Make your investment worth by avoiding, These Common Mistakes
You Invest Your Life Savings
Rule number one of investing; don’t invest more than you can afford to lose.
You should go into this ready to lose whatever you put in. Ultimately, as the price swings up and down, you should remain calm and still be living a healthy life with room for regular spending.
I’ve heard countless horror stories of people investing greedily with their entire life savings or borrowing large sums of money. This is a HUGE mistake.
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.
If presented with one coin priced at $0.01 and another at $75, they blindly purchase the $0.01 coin because they think it’s easier for a coin to go from $0.01 to $0.02, rather than $75 to $150.
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.
More often than not, a cheap coin has a huge supply of coins, which dilutes the price of each coin. If the supply is massive and there is little real-world value, then the coin priced at $0.01 is not undervalued and should be priced that low.
A better factor to consider when looking for coins with growth potential is the market capitalization of the coin. The ‘market cap’ is calculated as [current price * circulating supply] and is often a better (although not perfect) indicator of a coin’s valuation by investors.
If you want to find the next gem coin, look for coins that have a low market cap.
Low market cap coins have more potential for growth, but they also come with a lot more risk (failure, illiquidity, etc.)
Ultimately, you should stay away from those coins if you’re still at a beginner level, and pick your next investments based on their potential real-world value.
STOP OVER TRADING
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 a mistake and then trade more to recover their losses. Only to dig a deeper and deeper hole for themselves.
The reality is that there aren’t 20 good trading opportunities in a day. Trading too much leads to poor decision making.