Are you new to buying Ethereum? Here are the top mistakes you should avoid when purchasing this digital asset.
Ethereum, the second-largest cryptocurrency after Bitcoin, continues to attract investors and traders. Consequently, this digital currency has grown in value, but its price has been dipping simultaneously. However, with the recent price increases, you may have decided that now is the time to buy this virtual money. But, before doing that, here are the top mistakes you should avoid when purchasing this virtual currency.
Putting all Your Money into It
Ethereum is a very volatile cryptocurrency and, at the same time, a higher-risk asset. The returns of this digital asset have been fantastic so far, but they can change quickly too. To minimize your risk, ensure that you diversify your investments. You can reserve 5% to 10% percent of your portfolio for crypto and use that entirely for Ethereum or even include multiple cryptocurrencies. Please stick to investments with less volatility and a more extended track record of success, such as mutual funds for the rest of your portfolio.
Not Having a Plan
Before buying this digital currency, you must determine how much money you want to make and the risk amount you can take. Also, you have to decide whether or not you are investing long-term or short-term. All the above should go in line with your investment strategy. In the end, you must come up with a trading plan.
Buying High and Selling Low
Having to buy high and sell low is the easiest mistake to make. Ethereum is highly volatile, and significant gains come with high risks. It is also impossible to time the crypto market perfectly when trading. However, some clear patterns can help you maximize your profits and minimize losses. Among the critical mistakes you can make include:
- Fear of Missing out or just simply buying high. Some traders don’t want to miss out on trading opportunities, so they decide to jump in immediately significantly if the price of Ethereum has gone up. What they forget is that if anything that goes up must come down.
- Fear, uncertainty, and doubt, which come down to selling low, are other mistakes people make. Once you see that your Ethereum is rapidly danking, people tend to sell it to get out of it. However, the thing is, Ethereum is a stable cryptocurrency, and there are higher chances that it will bounce back. So, it would be best to avoid selling it at a loss to get rid of it.
Not Buying Through a Reputable Exchange
More ways to buy this digital asset include buying via cryptocurrency exchanges. Also, some apps and online stock brokers enable traders to acquire Ethereum.
However, not every option is good because many exchange platforms are available online to steal people’s money. Legitimate ways of buying this digital asset may have excessive fees or restrictions.
If you are new to buying this digital asset, the simplest way to stay safe is by sticking to the best cryptocurrency exchanges, including https://www.bitindexai.top/. Also, look for a crypto exchange that offers insurance and keeps most of its crypto in cold storage, meaning it is offline.
Not Researching Well Enough
Before committing your hard-earned money to Ethereum, take some time to learn about it first. Researching is the first thing every investor should do before investing. You don’t require expertise in Ethereum, but it helps to know how it works and what makes it unique.
Once you follow all the above guidelines on mistakes you should avoid when trading this digital asset, your trading experience will be seamless.