The buzz around investing in cryptocurrency has led growing numbers of investors into the growing investment world. From Bitcoin and Ethereum to newer altcoins, crypto represents the potential for exciting returns — as well as high risk. It’s a difficult world to get used to for beginners, and many new investors make easily avoidable mistakes that can cost them both money and confidence. Today, we’ll go over the 5 most common mistakes new crypto investors make and give you tangible approaches on how to avoid them.

1. Investing Without Research

The Mistake: A lot of people new to crypto get in because of hype or because they saw people tweeting about the coin with no understanding of the technology or the project behind the coin. Learn to recognize a “hot tip,” which will cause you to screw up your investments.

 

How to Avoid It:

 

  • Study the basics project: team, roadmap, partnership, technology.
  • Look at the coin’s market and community activity.
  • Search for ratings and comments on reputable cryptocurrency forums such as Reddit, CoinGecko, or CoinMarketCap.

 

Pro Tip: Approach crypto like any investment — knowledge is power.

2. Lacking in an Investment Strategy

The Mistake: Beginning investors often buy whatever coins are recommended to them or try to invest in just one or two assets. This can cause panic selling when the market goes into correction.

 

How to Avoid It:

 

  • Define the goals of your investment: Long-term growth or short-term profit?
  • Use a broad portfolio to distribute risk across several coins.
  • Determine how much of your total investment portfolio you are willing to risk in crypto (usually 5 to 10% for beginners).

 

Pro Tip: Have a game plan and don’t make snap decisions based on FOMO (Fear of Missing Out).

3. Ignoring Security Practices

The Mistake: Crypto is digital and digital assets are targets for hackers. New investors often leave their funds on the exchanges they purchase them from without much security in place and those funds get stolen.

 

How to Avoid It:

 

  • Use trusted wallets (hardware wallets such as Ledger or Trezor are best for long term storage).
  • Turn on two-factor authentication (2FA) for every account.
  • Never give your private keys or seed phrase keys to anyone.

 

Pro tip: Treat your crypto the way you would cash: If it’s online, it’s vulnerable.

4. Bitten Into Scams And Broken Promises

The Mistake: Scammers target beginners with promises of “guaranteed returns” or “insider tips.” Scores have fallen prey to scams related to phony initial coin offerings, fake cryptocurrency exchanges and other types of predatory behavior posted through phony social media accounts.

 

How to Avoid It:

  • Do not participate in projects without a website, a whitepaper, and those which do not have any information about who the team members are.
  • Any scams with big promises for returns: crypto is all about risk.
  • Stick with reputable, well-established exchanges

 

Pro Tip: If it’s too good to be true, it probably is.

5. Letting Emotions Drive Decisions

The Mistake: The cryptocurrency is highly volatile.  Newbies panic sell in dips or panic buy in spikes, and that’s how they end up losing.

 

How to Avoid It:

  • Stay the course in the face of short-term price moves.
  • Think about dollar-cost averaging, investing a fixed amount on steady schedule.
  • Stop constantly checking the prices to keep from having emotional reactions.

 

Pro Tip: When you’re an investor, pay attention to the long-term trend and not noise every day.

Conclusion

Cryptocurrency investments can be quite rewarding for you, but as a beginner, you need to be wary. Navigating the crypto market requires plenty of due diligence, having a plan, focusing on securing your assets, steering clear of scams, and keeping emotions in check so that you can pump up the odds of success on your crypto investment.

 

Just remember crypto is not a get-rich-quick easy money parachute it’s a weapon in building your wealth when used wisely. Take baby steps, keep yourself informed and build the portfolio gradually.

 

This article is contributed by an external writer: Natalia Ivanov, Crypto Whales Info


 
Disclaimer: The content created by LBank Creators represents their personal perspectives. LBank does not endorse any content on this page. Readers should do their own research before taking any actions related to the company and carry full responsibility for their decisions, nor can this article be considered as investment advice.