It is often said that experience is the best teacher and to gain experience you will have to commit a bunch of mistakes. Therefore, we can rewrite that adage to mistakes being the best teachers. However, some mistakes are quite costly and in crypto trading can more often than not translated literary. Spending enough time around the cryptocurrency forums, you will see a host of mistakes that rookie traders make and in this article we will highlight a few that we hope you will not make.
DYOR – Do Your Own Research
Doing your own research is the starting point and this applies not just to crypto trading alone but any other asset class whether stocks or bonds. You need to understand whatever asset you are interested in investing in. This advice is especially potent in cryptocurrency where you cannot outsource knowledge and education, you just have to get down and dirty to get to understand what makes cryptocurrency work, how is the value of an asset determined, etc. The cost of not doing your own research is very hefty.
Losing your private keys
If you are pretty new to the whole blockchain thing then you probably have no idea what private keys are so we will begin with a definition. Think of private keys as your house keys, you need them to open the door into your house which holds your money. The house, in this case, is your public keys and there is only one key that unlocks your house, lose it and you lose access to your money. If you hang out for some time in the cryptocurrency forums you are bound to come across a school of believers who subscribe to the philosophy of financial self-sovereignty using the mantra “Not Your Keys Not Your Bitcoin.” This just means that if you do not have the keys to your funds on the blockchain, then the funds on the blockchain are not yours. Do not lose your keys.
Falling for FUD and FOMO
FUD and FOMO are acronyms that stand for ‘fear, uncertainty and doubt’ and the ‘fear of missing out’. FUD is a form of market manipulation using the media and public forums to spread untrue information with the goal of eliciting an expected reaction (usually fear which leads to selling) from the investors and depressing prices for an asset. The fear of missing out occurs when a trader notices the price of an asset pumping hard and they realize that they can still catch the starship to the moon only they realize this often too late and they try to buy in only to be left with bags of worthless assets as others who are already in sell. To avoid falling for both these mistakes always DYOR before investing and ensure that you stick to a trading strategy.
Not Using 2-Factor Authentication
It is absolutely essential that you protect your trading accounts with all the tools at your disposal and the 2-factor authentication (2FA) is one of the absolute minimum requirements you have to execute to ensure the safety of your funds. Once you open an account on any exchange, ensure you activate the 2FA feature of every account. What this feature does is ensure that you verify each login using several additional options in addition to using the password. You can choose to log in using an email account as well or a phone where the platform can send a verification code through either SMS or a phone call. It ensures that if a hacker gets ahold of your password, they do not gain access to your account.
In summary, most of these mistakes are grave and may lead to lose of your funds. Despite the lure of a rich lifestyle for crypto traders, hacking and theft are real problems in the space. Educate yourself and ensure that your accounts are safe all the time.
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