• Cryptocurrency is a world of its own. There’s so much one has to learn and figure out just to understand the terrain
• One of the biggest mistakes that beginner crypto traders make is rushing into signing up with a crypto exchange platform without considering essential factors
• Investing in a cryptocurrency without understanding its unique function, community, development team, whitepaper, and road map for future development is another common mistake that beginner crypto traders make

Cryptocurrency is a world of its own. Seriously! There’s so much one has to learn and figure out just to understand the terrain. The problem is crypto also happens to be the new Wild West with a metaphorical gold rush happening before our eyes. Nobody wants to get left behind. Unfortunately in the rush beginners may fall victim to some pitfalls of cryptocurrency trading and investment. Let’s discuss 12 crypto beginner mistakes and how to avoid them.

Rushing into signing up with a crypto exchange platform

One of the biggest mistakes that beginner crypto traders make is rushing into signing up with a crypto exchange platform without considering essential factors such as platform security, low fees, a wide selection of cryptocurrencies, and user-friendliness. It is crucial to do thorough research and choose a platform that meets all your requirements. Check online reviews and independent opinions to make sure you’re dealing with a suitable exchange. It is also worthwhile to read the end-user agreement before using an exchange.

Investing in a cryptocurrency without understanding its unique function

Investing in a cryptocurrency without understanding its unique function, community, development team, whitepaper, and road map for future development is another common mistake that beginner crypto traders make. It is essential to research and understand the coin’s fundamentals before investing. These fundamentals form part of what is sometimes referred to as tokenomics. Tokenomics determine how the cryptocurrency will work and they also inform about the solution provided and the community served.

Believing everything you read on social media and news sites

Believing everything you read on social media and news sites without verifying the expertise, reputation, and following of the source is another mistake that beginner crypto traders make. It is important to be critical of the information you receive and do your research before making any investment decisions. It’s become a lot more complicated in this regard. Social media has democratized the ability to broadcast information. Just because the information is out there doesn’t make it true or worth believing. Always verify with reputable sources.

Failing to diversify the portfolio

Failing to diversify the portfolio by investing in a variety of coins and other types of investments is a mistake that could lead to significant losses. Cryptocurrency is extremely volatile and that doesn’t look like its going away any time soon. Over-investing in one particular cryptocurrency can ruin you if that particular crypto crashes. It is recommended to invest in stablecoins and some medium to small-cap coins to reduce risks.

Trading based on FOMO

Trading based on FOMO (fear of missing out) and not following a strategy that is tailored to one’s trading style, risk tolerance, and goals is another mistake that beginner crypto traders make. It is best to invest in your education and literacy on cryptocurrency. This will help you separate the wheat from the chaff. It is crucial to have a clear trading plan and stick to it to avoid impulsive decisions.

Ignoring risk management strategies

Ignoring risk management strategies such as stop-loss orders and position sizing is another mistake that could lead to significant losses. A stop loss order places a contingent instruction on your cryptocurrency positions. So if you invest in crypto and its value goes below a percentage you determine, say 25%, then the position is automatically sold and your loss is stopped. Position sizing is limiting your exposure in individual trades or tokens to a certain percentage of your portfolio, say 5%. It is crucial to have a clear risk management plan and implement it in your trading strategy.

Day trading without understanding the market

Day trading without understanding the market and taking high risks is another common mistake that beginner crypto traders make. It is essential to have a deep understanding of the market and its volatility before engaging in day trading.

Holding on to losing coins

We all make mistakes. Holding on to losing coins without cutting losses is a mistake that could lead to significant losses. While it is difficult to accept, there comes a point where you should cut off your losses before they sink you. If you are holding on because you believe in the cryptocurrency then you are better off selling it while there is still value to be had and buying back in when it starts showing signs of recovery. It is crucial to set stop-loss orders and cut your losses to minimize risks.

Not keeping track of tax obligations

Not keeping track of the tax obligations related to crypto trading is another mistake that could lead to legal issues and penalties. In Africa, we have seen that cryptocurrency taxation precedes cryptocurrency regulation. So just because there is no crypto law in your country, it doesn’t mean there is no taxation on cryptocurrency. It is crucial to keep accurate records of your trades and consult with a tax professional to ensure compliance with tax regulations.

Using insecure wallets

Using insecure wallets and not backing up private keys is another mistake that could lead to the loss of your crypto assets. It is essential to use secure wallets and backup private keys to ensure the safety of your assets.

Falling for crypto scams

Falling for crypto scams such as fake giveaways and Ponzi schemes is another mistake that beginner crypto traders make. The scammers are good. They have tactics specially designed to appeal to people’s emotions rather than intellect. It is important to be cautious of any investment opportunity that promises unrealistic returns and do thorough research before investing.

Not educating oneself enough

Not educating oneself enough about the basics of crypto trading and investing is another common mistake that beginner crypto traders make. It is essential to do thorough research and educate yourself about the market and its risks before investing. There are many platforms that can help in this regard.

Avoiding these common mistakes is essential for beginner crypto traders to minimize risks and maximize profits. It is crucial to