Six Things To Avoid When You Buy Crypto The First Time
Buying crypto shows a lot of potential for offering huge profits in a relatively short period of time. However, you have to do things right or you could end up losing a great deal of money rather than making money.
The following are six things to avoid when you buy crypto for the first time:
Failing to do adequate research on the exchange you use
There are a lot of exchanges that you can use to buy cryptocurrencies such as bitcoin. However, these exchanges are not all created equal. Often, these exchanges handle transactions differently. For some, you might have to pay a fee just to deposit and withdraw funds. You also might run into technical difficulties that make it necessary for you to contact customer service.
You need to do your research on the exchange you use to make sure that you'll easily be able to use your funding source to purchase crypto at a reasonable cost.
Not knowing what the trading fees are
You'll have to pay some type of fee each time you buy or sell a cryptocurrency. Fees vary widely between different exchanges. As such, it's important to factor the costs of these fees into your crypto trading venture.
To understand crypto trading fees, you'll need to look into the difference between an exchange's taker and maker fees. You'll also need to check if an exchange charges differently for spot purchases.
Buying when your crypto value is peaking
As with any type of investing, your goal is to buy low and sell high. You therefore may only want to purchase bitcoin when it is not at its peak value. Try to buy crypto not in these peak seasons so that its value is likely to go up from your buy-in point.
Neglecting to set a stop-loss order
Crypto values are known for being very volatile. This means that values could reduce after you buy-in. As such, you should set a stop-loss order to minimize the risk you're taking with your crypto purchase. A stop-loss order will automatically sell your crypto if its value gets down to a certain point. This helps to prevent catastrophic losses.
Getting too greedy
A lot of crypto investors make the mistake of thinking that the value of their crypto will continue to rise indefinitely. The best strategy is to go into a crypto investment with a specific goal and selling point in mind.
Once a crypto purchase goes up in value to a certain point, it's time to take your profits. As such, you should wait for values to continue rising without crashing.
Not researching the particular cryptocurrency you buy
Nowadays, there are many different cryptocurrencies. It's important to research the cryptocurrency you're investing in carefully. For more information about buying bitcoin, contact a financial service.