and new markets should be explored to avoid some problems in the crypto market, but also in the stock market, real estate, gold, etc.
Diversification and risk management are keys to a strong portfolio. Therefore, finding good entry points in several cryptocurrencies will increase your chances of making profits.
Mistake 10: Negative psychological impact
Emotions are an unwelcome friend in trading. Greed, fear, hope, or excitement can easily get away from you or get close to you. There are many situations that can make you feel different and you can decide how to deal with them.
When you make a bad trade, the negative feelings surrounding that outcome can spill over to the next trade. Sometimes you may not open a new trade for fear of losing again.
On the contrary, when you make a series of profitable trades, you feel invincible and may enter the market at a disadvantage. Therefore, managing emotions is the main key to distinguish good traders from bad ones.
Another example is that boredom can easily spoil your judgment and cause you to start a new position when you don't have one. Therefore, before buying or selling your assets, it is always helpful to ask yourself the reasons for the actions you are going to take.
We summarize these mistakes with the tips you should always strive for, which is to be a better trader by increasing your portfolio profits and making them more than your losses.
Now that you know the mistakes that you can make in currency trading, let me give you some tips that will help you in your work to provide you with the experiences that some experts have put in place for you to benefit, trade and create wealth, the most important of which are:
First: Trade cryptocurrency with a trusted broker
Trade cryptocurrency with a reliable broker
When you want to trade cryptocurrency, you should look for a broker that is licensed and trusted by international regulators, the broker must be highly reputable, have a simple and fast trading platform that gives you easy access to it and global markets. Since trading cryptocurrency with a trusted broker provides you with a great opportunity to earn profits and create wealth in record time and in a secure environment free of scams by some unlicensed companies that defraud and defraud traders, especially beginners and investments who have no trading experience, He promised them a lot of false profits
Second: - Choosing the right digital currency
You must have complete knowledge of these currencies and choose the one that suits you best.
Third: For a balanced start
As a new trader in this field, you should start with precision and balance, and this is done by familiarizing yourself with the main methods and processes used in order to be able to start investing and trading in various exchanges.
Fourth: Diversity in trade and investment
As a novice trader, you have to invest in more than one type, and this diversity makes the process of losing much less than investing or trading one investment, because the price of cryptocurrencies is constantly changing all the time, so traders face losses at any time.
Fifth, secure platform
There are many platforms in the field of cryptocurrency trading, so it is recommended to read more when choosing a trading platform, it should be safe and reliable.