From a newbie perspective, trading crypto can be a pretty daunting prospect.
It’s a whole new world.
From knowing where to buy bitcoin to fund your exchange accounts, trying to understand what all the lines on those damn charts mean to figure out what the hell a satoshi even is, it’s pretty scary out there!
Lucky for us the inter-web has no shortage of cryptocurrency gurus and experts available 24 hours a day to offer their pearls of wisdom though right?
Cryptocurrency is littered with bad advice. EVERYWHERE. And I mean everywhere.
There’s too much bad advice given to people which costs them so much money that some newbie traders barely last a month in this industry.
What I’ve noticed though is while there are often some really cool knowledgeable people around the really bad advice is given out by the bandwagon jumpers who only hopped into crypto relatively recently after a great many of them spent late 2016 and early 2017 telling you bitcoin and crypto was a scam and that you could make a fortune with them selling candles and juice or whatever else if you can just recruit all of your friends and family to join you in the businesses too.
All you have to do is get them to buy as much as a product as possible then get them to do the same with their other friends and families.
Seems simple doesn’t it.
Yep those same network marketers who used to trash bitcoin and cryptocurrencies are now self-styled experts in crypto and they love nothing more than sharing their “knowledge” with the world.
I thought I’d spare you guys some heartbreak so here’s my top 5 countdown of the worst bits of advice you’re likely to be given by your crypto buddies.
Crypto Tip 1 – Going all in on a “sure thing”.
Just like Wall Street or the London stock exchange or any other financial hub across the world, there are all kinds of tips and information flying about on a daily basis.
Some of them turn out to be great tips but sometimes quite often they don’t.
One piece of awful advice that I was actually given in my early days trading crypto was to bet all my bitcoin on a sure thing because “X, Y, and Z is going to announce…..”.
This is a terrible idea.
You should never put all your eggs in one basket because sometimes things (especially in crypto) don’t always go as expected so you end up losing out and selling at a heavy loss and holding a bag for what can seem like an eternity
Crypto Tip 2 – CBuy cheap coins.
This one is a surprisingly popular piece of bad advice.
The idea is to buy some of the cheapest coins on the market.
Some say that by buying cheap coins the only way is up.
This is often not the case at all.
You might get the odd coin here or there if you’re lucky that hits the big time or gets picked up by a pump and dump group but by and large many of the cheapest coins on the market are there for a reason.
This is why research and due diligence are hugely important aspects of trading crypto. It’s important that you find out what the coin is going to be used for, does it solve a problem in the blockchain or crypto space? who’s behind it, have they got a history of scamming people and so on.
Look for coins that are undervalued opposed to low value.
You want to find a gem with a good low supply and a great project with an active development team that is flying under the radar.
Great projects don’t say secret for long but if you can find one nice and early in its development you can make a fortune.
Crypto Tip 3 – “Expert” advice.
Social media is a gift and a curse.
On the one hand, it means that we can follow our favourite crypto people and see what they’ve got going on, what’s new and interact with them on occasion too.
But on the other hand you need to be very wary of some of the people with larger followings or millions of subscribers on YouTube.
Not always but quite often what happens is that the developers of a coin launching an ICO (initial coin offering) for example will pay some of these YouTubers and twitter famous accounts with huge influence and interaction huge sums of money to shill their coins and create some buzz about it.
Again research and due diligence play an important role because you don’t want to end up holding a bag of a pretty crappy coin.
The likes of John McAfee and many others have been paid thousands of dollars to shill crappy coins to unsuspecting investors.
These people will shill anything for a price!
Crypto Tip 4 – Don’t listen to FUD.
This one is absolutely up there at the pinnacle of bad advice and only narrowly avoids my top spot.
So what is FUD?
It stands for fear, uncertainty, and doubt.
I’m not sure exactly where it originated from and have read conflicting things on the internet.
Some say Wall Street traders thought it up others say it’s been around for years, either way, it’s effectively intentionally spreading false news or information.
You’d think at first that this was good advice (I know I used to think it) surely because if people are spreading false information around its best not to listen to it and once the right information circulates fears will calm, the uncertainty will dissipate and the doubt will be gone.
On rare occasions, this is the case but misinformation can kill a coin before it ever has a chance.
Once something is synonymous in a negative way it’s very hard for that negativity to be shaken off.
Especially when you’re dealing with money. What happens pretty regularly is that the rumours and FUD travel much faster than good news ever will.
Crypto Tip 5 – HODL!!!!
I’ve saved the worst for last and that’s because this for me is the single piece of terrible advice given to people who trade because it can be useful in specific situations but it is typically applied and offered as advice horrendously.
It is most commonly explained as standing for hold on for dear life and originated on a chat room or a 4chan forum years ago when someone mistyped the word hold.
I’m sure it’s one of those ones where you had to be there for it to be funny.
The idea is that if you’ve bought a coin and it’s currently sitting in a loss you hold it fit as long as it takes to get into profit.
So why is this such a bad piece of advice?
Because it’s used so badly so often.
First, let me explain when is a good time to HODL.
You’ve brought into a coin with 10% of your bitcoin balance out of FOMO (fear of missing out) on the back of it pumping 10%.
You go do the school run and get home to see some whale has ditched a few million dollars worth and now your sitting on a 75% loss (this does happen from time to time and yes it is soul destroying lol).
Selling at such a heavy loss probably isn’t the best thing at this point as you’ll likely be getting pennies back so you might consider holding it until the loss isn’t so steep or it gets into profit.
Another example of good hodling is when you’re investing long-term into a coin so price fluctuations in the short term are likely not to phase you if you’ve done your research and due diligence and believe that you’ve made a solid purchase.
The problem as I say is people are using it badly.
So an example of that would be you’ve brought a coin after some good news following an event or a coin is being listed on a new exchange so you grab some but a hour/day later you’re sitting at a 3% loss.
Not the end of the world but not great.
Many people will tell you to keep holding it.
Even if there’s a ton of FUD or the technical analysis points to it likely falling further.
This for me at least is a big no-no.
You could be holding that coin for months.
In that time the bitcoin you’ve got tied up in it could be put to good use and making you regular profits.
Sometimes it’s better to just cut your losses and wait for better opportunities.
I’ve seen some of the HODL gang lose untold amounts of bitcoin and thousands of dollars holding onto coins that make them nothing or they grow impatient and sell with a massive loss.
Holding one or two bags might not be a big deal but get a run of bad luck or the market just isn’t going your way one day and you could end up with a huge percentage of your investment tied up for a very long time.
So that’s my top 5 worst bits of crypto advice.
I hope it can save some of you guys reading this from making of the mistakes that I and many many other traders have made on our journeys so far in crypto trading and maybe save you a few bucks too!
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