The latest data looking at adoption curves shows that the cryptocurrency market and BItcoin are growing at a faster rate than the Internet itself. The technology that was considered once a fad is today something that life couldn’t function without. Could crypto eventually reach such a fate? The answer is most likely yes, but it won’t be easy getting there.
Because crypto is spreading so quickly, it is attracting more newcomers than trading platforms and exchanges can keep up with and it also leads to mistakes being made left and right. Mistakes range from sending crypto to the wrong address to getting hacked, while more commonly people lose money due to poor investing or trading strategies.
This is because a lot of participants in crypto aren’t used to financial markets, let alone markets as volatile as the cryptocurrency market. This leads to liquidations, losses, and lots of learning the hard way. Fortunately, there’s a better way to avoid early mistakes. Here’s how.
The Basic Precautions Everyone In Crypto Should Take
Before we move into how those new to crypto can avoid mistakes in markets, let’s get the basics out of the way with some of the most important tips any newcomers should be aware of:
Never invest or trade with more capital than you can comfortably afford to lose. The keyword here is comfortably, as sweating positions and losing sleep isn’t quite investing capital you’re fine with losing. Instead, write of any capital used immediately and consider it lost. It can help separate emotions like fear or greed.
Never tell others how much crypto you hold. Don’t tell family members, friends, or anyone online, as it could make you a target for hackers, or worse. If crypto takes off, having friends and family members asking for advice or begging for a handout is also one of the downsides some successful crypto investors and traders experience, but not so much early on.
Never enter a position without a plan. No one would go on a road trip without GPS coordinates and a few destinations in mind, and no one should ever blindly go long or short without understanding what they’re putting at risk and what the potential reward is.
Never listen to online influencers or paid group leaders on Telegram or Discord. These people don’t have your best interests in mind, even if they present themselves that way. Their intention is to make money off you by peddling referral links, useless subscriptions, or by countertrading their audience. They also often delete their posts when they are wrong and tend to show mostly bullish analysis.
The Big Mistakes Traders Can Bypass With Copy Trading
With those easy to avoid mistakes out of the way, bigger mistakes are what’s next to address. For example, understanding when or where to go short or long Bitcoin and other assets is difficult unless you spend time on technical analysis.
Knowing where to place stop loss orders and how much capital to risk to keep risk to reward ratios at a conservative level is critical to preserving wealth and surviving the early days of trading and learning markets.
Traders look to spot when trends are changing, and then capitalize on that trend as long as possible. But that can take years of skill and experience to learn.
Copy trading, such as the Covesting copy trading module on PrimeXBT, let’s anyone become a follower and copy trade strategy managers who show success through transparent metrics listed on the Covesting leaderboards. Strategy managers are ranked by total profits, but there’s all kinds of risk metrics to look at for followers to consider.
Followers can copy the trades and make money when the strategy manager they follow is profitable. The strategy manager earns a profit share from the follower’s capital for a win-win situation all around.
Newcomers can avoid the mistakes that are often made and take their time learning markets, and instead leverage the talent and expertise of a trader with real world experience and who already knows the basics and even advanced techniques inside and out.
When the follower has learned enough, they can stop following any strategies and start trading themselves. When the time comes and their skills advance, returning to Covesting as a strategy manager could be the next stop in their trading career.