It won’t sound unfamiliar; the endless parade of success stories from friends or acquaintances about how much money they’ve made today on one or the other coin about one dog or another memes† This of course sounds tempting and that is why many people buy the same currency; without always knowing what exactly is being bought.
It is a common mistake among beginners. Success stories ensure fear of missing out (FOMO), and beginners make decisions or purchases without really knowing where to spend their hard-earned money. One piece of advice that is often given is: Do your own research before you buy anything. This does not mean that the advice of friends is worthless, but only their trade winds copying is also not useful. Read about a project first; what the teaching behind the project is trying to achieve, whether the team has a relevant solution to a real problem. Does the coin also fit in the wallet? And is it a coin to hold as an investment for a longer period of time or is it only interesting for a short period? Additionally, it is also recommended if a coin has not risen too much in value recently, or if the coin is already falling sharply. Only when these types of questions have been answered is it possible to make a well-considered decision.
Think carefully about a corridor
It is also important to take a good look at what brokers there are and which one is best suited. It’s a waste of time to create an account, go through the verification process, and do business with a broker that ultimately doesn’t offer the features they had in mind. After all, it’s not very easy to eventually switch to another party. Also, sending coins from one platform to another involves transaction costs.
So check a few things here too. Which coins are interesting and which broker offers these coins? Do you prefer a platform where you can buy coins directly with a click, like Bitvavo, or a platform where you can place your own orders in an order book to get the best deals, like Binance? Also, check which products are interesting to trade and which functionalities of a platform are interesting. That’s how some people like it to take advantage of you can trade, but that doesn’t interest other people at all. These are trade-offs that are good to make before you trade. Therefore, carefully read various reviews about Dutch crypto brokers†
Don’t panic and don’t be too stingy!
Finally, trading on emotion is one of the biggest mistakes novice crypto traders make. The cryptocurrency market, as you may know, is a very volatile market. This means that, for example, it is normal for bitcoin to drop 30% in one day, only to rise 50% again the next day. To trade in this market, nerves of steel are almost a requirement. Many new cryptocurrency traders quickly panic due to a decline and sell coins in response. This is something to be avoided. Make a clear plan in advance. This can be, for example: ‘I invest now and leave it for at least one year’, or ‘I only sell when I have x euros of profit’. Also, it is advisable to invest only the money that one can afford to lose. Of course, losing money is never fun, but this ensures that there is less of an emotional connection to the money invested. In this way, it becomes easier to think rationally instead of getting caught up in emotions. Combine these tips and make sure you don’t panic if the market is against you.
Of course, this can also work the other way around; Don’t sell if you’re making a profit. Many new traders don’t know what to do with profits. It may be that the goal has already been achieved. On the other hand, there is the urge to move on; especially if most of the investments have been successful. On the other hand, it is not advisable to hold a position for too long, as there is a risk of losing again. What to do in such a situation? There are several solutions. For example, it is an idea to exit the investment step by step. So instead of selling 100% of the position all at once, sell 10% today and then again tomorrow and the following days. For example, sales are made at a profit, but the rest of the position can still benefit from any further price increases. If the price falls again, at least part of it has already been sold at a higher price.