Altcoin Trading Tips: Mistakes New Investors Need to Avoid [P3]

Even the most hyped of coins can, and do suffer from major dips while the market as a whole stays green. Cryptocurrencies are unpredictable and in a state of evolution, which means there is no single coin (not even Bitcoin) that is ‘guaranteed’ to survive down the road.

Whether you are holding, or trading, you cannot afford to put all your funds in one coin. Diversification and risk management is the key to a sound portfolio and finding good entries in multiple coins will increase your chances of profiting.

Just because a coin is cheap does not mean it is a better buy or has a higher chance of profits. While it is true that it’s easier for a $0.05 coin to reach $0.10 compared to a $500 coin reaching $1,000, but it is also easier for a $0.05 coin to go down to $0.01, wiping you out completely.

The key here is to not just take price as an indication of profitability, and conduct your research to understand why a particular coin is cheap, and which, if any, upcoming developments can boost the price.

Price movements, charting and market analysis is not enough. If you want to be a successful trader, you need to follow crypto news and stay up to date on all recent and upcoming developments. Since crypto is a speculative market, it responds very strongly to both positive and negative news, and being in-the-know is invaluable for a trader.

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Bitcoin may indeed be something truly new in the world of economics and finance. However, memories of past “financial innovation” schemes help to tarnish the image of Bitcoin. And while no one is calling the leading crypto currency an outright scam anymore, governments are still wary and trying to protect users from big mistakes in personal finance.

The world economy was just unraveling from one of the previous bubbles, reeling in shameful freefall as a set of toxic instruments, called “credit default swaps” had flooded bank balance sheets. No one knows how much value would have been wiped out if the central banks had not intervened to provide liquidity and confidence to banks and as the years progressed, to dilute the effect of the toxic financial innovation.

Almost a decade after, just as the central banks were preparing to breathe easy once again, Bitcoin came in with a retinue of altcoins, tokens, projects and a claim to the next wave of financial innovation. No wonder the European Central Bank and other regulators are bristling once again, after facing another round of cleaning up the aftermath of a bubble and the wipeout of value and economic confidence.