If you are like the average person, you work extremely hard for your paycheck, which may sometimes make you wonder if there is an easier way to make money. If you have been thinking about getting into some investment opportunities, you have probably come across cryptocurrency.
Over the past few years, cryptocurrency has become one of the hottest investments on the market. Modern consumers love the thought of using a decentralized digital currency to pay for things, and investors love the opportunities to make profits.
But if you are considering an investment in cryptocurrencies, you need to take the time to weigh all of your options. Read below to find out more about common cryptocurrency investment mistakes and how to avoid them.
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Do Not Choose Cryptocurrencies On a Gut Feeling
Currently, there are more than 4,000 different cryptocurrencies on the market. Choosing the right one to invest in will require the collection of cold, hard data. Trying to make this important decision based on a hunch can lead to you losing money. This is why you need to use the right tools to collect information on cryptocurrencies before you invest.
The online resource Cryptolume has many great tools designed to help investors achieve their monetary goals. With their crypto screener, you can get useful information about a particular cryptocurrency. This crypto screener tool shows you things such as the RSI (relative strength index), value, price and volume of a particular digital currency.
The RSI index shows you how much momentum a cryptocurrency has. The volume gives you information about the total number of cryptocurrency coins traded within a 24-hour period. Once you have the information from the crypto screener tools, you can make an educated decision regarding which cryptocurrency is the best fit for your investment needs.
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Avoid Overtrading
Approximately 14% of American citizens own cryptocurrency. When first getting your feet wet in the world of cryptocurrency trading, it is easy to let the excitement of this process get the best of you. Some new investors think that the best way to increase their chances of turning a profit is by overtrading. Making more than 20 crypto trades a day is not only expensive, it is downright dangerous.
This overtrading usually leads to investors quickly getting in the red. That is why you need to restrict the number of trades you make in a given week. By correcting your overtrading problem you can save money and reduce your tax liabilities.
Avoid Only Chasing Cheap Coins
There is a common trap in the world of cryptocurrencies: many of these currencies are priced low to attract impulse and uneducated buyers. These people usually chase these cheaper coins because they think they can turn a bigger profit with them. In reality, these cheaper cryptocurrencies very rarely grow in value.
Failing To Get a Hardware Wallet
Cryptocurrency theft is definitely on the rise, which is why you have to protect your investment. If you invest in more than $500 worth of cryptocurrency, you should avoid keeping it in an online wallet. The best way to keep this digital currency safe is by investing in a hardware wallet. These wallets cannot be hacked online, which is why they are so popular in the cryptocurrency world.
The only way a hacker can get into this wallet is if they physically steal it and know the password to open it. The money spent on these hardware wallets will be worth it considering the additional security they provide.
Applying the tips in this article can help you achieve your financial goals when you are just starting out in cryptocurrencies.
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Source: https://www.fintechnews.org/common-mistakes-to-avoid-when-investing-in-cryptocurrencies/
