Everyone in the trading world has only one goal, which is to make a tremendous gain. When cryptocurrencies like Bitcoin, Ethereum, and Blockchain emerged, the craze went very far.
To facilitate these, Cryptocurrency exchange script are structured to sculpt the future of finance. Investors drop the traditional stock markets and start investing in Crypto markets. And significantly the worth of the cryptocurrencies began to rise.
Investing in Crypto has created hype in this digital world. Beyond this hype, we have to understand the realities of crypto trading while investing in any cryptocurrencies.
If we start to discuss crypto trading, then we can’t pass through without speaking about Blockchain because Blockchain and Cryptocurrency exchange are intertwined together. We’ll address every facet in detail.
What is Cryptocurrency exchange?
Cryptocurrency exchange is a medium for buying, selling, and trading cryptocurrencies in a digital framework. These exchanges serve as a portal to the cryptocurrency market by supplying liquidity.
They can be either centralized(Binance, Coinbase) or decentralized(Uniswap, Sushiswap). In this, Crypto Investors are a varied group with different levels of expertise and stimulus.
Why do crypto investors trade?
One of the strong reasons investors choose to trade cryptocurrency is because of blockchain. Blockchain is the technology that fortifies cryptocurrencies. Blockchain is an advanced public database where the transactions once recorded cannot be modified. This transparent nature grabs the attention of traders. It uses progressive Cryptographic techniques to secure data and also provides global reach for crypto trading. This is why Many investors believe that Blockchain can reform the future. At this moment, we can familiarize ourselves with the crypto trading process.
How do crypto investors trade?
Crypto enthusiasts do invest their money in cryptocurrency for profit. By implementing unique strategies, they can make high returns from the market. Now we can learn about the entire trading process in a nutshell.
- Initially, investors register to create an account, which involves undergoing a Know Your Customer (KYC) verification process.
- Then in their exchange account, they deposit the funds or cryptocurrencies they held before in their wallet.
- After that, investors place the types of trade they wish to perform like spot trade, and margin trade, with limit orders, market orders, or stop-limit orders based on their preferences.
- After an order is entered into the order book, the matching engine pairs buy orders with sell orders.
- When the exact match is found, the trade will be executed, as the assets will be transferred to the respective wallets.
Apart from this process, there are many features to start a cryptocurrency exchange platform like staking, and launchpad. During these processes, investors accidentally or unknowingly commit some mistakes. So, let’s jump right into the main topic without any more delay.
10 Mistakes that investors commit and its possible remedies:
Making mistakes while investing in crypto can be either serious or silly. Here we’re about to discuss the crucial blunders that all types of crypto investors commit. Additionally, possible and practical solutions to those mistakes are given to rectify them.
Losing your wallet address:
Cryptocurrency exchange is built on a blockchain network known for its security. Investors might lose access to their wallet address by misplacing it or forgetting it. When you set up an address in your wallet, it produces both a public key and a private key.
The public key serves as your account number, enabling others to deposit cryptocurrency into your account. On the other hand, the private key is a resemblance to a password for your account. The private key is an alphanumeric code that only you can have control and grant access to the transactions when anyone sends to your address.
For online wallets, once the private key is generated, the users can copy it to their devices or write it on paper.
In the case of paper wallets, when you select for print option, the private key will be removed from your wallet. If you forget or miss your private key, you won’t have access to your digital assets.
Solution: Cryptocurrency wallets don’t store cryptocurrencies physically, they only store
the keys. So, If you clone your wallet, your private keys will be cloned/doubled, and your coins won’t be doubled.
Investing in a single cryptocurrency:
Many investors commit this blunder by buying or focusing on particular cryptocurrencies that are popular like BTC, ETH, and LTC. It’s like putting all the marbles in one jar. As per the report, At present, there are 13,217 cryptocurrencies in the crypto market. They do this because of the hype created for famous cryptocurrencies. However, crypto trading doesn’t work like that.
Solution: On crypto trading, it’s so casual that the value of any crypto might go up and down rapidly(market volatility). Accordingly, it is smart to invest in different types of crypto to avert loss.
Mistyping the wallet address:
While placing a trade, users may type their wallet address wrongly. They do this in a hurry due to the market volatility. Once the designated cryptocurrency is sent to the wrong wallet address, it may become impossible to recover.
Solution: Many exchanges provide recovery services which is expensive. It could take an ample amount of time to recover your assets. So, before making a transaction, it’s always better to check twice while entering the wallet address.
Trusting Every Source:
Currently, fact-checking on social media platforms like YouTube, Instagram, Facebook, X, and other websites has increased. The traders are misled by YouTube videos, and influencers and make the wrong investments at the wrong times.
Solution: Just because you’re receiving positive uptrends about a particular coin or token doesn’t mean that you have to invest in it. Before believing everything, check the latest trends in the markets and statistics with reputed websites.
Calculation Catastrophe:
This mistake often happens with absolute beginners. The concept of cryptocurrency trading, and its details can be a bit intimidating for them. They just start to adopt the trading strategies by their friends, and family circle’s suggestions.
Solution: This is due to insufficient crypto knowledge. Investors should possess strong exposure to cryptocurrency exchanges, cryptocurrency trading, market trends, and when to place a particular order.
Neglecting the tax and charges:
Before purchasing crypto, investors forget to learn about the charges that the cryptocurrency exchange platform requires. The users have to pay fees for their withdrawals, and Blockchain fees for executing transactions. The platform may also charge a certain amount from the rewards after staking.
Solution: A cryptocurrency exchange script could charge trading fees(Maker fees and taker fees), for converting one cryptocurrency to another cryptocurrency, on projects for the tokens to be listed on the exchange, the tax amount may vary based on the duration you hold the cryptocurrency in your wallet and the tax regulations, which differ by country. It’s better to do some research about the exchanges that charge less to economize your trading.
False Notion about Crypto Trading:
There’s a misconception among crypto investors that they can get rich or earn more profit in the short term. As we’ve seen earlier about market volatility. Traders make wrong moves by purchasing assets when the market goes down or placing the wrong order at the wrong time without analyzing market trends.
Solution: In crypto, investing in the long-term leads to noteworthy gains as the value of the cryptocurrency increases over some time. The investors gain momentum as there’s enough time to make changes according to the market volatility. So, as an investor, you don’t have to make any rush decisions.
Scamming:
Fraudsters send fake text messages or e-mails imitating the original cryptocurrency exchange platform to scan the investors. By this, users or traders might click the link and enter confidential details like wallet address, and login accreditations. This is called a phishing scam.
Solution: Choosing the exchange that provides an anti-phishing code for identifying whether the e-mails, messages, and notifications are sent by the cryptocurrency exchange. It carries a unique code designed for security purposes, that will be present in every e-mail sent by the respected cryptocurrency trading platform. Then by enabling the 2-factor Authentication(2FA), you can ensure a double-layer protection.
Implementation of Leverage:
Crypto investors are typically drawn to the leverage. Leverage is acquiring or controlling a large trade position with a small amount of funds which is keeping collateral. It gives massive gains at the same time it carries a huge risk. When the value of the particular cryptocurrency falls, then the margin level which is set by the exchange will go down. If it goes too low, then it reaches the liquidation stage. From this, you could lose your entire collateral plus the interest for your margin loan as well.
Solution: When the liquidation stage is reached, you can increase your collateral to save your assets. Newcomers can better not use leverage to trade during their early stages. After attaining enough experience, investors could deal with it.
Errors while placing orders:
It can occur in 2 ways, one is placing the wrong order and another one is quoting the inaccurate price while dealing with the decimals(which happens in popular and expensive cryptocurrencies).
Solution: Always verify after placing an order whether it is your desired type or not. Then be cautious about the price that you’re giving in a buy order or sell order, placing the wrong decimal point might drain your entire assets in a single go.
There are many factors that lead to these errors which depend on the level of the investors. some are beginners and some are experienced in cryptocurrency trading. Some mistakes won’t have any impact on your assets, while some will ruin your entire crypto asset.
And some will take time to recover your assets. Choosing a Cryptocurrency exchange script that has reasonable charges, 24/7 support, consistent maintenance, best user experience will eradicate your chance of making mistakes.
Apart from these, it might also happen due to technical issues as well. So, you cannot take the entire blame on yourself. Because even some seasoned crypto investors make missteps.
