Most experts agree that there is a major cryptocurrency bull run around the corner and it’s about time that we all start planning how we’re going to make the best of it.
But before you rush head-first into equivocal investments on sketchy trading platforms, you need to be aware of the risks of trading. And there are several risks that are extra prominent this time around that you didn’t have to pay attention to back during the bull run in 2017.
So, in an attempt to help you out, we’ve collected 7 risks that you need to avoid when trading cryptocurrencies in 2020.
1. Cyber Crime is More Prominent Than Ever Before
Cybercrime is a very real threat for anyone that spends time online and the threat increases as soon as there is money involved. Over the years, several of the biggest cryptocurrency exchanges have been hacked and hundreds of millions of dollar have disappeared.
Therefore, you need to be careful with what services you use and trust. In our opinion, one of the easiest ways to avoid most of these dangers is to use an online broker instead of an exchange. Online brokers’ trading platforms are generally much safe and they operate under strict regulation that crypto exchanges are not.
2. Your Private Keys
Continuing on the cyber safety topic, you have to be extremely careful with your keys. Make sure that you have a safe storage solution set up before you start investing and educate yourself so that you know what it takes to protect keys.
Once your private keys are lost, they’re gone forever and so are the funds you used to buy them.
3. Paying Too Much For Your Trading Platform
Trading doesn’t have to be expensive, yet many cryptocurrency traders are paying way too much for their trading. Before you sign up fo a new exchange or a broker, it’s your obligation to double-check all the fees and potential commission that you will be charged.
Keep in mind that the number of commission-free brokers and exchanges are constantly increasing. Naturally, you won’t be able to avoid the transfer fees when buying and selling your digital currencies, but you should try to keep the costs down at a minimum.
4. Missing Out on the Coming Bull Run
As mentioned, chances are very high that there is a massive bull run right around the corner. And if you don’t start planning and investing already, you run the risk of losing out.
By starting now, you will be able to analyze which currencies are likely to increase the most as well as invest in them before it’s too late.
5. Not Using Leverage Trading
If you’re planning to trade cryptocurrencies and not only invest in them with long-term goals, you need to consider leveraged trading. By using leverage, you can increase the exposure to every position that you open, thus making more in profit.
Just don’t forget that leverage works both ways and that you also increase the potential loss by using leverage and margin.
6. Listening too Much on Others’ Advice
Every investor and trader in the world listens to and learns from others, that’s a natural part of the industry. However, you don’t want to get too comfortable in that and only rely on others opinions.
In the end, it’s your responsibility to become efficient enough to analyze your assets and place investments that you think will be profitable.
Now, there is a fine line here and it’s always to double-check what other traders and investors are doing to find trends and opportunities that you might have missed otherwise.
7. Still Looking for ICOs
Lastly, it’s time you forget everything you know about Initial Coin Offerings (ICOs). While this was a massive market during the last bull run, there are literally no good ICOs anymore. Moreover, very few of the thousands of all the ICOs that’s ever been have been profitable for investors.
You might as well through your money out the window if you think you’re going to make money from new cryptocurrencies just when the launch.