Investing in the right crypto at the right time takes luck but more importantly insights and precision. Only those who improve their investment methodologies every day, one mistake after another, consistently crush the masses.

Here is a list of common mistakes to avoid when one invests in the highly volatile crypto world:

You Don’t Understand the Technology

If you don’t understand the foundations of the technology, the road will be risky. Until you can judge projects for yourself, you will be missing out on big opportunities.

You Overtrade

Some investors, mostly beginners, want to make 20 trades a day. This is dangerous. Ultimately, many of them lose from fees or because they make bad trades and then trade more to recover their losses. The reality is that there aren’t 20 good trading opportunities a day. Trading too much leads to poor decision making. Overtrading also increases your tax liabilities.

You Think Cryptocurrencies are Shares

Cryptocurrencies are not shares like stocks. You have no ownership in the company and receive no dividends. If a company issues a cryptocurrency, then it is very possible for the company to profit or get acquired, with no benefit to you. A company can be doing very well, yet their coin can drop.

You Chase Cheap Coins

Don’t chase cheap coins with dreams of lambos and private jets.

Lots of uneducated investors in the crypto space buy low priced cryptocurrencies because they think there is a higher chance of big returns. This is a common trap. There are lots of factors that affect a coin’s price, including two important ones: the circulating supply and the real world value of the coin.

You Don’t Diversify Your Portfolio

While it may be tempting, don’t put all your eggs in one basket. Every experienced investor hedges, or protects his/her risk by investing in multiple assets. It’s a good idea to own at least 5 cryptocurrencies.

You Research Poorly

The process will be time-consuming. But the more you research, the better you’ll become at it. You can have a look at each coin’s BitcoinTalk.org announcements thread and website. Check on the economics of the coin such as its market cap, trading volume, price history, and total versus circulating supply. Cross-reference opinions from industry experts.

You Overly Invest or Don’t HODL Hard Enough

Lots of investors are impatient and ‘cut their losses’ early because of emotions.

The cryptocurrency market is made of cycles, where prices rise and fall drastically.

If you buy high, then you will need to wait out an entire new market cycle to end up with profits — meaning a new bear, then bull run — which can be well over a year of waiting. For that very reason, never, ever risk the money you can’t afford to lose!

You Don’t Use 2FA

One crucial step when working on your cryptocurrency investment strategy is to reinforce the security of your cryptocurrencies. Enabling 2FA on every sensitive website is the most important habit you need to adopt to increase the security of your accounts.

You Leave All Your Coins on Exchanges

If you don’t control your keys, then you don’t control your coins. Exchange are huge targets for hackers and are always at risk. When you leave coins on an exchange, you are trusting the exchange’s security measures and not your own.

You Don’t Own a Hardware Wallet

We will be straight up: if you’ve invested more than $500 in cryptocurrencies, then hardware wallets are a smart investment. They are disconnected from the internet, which means that hackers can only obtain your funds if they steal your physical device and also know the passphrase to access it. This makes security a much easier task.

You Fall for Media Propaganda

Major news sites will sometimes release very negative, and often, threatening news. Deceiving headlines are the foundation for propaganda. A lot of these news articles are intended to generate clicks, controversies, and sometimes even FUD. It’s often very exaggerated.

You Don’t Understand the Market Dynamics

Bitcoin only makes up about 50% of the market’s liquidity. There are thousands of altcoins, and they work in correlation with Bitcoin. Not understanding these correlations can lead to poor and costly investment decisions. Those who make money trading crypto understand these dynamics like the back of their hand.

You Don’t Understand How to Read a Trading Chart with Fundamentals

Once you understand some basic dynamics such as supply and demand, it helps to start learning how to read trading charts, also known as technical analysis, and more importantly how to relate the fundamentals of the project with these charts. Technical analysis backed by solid fundamentals and financials of the project may help you better predict the future by analyzing historical data. You’ll gain a feel for when markets are about to turn, or if assets aren’t priced properly.

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About Crypto Commonwealth

Crypto Commonwealth is an asset manager and publisher on blockchain that aims for the welfare of the most. We designed rich tokenomics for our asset management and publishing ecosystem, and endeavor to fundamentally improve the value seeking processes in both industries with fair compensation. We have a professional portfolio management and trading team in conventional assets and cryptos. The fund and publisher operations as well as alpha and content mining enable rich use cases for our token — COMM.