Before you can profit, first you must learn. In the world of cryptocurrency investing, too many investors try to flip the order and end up losing their shirts. You can avoid substantial losses and put your Bitcoin portfolio in the green with just a few easy adjustments, if you take action today.
The most common mistake, by far, is over-trading. I see this in the stock and commodities markets, but there’s something about the world of cryptocurrency that seems to encourage fast moves in the quest for quick profits.
For the vast majority of traders, making more buys and sales won’t lead to enhanced profits. If anything, being overeager to trade is just a manifestation of FOMO, or the Fear Of Missing Out when you’re seeing other investors making money.
FOMO is a cardinal sin in the markets and usually results in capital losses, do don’t think that making 20 Bitcoin trades a day is necessarily better than making one trade a week or even less than that. After all, investing should be about quality, not quantity.
This point leads us to a related point: Bitcoin investors often ignore fees when they’re calculating their profits and losses. Over-trading can quickly decimate your cryptocurrency account because all of those small fees can add up.
The solution to this is twofold: find a low-cost or no-cost Bitcoin broker, and trade less often. Don’t put these actions off, as small changes today will make a huge difference over the years to come.
Then there’s the other type of over-investing: putting too much of your money into Bitcoin all at once. First of all, Bitcoin and other cryptocurrencies are speculative in nature. I’m a believer in cryptocurrency and the blockchain, but that doesn’t mean that I’m ignoring the risks involved.
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Therefore, please do not put your life savings into Bitcoin or mortgage your house to buy Bitcoin. Also, don’t borrow money to buy Bitcoin or any other cryptocurrency. A safety-first attitude will let you “live another day” in the markets.
Yet another common error is to keep your Bitcoin on an exchange for extended periods of time. If you don’t have a hardware wallet yet, consider buying one today as they’re not all expensive. And as soon as you’ve completed a purchase of Bitcoin, take it off of the exchange and store it securely in your hardware cryptocurrency wallet.
You’ll thank me someday for that last piece of advice as remote attacks are not uncommon in the world of cryptocurrency. Keeping your Bitcoin in a physical storage device, away from your broker’s platform, can help to safeguard your holdings against these attacks.
Here’s a mistake that I see all too often: waiting forever to find the “perfect” entry point into Bitcoin. There’s an old saying that can apply to modern investing as well: the key is “time in the markets, not timing the markets.”
By this, I mean that it’s better to start accumulating Bitcoin now and average down gradually if the Bitcoin price goes lower. If you just sit on the sidelines month after month, you’ll realize too late (when the price is much higher) that there was never a “perfect” entry point for Bitcoin.
Finally, there’s a definite possibility that you’re investing in Bitcoin without any real strategy. Haphazardly investing in a volatile asset like Bitcoin is a recipe for disaster as the big-money “whales” will eat you for breakfast.
Financial legend Jack Welch once said, “In reality, strategy is actually very straightforward. You pick a general direction and implement like hell.” Undoubtedly, he didn’t mean that you should over-leverage yourself. Rather, it’s a matter of forming a (hopefully bullish) thesis on Bitcoin – and just as importantly, committing to that strategy for the long haul.
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