How To Make Money Exchanging Cryptocurrency; Typical Problems

Feb 18, 2021
11:02
2 min reading

Choise.com team

Since cryptocurrency is on the rise, many people start dabbling in crypto exchanging believing that they can make fortune just by buying and selling coins at the right time. Yes, certain coins are demonstrating incredible gains nowadays, bringing investors really big money.

The harsh truth about cryptocurrency trading is that you can lose as much as you make. Beginner crypto traders often do not have a clear understanding of how the market functions, evolves and responds to the changes. As a result, they often trade unthinkingly and make lots of judgmental errors at the very beginning of their trading career, losing both money and confidence in their abilities. In this article, we will spotlight typical mistakes when exchanging crypto to help you trade consciously and avoid financial losses.

Failing to comprehend trading charts

A long journey always starts with small steps. Your success in the world of crypto hinges on how well you understand the rules and principles of trading. Yes, you will have to do this: get down to books, articles, and tutorials to learn the basics of crypto trading as well as master the interpretation of technical analysis and how to correlate the fundamentals of the coin with its charts. An ability to make sense of historical data will help you predict the coin’s price behavior in the future and avoid wrong investment decisions.

Trusting the hype

Crypto-enthusiasts want to barter their digital holdings for other assets to earn on a difference in the exchange rate. Such as, Bitcoin price is breaking records nearly every day, and many opportunists start converting their altcoins to BTC, naively believing that its cost will continue to grow.

You should understand that the interest in Bitcoin or other crypto products is often determined and stirred by social media and major influencers. A single post of Elon Musk caused the BTC value to skyrocket, but this trick can work just the opposite way. Just imagine what a craze will start in the market if Elon announces on his Twitter that he will sell out all his Bitcoin coins because he no longer believes in its power.

When relying on social propaganda, do not forget that the hype can be made artificially just to pump up or dump its price. The best tactic to withstand the hype is to thoroughly study the crypto world and learn to judge the projects for yourself. The more you know about the cryptocurrency industry, the wiser investment decisions you make.

Unwillingness to work properly

Exchanging coins without proper research is not a smart course if you want to capitalize on crypto trading. A failure to do a fundamental analysis before trading coins can translate into a disheartening outcome that you have spent more than you eventually gain. If some altcoin appeals to you and you want to get it, take the plunge wisely. Check the company’s website, find out whether this company attends conferences, learn about its partners, sponsors, management team, and token economy, and take your time to read their white paper. This will help you evaluate the coin’s earning potential before pouring your money into it.

Overtrading

Aspired to make money on exchanging crypto, many rookie traders try to conclude ridiculously many deals per day, say 20 or even more. This is a risky strategy because can lose from commissions or make bad investment choices, which will ultimately push you to exchange more to cut down the losses. The reality is that you cannot have dozens of lucrative trading opportunities every day. Overtrading may lead to poor decision-making because you get focused not on the trading quality, but the quantity.

Losses are inevitable when trading altcoins, but many users cannot accept this bitter truth and often fall for revenge trading to mitigate the losses and break even. Led by frustration and anger, such people begin to actively exchange their tokens, without proper research and consideration, which can make things even worse. To keep your crypto portfolio positive, you need to learn to combat excitement and emotions.

Chasing cheaper coins

Many newbie crypto traders hunt for cheap coins thinking that in the future, these coins will get expensive. This is a common trap. Many factors may take a heavy toll on the token’s price, including the cost of major coins that set the trends for the entire crypto scene, the circulating supply, and liquidity.

Exchanging on signals

The Internet brims with groups that provide signals for buying and selling tokens, and many novice traders rely on such action calls. It is dangerous. If a group includes several thousand members, and they all respond to the same trading signal, the chances of that signal working are reduced to zero.

Such a strategy succeeds only when the group is relatively small and managed by a trusted and accomplished trader with a wealth of relative experience. Joining a good signal-providing platform is never free, but paid, and the number of participants is generally limited to just 20-30. Taking advantage of trading signals requires harnessing the basic trading skills and an ability to perform technical analysis, otherwise, you may find yourself losing more than making.

Scrimping on a hardware wallet

If your electronic holdings exceed $500 in value, you should seriously consider obtaining a hardware wallet to keep your funds. A great allure behind a hardware wallet is that it presents a physical device disconnected from the Internet. It means that hackers can only steal your crypto assets if they get access to the physical gadget and enter the correct passphrase. This takes the security of your investments to a brand new level.

Playing on high-commission platforms

When you sign up with an online exchange platform to trade your digital coins, expect to pay a fee for each exchange transaction. The solution here is to find an exchange platform with moderate trading charges and a good range of instruments to trade. For example, Crypterium is an ultimate crypto app that allows you to compare rates from dozens of the world’s most reputable exchanges like Binance or Kraken and pick the best offer for hundreds of crypto pairs.

Exchanging virtual coins is not rocket science, still, there are a few lessons to learn to avoid pity mistakes. Take your time to learn the essentials of crypto trading, be skeptical about social media publications, do your due diligence before investing in crypto, ensure the security of your tokens, and find a reliable provider to execute your transactions – following these little tips will save you from huge problems when speculating in cryptocurrencies.