Goal setting is the starting point of investing. This also applies to cryptocurrency. When establishing goals, you define what you want to get out of that investment. And according to plan, you buy/sell a cryptocurrency, take part in crypto projects, and so on. Setting goals and creating a plan is a crucial part of investing activity, unfortunately, many investors, especially beginners, are about to make mistakes at this stage, which can result in lower revenue and even money loss. We are going to review the most common mistakes in setting crypto investment goals and give a possible solution for each one. Let’s start!
In general, while establishing investment goals, you should answer the following questions:
- How much money are you willing to invest (and potentially lose)?
- Do you want to engage in short-term investing/trading, watching the market daily or even hourly to make investments and trades?
- Do you want to put your money into some currencies you believe will be successful in the long run?
- Do you prioritize generating income over investing in a company’s mission?
In other words, you decide on the amount you want to invest, the period (short or long), the sort of activity (passive or active), and make research.
Earlier, we made a list of methods on how to earn money on crypto — it can help you while establishing goals.
Below you will find the list of possible mistakes that can occur while establishing goals, try to avoid them to achieve success.
Mistake #1. Lack of knowledge
“Everyone is trading and I will, too”, — this is a bad reason and motivation to start your way in crypto investment. Many investors come to the crypto market just because of hype having no background on topic — they even do not understand how it works. They go belly up and then claim that “cryptocurrency doesn’t work”, however, the problem is a lack of understanding of how the cryptocurrency market works and what blockchain technology is all about.
Solution: Before starting, take a rest and educate yourself. Learn the basics of blockchain technology, find information about exchanges, wallets, private keys, and public keys. After finishing with basics, go deep into studying the blockchain technology: have your finger on the pulse of all new features and techniques that could make your crypto trading investments gain more profit.
Mistake #2. Investing what you are not ready to lose
Always remember the number one rule of investing: don’t invest more than you can afford to lose. NEVER invest your life savings or borrow large sums of money for that purpose. Probably, you’ve heard numerous terrible stories of people investing thoughtlessly with their entire life savings.
Solution: When you decide on how much to invest, you should be ready to lose it without harmful effects on your everyday life and regular spending. Plus, be sure that you are picking a number of coins that you can keep track of (keeping up with news and price action). The best possible maximum is 10 cryptocurrencies at a time.
Mistake #3. Investing without doing your own research
Once again, many people invest based on hype. They hear and see other investors talking about a coin (even on Facebook and Twitter), have a glimpse of the chart — the price is rising — and then buy off of impulse fearing missing out an opportunity. Far not a wise decision.
Solution: Research a coin before you invest in it — DYOR (do your own research). What information to look for? You should be able to answer the following:
- What project stands behind the cryptocurrency?
- What is the mission of the project?
- Who are the core team members? Have they worked together before or have past success?
This is the minimum you need to start with. You can find the necessary information in published sources.
Mistake #4. To be affected by FOMO
FOMO, a fear of missing out, is a common feeling of the crypto investors. FOMO makes investors buying assets: they feel they are going to miss out on big opportunities, and they make deals on emotions instead of thinking rationally.
Solution: Just ignore the noise and analyze facts: investment decisions should always be based on logic, and not on emotion and impulse. Another important skill for the crypto investor is emotion control. You are better to think positively because negativity won’t make your crypto investment grow. The cryptocurrency market is very volatile. When you see the market is going down, do not get discouraged. Having a positive outlook, especially when trading, will make you enjoy trading your investments and yield a positive result.
Mistake #5. Your Portfolio isn’t diversified
When pulling all eggs in one basket, you act much risky. Having only one coin in a portfolio can make you lose everything, while the set of them will lower the risks: when one coin goes up, the other goes down.
Solution: Do research and protect your assets by investing in multiple assets: own at least 5 cryptocurrencies.
Mistake #6. Depreciating the power of HODL
Impatience makes lots of investors ‘cut their losses’, selling their coins early because of emotions.
Solution: While investing, consider the cryptocurrency market cycles: the prices rise and fall drastically. If you buy high, then you will need to wait out an entirely new market cycle to end up with profits — meaning a new bear, the bull run. It can take more than a year for the price to become higher.
If you want to learn more about HODL and how to get profits out of it, read our previous article.
Mistake #7. Not having a plan at all
If you don’t have a clear plan (price targets in other words), you are very likely to face these two situations:
— portfolio hits an all-time high, while you only want to go higher and don’t lock in profits;
— a coin drops in price and you hold until 0.
Solution: The best way to avoid these situations is to set a target (a coin price), stick with it, and don’t be greedy. When you enter the market, write down your plan. Then monitor your own cryptocurrency trading goals and plans.
Mistake #8. Leaving Coins on Exchanges
That day has come: you’d made your investment plan, done research, and bought your first coins. What’s next? Many investors leave their assets on the exchange, which can become a fateful mistake. Exchanges are huge targets for hackers and are always at risk. Remember a simple rule: when you leave coins on an exchange, the exchange controls your coins.
Solution: Keep your coins in a personal wallet. How to make the right choice? Read our article full of tips on how to pick a wallet for crypto.
Now you know the soft spots of establishing investment goals, and probably you will act more confidently while making plans. And still, remember all investors, old or new, make mistakes when investing, especially in the cryptocurrency market. Only the one who does nothing does not make mistakes.