After going through our course, you’ve probably realized the problem of the current financial system and the potential that crypto has and you may be interested in getting a piece of the cake.
What is the first step?
Before going through the exact process, let us introduce you to the biggest mistakes newbies make so you can be aware of them and act accordingly.
After this lesson, you will know what you must avoid and…
what are the most common traps people get in?
1) Choosing cheap coins
This is one of the most common mistakes inexperienced investors make. They think the coins with a very low price have greater potential and they can’t be further from the truth.
That’s not how it works.
You can’t compare the potential of the coins by their price, because they have different coin supply. We, as humans, tend to value things by their price, ignoring the real worth.
There are coins with the price less than a dollar that are overvalued while some coins with the price higher than $1000 can still be undervalued.
The coin that is priced below $1 can have a total supply of a thousand times bigger than the coin priced at $1000. Huge coin supply stops these coins from reaching high prices per individual coin because it’s not an increase from $1 to $10 but the increase of whole market valuation for 10 times.
The demand for that coin has to become 10 times bigger than it’s now to expect price going 10 times higher which is pretty tough.
Most people are just too impatient and they think that they will invest a few thousand dollars and they will be millionaires in a month or two.
This is not how it works.
Even if you were lucky enough and find out about Bitcoin very early, you should hold it for years to make astronomical gains from a small investment.
Most people can’t stomach big price moves up and down and the majority of people who bought Bitcoin for few cents sold it for a few dollars, and ones who bought it for few dollars sold it when it was few hundred dollars.
They still made a pretty decent profit but looking from this perspective, they’ve missed huge opportunity that usually happens once or twice in a lifetime.
3) Losing coins by day-trading
A lot of new crypto investors buy Bitcoin and then without too much education start trading with a goal to multiply their coins. And what usually happens is that they lose it all.
Trading seems easy and yes, you can get lucky on a first few trades, but if you don’t know what you are doing you will sooner or later lose it all. Trading is a profession and to be good at any profession, you must first learn and practice. So don’t put your investment at risk before you know exactly what you are doing!
Trading skills help investors a lot because you can use them to value the potential of a certain coin, both fundamentally and technically. Being a trader will prevent you from buying some coins at the peak or selling at the bottom because all the indicators and tools you’ll be using will tell you not to do that.
But don’t start trading until you have learned the things that have to be learned.
4) Falling for a Scam
If there’s an industry where creating a scam project is easy, that’s crypto for sure. All you need is a good idea and marketing. With advanced technology, you can have your coin in less than a week and then all you need is the way to sell your idea to the people.
Since the creation of the scam project is so easy, I am very cautious when investing in new projects and like to stick to the ones with a working product and growing team. Their vision has way more chances of becoming a reality than those who have no team but just an idea on paper.
The crypto community is used to big returns and they are always looking for new coins that will offer them the opportunity to make astronomical gains. Because of this, selling them an idea is very easy and all it takes is some creativity and putting some numbers in perspective where they see 100x potential. There could be potential but if the coin has no idea how to make it happen, poor team or no team at all, the end result will mostly be negative.
These were the most common mistakes investors make and I could add easily way more mistakes but then this lesson would turn into a book. Making mistakes is not a bad thing if you learn from them and if you don’t risk too much so the mistake means becoming broke or similar to that.
In the next lesson, I will introduce you to the cryptocurrency wallets which will be the place where you will be storing your precious coins.