Mistakes to Avoid as a Beginner

**Problem: Letting emotions getting in the way of trading**

Many people will feel some sort of fomo, fear, panic when they get into crypto due to the volatility. Chasing pumps in panic buying and panic selling in dumps without a clear plan can be an easy way to lose money.

**Solution****: Have a plan for buying and an exit plan for when to sell**. There are strategies for buying such as DCA where you buy the same amount at a fixed interval (eg buying $100 of bitcoin every week/month). And then planning to hold onto this for years before considering selling.

Another example is buying when the fear and greed index (market sentiment indicator) is at extreme fear and selling when the it reaches extreme greed.

Learning technical indicators such as stochastic RSI and buying on the weekly oversold zone and selling when it reaches overbought zones on the weekly chart.

**Problem: Not doing research before buying a coin/token/NFT etc**

There are over 10,000 digital currencies and not all of them are going to survive in a year or so. Some of these will peak and never again reach their all time highs.

**Solution: Find out more about the coin/project before investing your hard earned cash.**

Examples of things to research include:

* how active are the developers?
* What is the community like?
* Are there notable backers for the project?
* Are there incentive programs to bring in new developers and users into the ecosystem?
* Are the roadmaps/goals realistic?
* Do tokenomics seem sound?

**Problem: Investing more than you can afford to lose**

Putting in large sums of money into crypto hoping to make a big return is not a guarantee. Borrowing money from friends or taking out loans to put into crypto is not recommended.

**Solution: Plan on a set budget that you are comfortable in putting into crypto**

You could think about your disposable income after necessary expenses and how much of that you would be willing to invest and potentially lose in crypto. It is better to start with a smaller budget and then work up if that is what you decide rather than aping in huge amounts at the beginning when you are still learning.

**Problem: Not diversifying portfolio**

Putting all your eggs in one basket can be risky if something goes wrong with the coin/project.

**Solution:** **diversify portfolio**

As a beginner, it is usually recommended that a large portion of your holdings are in bitcoin and ethereum as they are the two that have the longest track history and have proven themselves. Bitcoin is a good store of value as it generally doesn’t tank as hard during crashes compared to other altcoins.

An example allocation could be 50% bitcoin, 30% ethereum and 20% other altcoins

**Problem: Not securing assets**

With crypto, you have more control over your money/asset but that also means you need to manage the security of it yourself.

There is a common saying in the crypto community that says “not your keys, not your coins”. This is mostly referring to leaving crypto in exchanges or brokage platforms where the platform itself stores the keys

**Solution: Use unique passwords, enable Two-Factor Authentication and hardware wallets for long term storage**

Make sure you are using unique passwords for each exchange / crypto website that you sign up to. Two-Factor Authentication is usually required for a lot of platforms especially when you are withdrawing crypto. Hardware wallets such as ledger or trezor are not connected to the internet and is more secure than leaving crypto on an exchange especially for long term storage

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18 thoughts on “Mistakes to Avoid as a Beginner”

  1. >There is a common saying in the crypto community that says “not your keys, not your coins”.

    While I agree with this I think it’s also no problem to leave small amounts on exchanges as a beginner

  2. Problem: getting stuck on watching charts and living/dying by 5 minute candles

    Solution: set limit buys and sells with various price alerts that you’ve actually thought about. Close your app and maybe check here for sentiment but this is a good way to avoid the daily volatility and live your life

  3. The easiest mistake to avoid, is not going through IDO launchpads when wanting to invest in startups. Most startups are scams, also some launchpads like SolanaPrime have an insurance for any rogue IDOs an a newbie might come across


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