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If you are a professional who has tons of experience in the financial industry, then the crypto market is an incredible place. If you have had business with the stock or forex market in the past and have a trick or two up your sleeves, then sure, the crypto market is the right place for you to engage your next mission towards financial freedom.
Here you would be able to make a handsome return on your investment by trading cryptocurrencies or engaging with other types of opportunities that the market provides you with.
Not so long ago, the whole idea was considered to be nothing but a hoax designed by professionals to lure investors into chipping away their hard-earned money and kissing everything goodbye, but all those speculations ultimately proved to be wrong as the crypto market is not only here but providing the financial frontier with extreme diversity that no other market at present is doing.
You can either trade cryptocurrencies in real-time and make a profit when the prices go up, or you can engage with other opportunities that the market has to offer; some people have made a fortune engaging with exchange-traded funds that are primarily not the primary product of cryptocurrencies or even crypto market per se but is offered jointly by both crypto and the stock market. It allows you to have indirect exposure to the crypto market and its volatility is not as tough as it is when you engage with the crypto market on your own.
With that being said, one thing is certain the crypto market is a gold mine of opportunities, and if you know how to dig, then you are going to make an incredible fortune trading your way within the market. But not everyone engages with the crypto market having the right set of expertise and financial knowledge, and that is where most of them get defeated by the crypto market in an incredibly painful way.
There are instances where people have lost their entire original investment to the volatility and dips of the crypto market, not knowing when to enter or exit a position and therefore experiencing an early loss.
This is a rather deadly side of the crypto market that no one wants to engage with, but despite that, there are people who would give away their entire fortune just to have a chance to play the game with the crypto market now, these are the people who should be termed as champions, but in reality, they also don’t have the right toolset, they are just betting on the market, trying out their luck and even if they managed to chip in a few successful hands who knows when their luck is going to run out?
There are certain things and trends that you should always be on the lookout for, and just to help you get started with the crypto market, the following are some of the mistakes that you should avoid when investing in the crypto market and thus securing yourself from the burden of tasting defeat.
Selling Crypto Assets Prematurely
Most investors are in it to make a quick buck; they fail to comprehend the long-term benefits of leaving their investment in whatever asset they have chosen so that it can mature over time and could provide them with better returns. Most investors don’t bother themselves with this very aspect which means that they would be chipping away whatever assets they had invested their money into for even the most feeble of returns that don’t even amount to something substantial.
This is an extremely irrational behaviour on the part of the investors as they don’t really comprehend the bigger picture at play here, and they only want to make as little money as possible and exit their position right away; it is not a healthy approach at all because you are actually giving away everything for mere cents on dollars where you could make bigger returns.
This actually has been one of the regrets of investors who have poured their money into the crypto market that they jittered away and sold their position way too soon.
For some investors, as soon as their investments start showing some returns, they get impatient, and they don’t want to wait any longer, and they settle their position; most of the time, investors are not to blame because of the volatility factor of the crypto market and how intense it could be which is why as soon as there are returns even in the most feeble sense possible most of the investors are going to chip away their investment and exit their position.
Decision-making is the key here; you need to control your mind and emotions that are running high at the moment when you begin to see some return on your investment; you need to analyze the bigger picture here and continue to study the trends that the market is presenting you with. This is an ironclad approach that is going to help you steer through the volatility, uneven data, and unpredictable stance of the crypto market.
Fear is one of many elements that play a significant role in tempting the investors to sell the whole lot at a lesser price because they fear that eventually, all of their investment would amount to nothing and that the whole enterprise would hit rock bottom. The first rule to trade in the crypto market is that you must have nerves of steel, and if you don’t have these, then you must practice and get yourself on the path to acquiring those nerves because emotions and irrational thinking aren’t going to get you any further.
There are other types of investors who would start to sell their position as soon as the asset in question begins to plunge and its price begins to drop; this is yet another classic example of fear taking in and changing the behaviour of the investor towards their investment.
The golden rule of investment claims that you should always buy low and sell high, which means that even if your asset is declining in value, then you should wait it out and stop until it is above the price that you earlier paid for it, but it is the market, and you get to see all sorts of people trading on, taking charge, making money or losing it.
Blindly Following Social Media Influencers
The crypto market is a financial platform that is a bit different from the others, especially in the prospect of people trying to lure others into bad or rotten investment deals while claiming that these are the deals of a lifetime.
Word of mouth travels a bit faster in the crypto market as opposed to other financial sectors because of the fact that it is an extremely unregulated market, and there is no final verdict proposed by a regulation agency or other corporate or government sectors.
For example, if there is a bit of information on a dedicated stock or forex entity and it is presumed to be a rumour, then people can verify the source of the news through a proper government-backed regulatory office, and they could put their doubts at rest. On the other hand, in the crypto market, there is no follow-up of any potential news; the sources are all bleak and decentralized and, most of the time, anonymous, which makes it extremely difficult to discern between information even if you presume it to be right or wrong.
Most people would blindly follow an influencer or some other social media tycoon. The younger generation is more at risk when it comes to following the advice of an influencer because they usually get into investing in the first place if the advice is coming from someone whom they like or follow on social media.
Elon Musk has been an influencer of decentralization and the crypto economy and has boomed the price of Bitcoin along with various other cryptocurrencies in the past. Not only has he boomed the price by tweeting about certain cryptocurrencies, but he has also become the reason for sudden market crashes and price dips.
Even if someone is claiming that a certain asset is going to soar over the course of the next week or so, you must not believe them and do your own research; most of the time, these celebrities are not right because they or just chipping away information based on what is in their heart or what they believe about a certain asset and they also don’t have a proper analysis performed on the information, it is just what their gut is telling them same as you or any other investor in the crypto market.
So, these investors might have their own motives behind the statements that they make public regarding crypto-assets, and most of the time, you do not stand to make something out of believing in them or even following them through a particular deal.
If someone is using the word guaranteed or 100%, then it usually means that it is too good to be true, and you should avoid the advice of such influencers and always stay away from these people at all possible costs before committing your money to the crypto market or any other financial sector.
Over Diversification
It is a common saying that dates back to various decades that you should not put all your eggs in one basket, which means that if you are a financial investor, then the best approach for you is to diversify your portfolio and invest your money into various particular assets.
Especially in the case of the crypto market, you should not rely on Bitcoin even if it is the flagship cryptocurrency that launched in 2009 and since then has shown phenomenal returns because the dips or volatility factor for Bitcoin is amazingly huge, which means that out of nowhere it is going to drop significantly both in terms of price and performance within the crypto market.
That is why it is only wise to invest your money into some other cryptocurrencies such as Ether, XRP, BNB, and various other such cryptocurrencies. But you should not over-diversify your portfolio as, in the long run, it is going to do you more damage than good.
You think that by buying plenty of different financial assets, you are actually diversifying your portfolio and hedging yourself against risks and market volatility, but in truth, you are actually grinding yourself and your financial endeavours down the drain because if you are investing in these wide arrays of products than you are becoming a target to volatility, price drops and other such risks that come with investing in all of those assets.
A word to the wise, do not engage with over-diversification as it is going to do more damage to you and the best approach is to keep it short yet not have all your eggs in one basket.
Investing in two to three different crypto assets is wise and investing in 20 to 30 different crypto assets is plain foolish, and that is why you should not over-diversify your position within the market; however, if it were stocks or other forex entities, then you could knock yourself out a bit more because these products are actually less volatile as compared to the crypto market where volatility is always at its peak, and it is like volatility has become hypersensitive in case of the crypto market.
Investing All Your Money
An experienced investor, someone who has stumbled across various regimes of the financial world, would never overcompensate themselves with the idea of investing more money than they can’t afford. It is like the first rule in the textbook for investing. You only invest what you have at hand or invest the amount that you aren’t afraid to lose.
Many people in the spotlight of doing business with the crypto market don’t take this advice into account, and they are like putting everything they have or own into the crypto market. First of all, that is foolish on various fronts; it deviates from the first rule of financial investment that you should only invest what you have at hand and never try to overcompensate your position.
On the other hand, it also goes for the volatility factor of the crypto market; it is an extremely volatile market which means that the price dips and reductions are going to be more severe as compared to the forex or stock market.
First of all, there are going to be immense cutbacks and dips in the price of the asset, with this thing happening not over the course of the week, days or hours but in mere seconds. It is regrettable to know that many people have lost their life savings in these crypto-assets; some of them might have lost their money in a legitimate way, while many of those fell prey to various scams that are afloat within the crypto market.
There are two different market segments that correlate with each other but never exist at the same time; these are the bullish and bearish markets. First of all, a bullish market is when the price and performance of an asset or various assets, for that matter, are exemplary across the board. It means that the prices are rising in a consistent fashion and the overall sentiment of the investors is positive regarding that particular market.
On the contrary, there is a bearish market as well, which proposes the fact that prices are falling like dice of a domino across the board, and only a few or none of these assets are performing in a productive fashion. This is something that is constant across any financial sector out there, may it be crypto, forex, or even the stock market.
It means that prices are going to increase, and they are going to fall, and it will directly or indirectly affect your position within the crypto market. Now you should be investing only the money you have at hand or a perforated amount that you feel comfortable with.
If you are taking out loans or handouts from your friends and family members who are throwing them into this trap of crypto investments, then it is not a very pleasing behaviour on your part. Not only you are going down, but you are putting the future of other people in jeopardy too. This is an incredibly regrettable scenario among crypto investors that they should have only invested a particular amount of money and shouldn’t have let their greed run its course by investing their life savings or, worse yet, asking for handouts or loans from friends and family members.
The crypto market is a strange place to be for sure; sometimes it is plain complicated, but only through abiding by the rules that have been set for these potential markets when it comes to investment could you stick to see another day in the crypto market. If you ignore these rules, then you are soon going to have nothing to fight for or invest in because the crypto market seldom gives you second chances.
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