5 Mistakes Beginners Must Avoid
Investing in Bitcoin and other cryptos certainly may have some benefits when you do it right. But you may set yourself up for failure if you are not careful. That’s why it’s essential to avoid mistakes that may expose you to unnecessary risk in the early stages of your investing career.
To help improve your experience, we gathered some of the most common pitfalls that trip up newbie traders. Let’s see what they are and how you can avoid them below.
Choosing the Wrong Broker
The most crucial decision before any new trader is selecting the appropriate broker. Companies may seem to offer very similar services across the board. However, not all brokerages are created equal.
There may be a number of differences between different brokers. For example, not all companies offer the same variety of trading instruments. Some may focus entirely on crypto, while others list a little bit of everything. Moreover, brokers handle and charge different fees, which correspond to different conditions.
Most importantly, brokers differ in how they are regulated and what countries they are licensed to operate in.
When you take all of these factors together, you may see how painstaking it could be for a trader to make a choice in the beginning. But this is where Immediate Edge comes in!
We are already connected to many popular brokers from around the world. Using our app, you can save countless hours of hesitation and be immediately pointed to a company you’d like. Plus, the platform is entirely free to use, accessible, and beginner-friendly.
We can guide you to a top-tier broker that offers everything you need to get started - and it will only take a few minutes.
Focusing Only on Bitcoin
As the mother of all crypto, Bitcoin is arguably the most well-known digital asset out there. But that doesn’t mean it’s the only one, or even the best one to invest in. Far from it!
Depending on your trading strategy and desired results, there may be other crypto tokens out there that are more suitable for you. For instance, many traders have their eye on Ethereum and Build and Build (Binance’s answer to Ethereum). Those two coins have expansive ecosystems home to many exciting dApps and other DeFi solutions that regularly add value to their underlying coins. Not to mention, new cryptocurrencies launch all the time, each learning from the flaws of its predecessors, promising something new.
What’s more, investment experts always recommend diversification. If you only invest in XBT, you are putting your full trust in just one asset. Sure, if it does well, you can profit from it. But if it fails, you could lose your whole investment.
As a result, you stand to potentially gain more (not just as clean profit, but also in terms of your own peace of mind) if you spread out your investments across multiple assets. You can look beyond the crypto space too. Our partners also offer Forex currency pairs or the shares of popular companies, for example. A mix-and-match trading strategy can benefit you in the long term more than you expect!
Investing Too Much Too Fast
Everyone knows that a higher investment means a higher volume and potentially better returns. That may be true in theory. However, it’s important not to get too trigger-happy from the get-go.
After all, the markets are highly risky, and you may lose your investment, especially if you’re new and still learning. In that unfortunate scenario, it’s better to lose a smaller investment than a big one.
Finding effective strategies to limit your exposure to risk and curb your losses is a must. That is why we recommend starting a bit more modestly. Don’t put all of your savings on the line. Instead, try to invest only funds that you could survive losing.
Relying on Automated Trading Platforms and Trading Robots
Don’t get us wrong: trading robots can absolutely be beneficial to a trading strategy. In fact, many experienced traders rely extensively on auto trading platforms to meet their investment goals.
A trading bot is a nifty tool you can use to automate the live trading process. You can set the order execution parameters in advance. For instance, you can tell the auto trading platform to react when certain price levels are reached, or other market events occur. Then, you can let the bot work its magic and read market data automatically without any need for supervision from you.
While this approach saves time and may prevent human error, working with trading robots can be tricky. Some automated trading software is quite complicated. If you’re a beginner, you could accidentally mess up the settings and set yourself up for failure.
So, if you’re new to crypto trading, we recommend staying away from trading robots. Taking the time to learn about the markets and carefully planning each order might be more beneficial in the beginning. You can always play around with automated trading tools later on in your trading career.
And in case you were wondering - yes, our app allows for the use of trading bots. Our partners offer different types of AI solutions to aid you in trading if you are interested.
Not Doing Enough Research
Some famous investors might claim success is all about luck and feeling. Don’t listen to them! Luck and feeling may sometimes lead you to an opportunity, but more often than not, they bring you nothing but losses and pain.
The true secret to trading success is research and hard work. It is crucial that you educate yourself about digital assets and how the financial markets operate in general. Learning how to read charts and use technical analysis is also important. Basically, any information you can gain in advance about an asset can potentially give you an edge over the competition.
Beginner traders often make the mistake of only checking one or two bits of news and taking them as a certain fact. We urge you to be critical instead. Check multiple sources, look into any terms you don’t know, and so on. Keep an open mind and take everything with a grain of salt. That’s the only way to remain open to potential flaws in your strategy and anticipate the risks associated with trading properly.