Things to Remember before Trading Cryptocurrency

Cryptocurrency is a new asset class. It’s not a stock or a bond, and it’s not backed by the government or central bank like traditional assets are.

Cryptocurrency is also not backed by gold, which has been historically considered a valuable and stable currency for centuries.

If you’re trying to make an investment decision based on how much money could be made from trading cryptocurrency, it’s important to remember that this new form of exchange does not have the same characteristics as other currencies that you might already be familiar with. Before you start trading, you need to take a close look at the cryptocurrency markets. You also have to understand what influences cryptocurrency prices and the cryptocurrency value of any given coin.

So, before you start trading crypto, here are a few things to remember.

Crypto and blockchain markets are highly volatile.

There are a few things to remember before trading cryptocurrencies. Crypto and blockchain markets are highly volatile, which means that the price can change quickly and drastically. They’re not regulated by any government or central bank—and they’re not backed by any physical assets (think: gold). They also aren’t backed by a legal authority like stock exchanges are.

That said, cryptocurrency trading isn’t for everyone. Wondering if you could get into it? Here’s what you need to know before buying in:

Beware of scams.

Beware of scams. There are many ways scammers can trick you into giving them information or money, but the most common methods include:

• Sending an email with a link to a fake website. This is called phishing, and it’s an attempt to trick you into giving your personal information or money by making it look like you’re visiting a legitimate site (like Google or Facebook). The easiest way to avoid this scam is by opening emails in a new tab rather than clicking on links within the message itself. If you see something suspicious, don’t click on it—just report the email as spam using whatever method your email provider provides.
• Asking for remote access to your computer so they can fix something (or so they claim). Don’t let anyone remotely connect with your computer unless they’re able to prove that they own the machine—you should never allow someone else access without first verifying their identity and vouching for their trustworthiness!

Learn from your mistakes.

It’s easy to let emotions get the better of you when trading. If a coin is soaring in value, for example, it can be tempting to buy in at the top and hope it continues to rise—but don’t do this! It’s important not to fall into this trap: if your investment increases by double digits within minutes or hours of investment, there’s no guarantee that it’ll keep going up. You could very well lose everything.

It’s easy to let emotions get the better of you when trading. If a coin is soaring in value, for example, it can be tempting to buy in at the top and hope it continues to rise—but don’t do this! It’s important not to fall into this trap: if your investment increases by double digits within minutes or hours of investment, there’s no guarantee that it’ll keep going up. You could very well lose everything. If you want to diversify or grow your money. The Motley Fool’s rule breakers are those who invest in stocks with high growth potential. This group recommends Apple and other stocks. 

By using a stop-loss limit on each trade, you can protect yourself from making bad decisions under pressure or when emotions are high (after all, cryptocurrency trading is an intense hobby). The stop-loss order allows investors set an automatic sell price below their purchase price so that they won’t incur losses if the price goes down after they buy their coins

Use a secure wallet.

The first thing you should do is choose a secure wallet, which is the place where you’ll store your cryptocurrency. You can use any type of wallet to store your coins—desktop, mobile, and online wallets are all available. We recommend using an offline wallet or hardware wallet for storing larger amounts of the cryptocurrency (like Bitcoin) and an online or desktop one for small amounts (like Litecoin).

When choosing a secure wallet:

• Check the reputation of its developers and team members. Do they have a history in cryptocurrency? What kind of experience do they have?
• Read reviews about it online; see if anyone else has had problems with it before. If so, how did they deal with them?

Don’t be on the wrong end of FOMO.

FOMO stands for “fear of missing out,” and it’s the natural tendency to buy a specific cryptocurrency that you’ve been watching the rise in value because you think it will continue doing so. That can lead to people buying high and selling low, which is a common mistake that many beginners make at some point in their trading career. If your strategy involves investing in one particular currency over another, be patient with your investments until they have reached their peak potential for returns.

Watch out for exuberance-driven misvaluation.

Don’t be blinded by the hype. The cryptocurrency space is increasingly full of hype, and it’s easy to get caught up in it. But remember that this is still a market that has plenty of risks. Be cautious when you’re considering any investment: don’t buy into a bubble, fad, hype, or mania. Don’t buy just because “everyone else” seems to be doing so. Think about what you’re buying and how much it might cost after the hype dies down or when people realize how bad the value will be compared with other investments they could make instead of cryptocurrency trading.

Your digital currency is yours to keep.

If you’re trading cryptocurrency, remember that it is your money. If you lose it, it was because of an error or a bad trade—not because someone stole your funds.

You can be sure of this because all transactions are recorded on public ledgers (called blockchains). Every transaction will be visible to anyone who wants to look at it. That means that no one can take away your digital currency without being noticed by the entire world!

As long as you remember these points, your crypto trading experience will be enjoyable, with high chances of success too.