As a newcomer to the crypto space, there are some basic mistakes that you are destined to make if not warned. These are errors that happen for reasons like the nature of the technology versus centralized systems or even simple human errors. In the blockchain sector, your transactions are final on the vast majority of networks. As such, you need to be sure of your actions and confident in your strategy. Here are some of the top crypto trading mistakes to avoid in 2022.
There are a lot of reasons why someone would enter the blockchain sector. It provides the world with more transparency and an open financial system that can accommodate the billions of unbanked and under-banked individuals in the world. It also empowers users to retake control of their financial destiny.
The Tortoise Beats the Hair
Sadly, there are a large number of new traders that get involved in crypto thinking they have found a get-rich-quick scheme. It doesn’t take long before they learn the error in their ways. If you enter the market with this mindset, you will have shaky hands and more than likely lose due to irrational and emotional decisions.
You will always see higher success going with a long-term strategy in the crypto market. As part of this approach, you need to focus on securing passive income. Passive income is profits you secure from past efforts. In the traditional fictional sector, you can think of income like royalties, residuals, and rents as the best options.
Passive Income
In the blockchain sector, it’s much easier to gain access to passive income. There are low-risk options available to users such as staking, farming, and high-yield savings accounts. All of these options enable users to generate wealth with minimum risk to their original assets.
The best DeFi networks will provide you with compounding returns. This term simply means that you will receive rewards in the same token that you use to generate them. You can then take these rewards and add them to your original passive income strategy to improve wealth generation considerably.
Forgetting Your Private Key
This next warning may seem obvious but it’s still worth mentioning, losing your private keys. Blockchains provide the advantage of direct P2P commerce. However, they are structured to put you directly in charge of holding your tokens. This setup puts you in charge of holding on to your private keys.
In the event you lose these keys, there is no way to access your crypto. There has been as many as 3 million Bitcoin lost to basic errors like this over the last 13 years. The internet is filled with stories of billions in Bitcoin lost due to a person throwing out or misplacing their private keys.
You can avoid this threat by following some basic key protection tips. First, never give your private key to anyone. If you do, you gave them your crypto. Also, never take photos of your private key and keep them on your phone or email. You need to write the key down or store it in a fire-safe method to increase your protection against pointless losses.
Inflation is the Enemy of Savers
Anyone who seeks to gain financial freedom needs to understand that inflation is the enemy. Inflation is a loss of buying power from a currency. It’s a real problem today for fiat currencies and many cryptos. There are a few reasons that drive inflationary risks. For one, bad monetary policies like over-printing can increase supply and lower overall demand and value.
It makes no sense to save an asset that decreases in value over time. As such, you want to stick to crypto projects that have anti-inflationary protection. For example, META 1 leverages a basket of self-appreciating gold-related assets to decouple from the volatility of the crypto market. This reserve drives the project’s value up as the demand for gold increases.
Not Understanding the Technology
Another common mistake that traders make is they start trading projects they don’t understand the technology behind. If you plan to open up your crypto trading app and look at the three-letter abbreviations of projects and make informed trades, you’re in for a big surprise.
When you take the time to learn the technology behind the tokens you trade, it becomes easier to see what platforms have longevity and profitability. When new traders don’t understand the technology, they are susceptible to scams and thieves. Think of it like there is a pack of crypto scammers circling new traders waiting for them to make a mistake.
For example, at the very least you need to understand what a blockchain network is and what makes it a better alternative to centralized solutions. You should also understand basic security protocols like, never giving out your private key.
Trading More than You Can Afford to Lose
Another common mistake made by new traders is getting overly confident and trading too much at a time. The crypto market is still new and when you are training, it’s common to rely on third parties and explore new projects. These ventures can prove to be fruitful or catastrophic depending on your approach.
Never assume that a new network is 100% safe. Its better to start off trading with a minimal amount of crypto to get used to a network’s features and services first before moving up in scale. The general rule of thumb is to not trade more than you’re ok with losing. This approach will ensure that you never go home empty-handed.
Not Learning Trading Tools
Along the same line of thought is another common error made by new users, not taking the time to learn all of the trading tools. Today’s professional traders have a major advantage over the new user. They have tons of tools, charts, and even trading bots to help them stay ahead of trends and prevent losses.
You don’t want to remain stagnant in the market. As such, it’s best to take your time and invest in yourself. The more trading tools you master and the higher the chances your ROI improves. Tools like trading bots can help you remain connected and responsible for market movements 24/7 without delays.
Sending Crypto to the Wrong Address
Another major issue for new users is the miss sending of funds. When you send your crypto to another party, it’s a direct peer-to-peer transaction. This design means that there is no middle party to block, censor, alter, or refund your payments. As such, it’s critical that you always triple-check the recipient address on all of your crypto transactions.
The internet is filled with stories of people losing thousands in crypto from this simple mistake. In some instances, they sent the funds to a wallet address that was already saved in their previous payments cache. In other instances, the crypto was lost forever because it was sent to an address that was non-withdrawable which burned the tokens. In either case, this is an easy error to avoid. The best way is to use 3d barcodes and recheck the address before you press send.
Getting Obsessed with One Project
When the crypto bug gets you, it can be easy to get fixated on one project. The crypto market is a diverse and expanding space. There are all types of new projects, services, and protocols, entering service weekly. You don’t want to limit your exposure to new projects because you are locked into a single platform.
For example, if you hold Ethereum, it’s ok to hold AVAX, DOT, EOS, META 1, and any of the other smart contract programmable networks. The goal of your crypto strategy should be to secure your financial future. Getting locked into one project could make you miss other awesome opportunities that are available right in front of your eyes.
Not Factoring in All Costs
When you decide to become a crypto trader, there are some basic costs that you will need to consider. For one, the main cost will be your time. If you don’t have the time to learn about the market, its history, and the projects that interest you, you shouldn’t start trading yet. Depending on your trading strategy, you will need to devote many hours to learning strategies and market analysis.
The next cost to consider is your trading fees. CEXs (centralized exchanges) like Binance and Coinbase provides a familiar and easy onboarding process. Owever, they will have more fees than most DEXs.
Not Understanding the Local Tax Laws
Another major issue that should not be overlooked is taxes. If you live in an area that requires you to report your trades, you need to abide by these laws. If you don’t report your earnings you could have the tax man knocking on your door to conduct an audit.
Missing Easy Passive Income Streams
Another mistake made by many new traders is not taking advantage of the growing number of passive income services provided by DeFi platforms. Features like staking and farming enable you to secure passive rewards without giving up ownership of your digital assets.
There are entire networks built around wealth generation today such as the META 1 Coin. Users can stake, trade, and even secure 10% APY when they use a META VAULT savings account. The best part about these services is that they are completely open to the public regardless of your country, race, or political affiliation.
Getting Caught Up in Social Media Hype
Another major issue for new traders is avoiding all the hype. You need to get involved in the discussion via social media to stay up to date on the latest and greatest, plus market movements and insight. However, you need to always be on guard as there are groups that prey on new crypto traders that they source exclusively from networks like Facebook and Twitter.
These scammers will use FOMO (fear of missing out) to make you believe that if you don’t join a particular project right now, you are going to miss out on a huge payday. As you could imagine, these paydays only come for scammers as the users are left high and dry. To avoid these issues, you need to take a balanced approach and cross-reference all data you get from social media channels to ensure accuracy,
Privacy is Another Factor
It’s impossible to open a bank account using centralized systems without the “proper” documentation. These systems were tightened up considerably following the 9/11 attacks and the restrictions were never lowered. As such, you need to verify your identity to gain access to the most basic financial features such as a savings account.
The problem with all of these requirements is that they are just not possible for a large percentage of the world. People like refugees, those from underdeveloped regions, and the poor are left out. Reports have shown that there are billions of people around the world who remain unbanked due to reasons like this. This disenfranchised population can avoid these headaches by participating in the digital economy.
When you open a DeFi account with the META VAULT, you simply need to connect your wallet. Once linked, you gain complete access to the network’s systems. You can monitor all transactions using a blockchain explorer in real time. You can also secure passive rewards to build wealth.
More Rewards for Everyone
When you eliminate the central party and replace it with regular users, the entire community can then prosper. DeFi networks like META 1 take a portion of fees and redistribute them to their users in a variety of ways. This structure makes them more profitable for the average user versus centralized options. Additionally, the open nature and overall wealth-generation options provided to users makes META 1 a smart choice for anyone looking to beat inflation and create long-term wealth.
New Traders Become Pro Traders
Take these tips and progress your crypto skills to the next level. The market is on the verge of another adoption push. Technologies like DeFi continue to drive blockchain adoption to new heights even as the market corrects. Use this guide to help you avoid the most common mistakes that keep new traders from reaching their goals in 2022.