Rookie investors are at risk for sitting on fat losses if their behavior continues.
As great as it is to witness the adoption of cryptocurrencies around the world, there are some downsides that need to be addressed. A sense of false confidence sweeps the world as cryptocurrency markets continue to provide astonishing returns. Such high returns attract investors of all backgrounds and all experience levels; some who know what they are doing and some who now think they know what they are doing.
The problem is the faulty logic that rookies tend to use when making investment decisions in the crypto market.
A certain Reddit user, after a total profit of $350, confidently counseled his friends to “just watch the graphs on binance close and get in on the upswings.” This is unfortunately a tactic many people that are just starting out erroneously employ in their investing.
The reality is that watching a graph in real time gives you NO indicator of the future of that coin. It’s very easy to think you have a knick for reading crypto graphs when, in general, they are just generously going up on their own. It can be hard to recognize where your investment tactics are lacking when all you do is win win win no matter what.
If you’re quietly reading this as a rookie investor, it’s not too late. Here’s how you can avoid creating patterns that will inevitably set you up for future financial disappointment:
The key to sustainable success with investing is to stay active on news surrounding the coin’s company and industry. This doesn’t mean to just be conscious of the news, you need to develop the skill to UNDERSTAND WHAT IT MEANS. The more you analyze why a coin shot up or down in price, the better you can understand how the market responds to certain events in the crypto world.
A no brainer, for example, is when news comes out that a cryptocurrency is going to fork. If the fork has a large following behind it, people will likely pour their money into that coin in order to receive the free token it forks. So your analysis for this piece of news should lead to the conclusion that the demand for the forking coin is going to shoot up. With such an increase in the demand, the price will follow suit and shoot up as well. Investing in that coin until it forks is probably a good idea.
Here’s a look at the most recent case like this: Just as we entered 2018, it was announced that Zclassic (ZCL) will fork sometime in mid-to-late January to create BitCoin Private (BTCP). Since BTCP was properly marketed and has a unique niche in the market, people are wanting a stake in that new BTCP coin. The analysis then leads you to believe that the price of Zclassic should increase. Take a look to see how the market responded:
Upon announcing the fork, Zclassic jumped from around $8 to $120!!!
The potential in the crypto market is incredibly high so it’s definitely worth your time to stay current on the news. Avoid playing number games unless you’re a computer on wall street running gnarly analytics and just pay attention to the legitimate factors affecting crypto prices.
I'm currently writing for The Crypto Gym; you source of CLEAR and ACCURATE analyses of all things affecting the crypto market. If you want to stay keen on your investments and crypto knowledge, follow us on Twitter @TheCryptoGym. Thank you for reading!
[exemplary] thanks! have a nice day!