As a new comer to the crypto space there are some basic mistakes that you are destined to make if not warned beforehand. These are errors that happen for reasons like the nature of the technology versus centralized systems or even simple human errors. In the blockchain sector, your transactions are final on the vast majority of networks . As such, you need to be sure of your actions and confident in your strategy. Here are some of the top crypto trading mistakes to avoid in 2022.
Sadly, there is a large amount of new traders that get involved in crypto thinking they have found a get rich quick scheme. It doesn’t take long before they learn the error in their ways. If you enter the market with this mindset, you will have shaky hands and more than likely lose due to irrational and emotional decisions.
There are a lot of reasons why someone would enter the blockchain sector. It provides the world with more transparency and an open financial system that can accommodate the billions of unbanked and under-banked individuals in the world. It also empowers users to retake control of their financial destiny.
Not Understanding the Technology
Another common mistake that traders make is they start trading projects they don’t understand the technology behind. If your plan is to open up your crypto trading app and look at the three letter abbreviations of projects and make informed trades, you’re in for a big surprise. When you take the time to learn the technology behind the tokens you trade, it becomes easier to see what platforms have longevity and profitability.
When new traders don’t understand the technology, they are susceptible to scams and thieves. There is a pack of crypto scammers circling new traders waiting for them to make a mistake. It’s easy to get manipulated when you don’t understand the technology making that makes the system function.
For example, at the very least you need to understand what a blockchain network is and what makes it a better alternative to centralized solutions. You should also understand basic security protocols like, never give out your private key. Whoever has your private key controls our crypto.
Sending Crypto to the Wrong Address
Another major issue for new users is miss sending funds. When you send your crypto to another party, it’s a direct peer-to-peer transaction. This design means that there is no middle party to block, censor, alter, or refund your payments. As such, it’s critical that you always triple check the recipient address on all of your crypto transactions.
The internet is filled with stories of people losing thousands in crypto from this simple mistake. In some instances, they sent the funds to a wallet address that was already saved in their previous payments cache. In other instances, the crypto was lost forever because it was sent to an address that was non-withdrawable which burned the tokens. In either case, this is an easy error to avoid. The best ways is to use 3d barcodes and rechecking the address before you press send.
Getting Obsessed with One Project
When the crypto bug gets you, it can be easy to get fixated on one project. The crypto market is a diverse and expanding space. There are all types of new projects, services, and protocols, entering service weekly. You don’t want to limit your exposure to new projects because you are locked into a single platform.
For example, if you hold Ethereum, it’s ok to hold AVAX, DOT, EOS, META 1 and any of the other smart contract programmable networks. The goal of your crypto strategy should be to secure your financial future. Getting locked into one project could make you miss other awesome opportunities that are available right in front of your eyes.
Not Factoring in All Costs
When you decide to become a crypto trader, there are some basic costs that you will need to consider. For one, the main cost will be your time. If you don’t have the time to learn about the market, its history, and the projects that interest you, it’s best you don’t start trading yet. Depending on your trading strategy, you will need to devote many hours to learning strategies and market analysis.
The next cost to consider is your trading fees. CEXs (centralized exchanges) like Binance and Coinbase provide a familiar and easy onboarding process, however, they charge much higher fees than DEXs (decentralized exchanges). DEXs have a learning curve but platforms like Uniswap and the META DEX offer lower fees and the added benefit of being non-custodial in nature.
Another major issue that should not be overlooked is taxes. If you live in an area that requires you to report your trades, you need to abide by these laws. If you don’t report your earnings you could have the IRS knocking on your door to conduct an audit.
Missing Easy Passive Income Streams
Another mistake made by many new traders is not taking advantage of the growing number of passive income services provided by DeFi platforms. Features like staking and farming enable you to secure passive rewards without giving up ownership of your digital assets.
There are entire networks built around wealth generation today such as the META 1 stablecoin. Users can stake, trade, and even secure 10% APY when they use a META BANK savings account. The best part about these services is that they are completely open to the public regardless of your country, race, or political affiliation.
Getting Caught Up in Social Media Hype
Another major issue for new traders is avoiding all the hype. You need to get involved in the discussion via social media to stay up to date on the latest and greatest, plus market movements and insight. However, you need to always be on guard as there are groups that prey on new crypto traders that they source exclusively from networks like Facebook and Twitter.
These scammers will use FOMO (fear of missing out) to make you believe that if you don’t join a particular project right now, you are going to miss out on a huge payday. As you could imagine, these paydays only come for the scammers as the users are left high and dry. To avoid these issues, you need to take a balanced approach and cross-reference all data you get from social media channels to ensure accuracy,
New Traders Become Pro Traders
Take these tips and progress your crypto skills to the next level. The market is on the verge of another adoption push. Technologies like DeFi and NFTs continue to drive blockchain adoption to new heights. Use this guide to help you avoid the most common mistakes that keep new traders from reaching their goals. This strategy will help you to improve your security protocols and ROIs.