However, this hasn't stopped UAE crypto traders from buying bitcoin or collecting meme tokens like Doge and Shiba Inu, especially now that digital money, like digital media and digital connections, has been ingrained in millennials' minds.
Most people believe that making money from trading crypto-assets is a matter of luck. Trading or investing in crypto is, in reality, more dependent on techniques and analytics. However, there is still hope for people who are new to cryptocurrency and find price charts daunting. Avoiding these "noob" moves, for example, can help newcomers obtain better short-term returns on their cryptocurrency investments.
5 Bitcoin Trading Blunders to Avoid
Following are Bitcoin Trading Blunders -
When Purchasing Bitcoin
While the price of bitcoin is high, traders may feel obliged to buy (even a fraction of) it when everyone else is. However, you may need to "hodl" the cryptocurrency for a long time to generate returns on such high purchase costs. So, when is the best moment to buy bitcoin: Due to significant sell-outs, the price of bitcoin and most other crypto-assets tends to plateau following a new ATH. Such circumstances can create excellent buying opportunities, particularly for rookie investors.
When you're adding a stop loss
Some traders set a limit, which is usually the same as the purchase price, to limit their losses and manage risks better when exiting a trade at the proper time. Adding a variety of stop loss orders can help you avoid situations like a sudden decline in the price of a cryptocurrency. Beginners typically find it easier to quit a transaction using daily closing prices rather than harsh stop losses.
Putting everything on the line to buy bitcoin
Instead of buying significant amounts of a single currency, most skilled traders keep a varied portfolio and invest in a range of crypto-assets. Diverse investments reduce losses and protect traders from unexpected price drops. Furthermore, bitcoin newcomers should remember the crypto adage that indicates that while purchasing crypto assets, only invest the amount that you are willing to lose.
Avoid being duped by convincing con artists
Aside from price spikes, the crypto economy has seen other warning tales; for example, individuals who fell for a fraudulent request to upgrade their wallets reported losing all of their assets to a fraudster last year. As a result, con artists frequently use new technologies to persuade traders and defraud them of their fiat and crypto-assets. For example, some criminals have impersonated well-known crypto influencers, while others have fooled individuals with bogus cryptocurrency ventures.
If you find new crypto coins or protocols that you like, consider following the project's social media footprints to see what others are saying. Always conduct your own research and keep up with the latest crypto news. If you have any suspicions.
How to avoid the Common Blunders made by First-Time Bitcoin Purchasers?
The tremendous rise of Bitcoin is sure to attract more investors, but recent extreme price swings may heighten the risks for newcomers.
Despite the booming tech stocks of 2020, Bitcoin's price action stood out, rising from a March low of roughly AED 3,800 to over AED 29,000 by New Year's Eve, and continuing to increase in the first weeks of 2021, reaching an all-time high of over $40,000. To put it another way, if any person had invested their AED 1,200 stimulus check in Bitcoin in mid-April, it would have been worth almost AED 7,000 by the time it hit its all-time high.
However, cryptocurrency gains can be temporary, as Bitcoin dropped nearly AED 10,000 in a single day on Monday.
Part of the reason Bitcoin remains as divisive as ever is due to these dramatic price movements. The world's first cryptocurrency is considered sound money and a potential global reserve currency by its adherents. Bitcoin can be sent from wallet to wallet around the world, allowing billions of dollars' worth of the asset to be moved for a few dollars in fees and with no middlemen.
It is a speculative asset, according to its detractors, and ineffective as a store of value when price swings of more than 15% in a single day are normal. Critics see it as a speculative bubble, with people buying in the hopes that someone else will buy it from them at a lower price.
Leverage is something to avoid.
Another common blunder made by beginners is taking on too much risk by joining leveraged trading positions. Inexperienced individuals can trade with up to 10 or even 100 times leverage on some cryptocurrency exchanges.
Novice traders should stay away from highly leveraged positions that put them in danger of losing all of their money." If prices go against them, they lose a lot of money — in certain situations, their entire stake is lost completely.
Fees, storage, custody, and laws are all factors to consider.
While Bitcoin has unique qualities that make it more usable – such as the ability to send money from one wallet to another in minutes and the fact that it is virtually not hackable - same features also pose risks to investors.
Bitcoin can be kept in your own wallet, but you are responsible for keeping your private key secure. Your Bitcoin is likely gone if it is stolen, or if you lose or forget the key. One common blunder is storing your private key on an internet-connected phone or computer that might be compromised.
Bitcoin transactions are also irreversible, which means that if you send Bitcoin to another wallet and enter the address incorrectly, it will most likely be lost forever (a prudent measure is to send a small amount to test the address ahead of the main amount).
Meanwhile, many cryptocurrency exchanges are unlicensed or lack the kind of comprehensive protection that many stockbrokers offer. And, given that a number of exchanges have been hacked or exposed to fraud, some investors are leaving their crypto on exchanges where they buy, this is a huge concern for the sector.
"With a strong fundamental asset like Bitcoin one shouldn't panic while selling if the price drops, or panic while purchasing if the price rises dramatically." One should have a strategy in mind, and should buy when something is trading at a lower price."
Most crypto traders have teething problems in the beginning, but with more guidance and awareness about this relatively new sector, those interested in Bitcoin and other crypto assets can always learn and trade safely and with tact.
Looking to expand your crypto portfolio or invest in crypto can connect with Dhanguard Experts relatively for further Information.