When you go trading in the cryptocurrency market, things happen fast, they change fast, and there are a lot of them. Some people say that the crypto exchange world sees the number of changes in a week that the standard stock exchange scene might get in about three or four months.
In that kind of crazy and hectic environment, it is way too easy to lose your pace. According to our insiders over at rubix.io, if you want to achieve any significant results you will have to keep on top of things on an hourly basis, instead of doing check-ins once or twice a day. Not a lot of people can do that, especially those who are new to the crypto trade world. And so, people make lots of mistakes. These are the deadliest ones.
Buying Litecoin because Bitcoin has gone up
When you are taking a look at your Altcoins investments, there are typically two major points of comparison – comparing them with Bitcoins and comparing them with the United States Dollar. However, people who happen to have missed out on their chance for jumping onto the Bitcoin bandwagon tend to act rashly and they rush for any opportunity to turn some profit on any other Altcoin they can.
The problem here is that, instead of using any pre-owned Bitcoin to make their investment, these people have to consider their trading in terms of exchanging their US Dollars or FIAT for some sort of cryptocurrency, like Litecoin. On that note, see this article for a handy reminder of how FIAT works and what are some of its benefits and drawbacks.
But see, the idea that Altcoin sees a decrease in value whenever Bitcoin sees an increase, although it is a definite trend, is not always true. For example, when cryptocurrency exchange was made illegal in China, Bitcoin’s value dramatically dropped, and Altcoins dropped even worse than that, because the entire crypto market suddenly had all the money sucked out of it.
What actually happens is that Bitcoin and Litecoin follow the same pattern of behavior in regard to the US Dollar – when Bitcoin’s Dollar price increases, Litecoin’s also does, just somewhat less. Correspondingly, when Bitcoin’s Dollar value decreases, Litecoin’s also goes down, albeit in a somewhat lower percentage. So, if you really want to go for Litecoin when you see that Bitcoin is soaring, better save your dollars and invest some FIAT instead.
Buying Ripple because it is comparably cheaper than Ethereum’s
This is a mistake that is typically made by beginners in the business, but it is nonetheless deserving of a mention, because it is still regularly being made. What people do is they look at the price of the coin itself, instead of looking at what the market cap is. Market cap in reference to Altcoins is more or less the same thing as the market cap in terms of company performance.
You look at the number of shares, multiply that by the price of a single share, and that number tells you how well a company is performing on the market. For Altcoin market cap, you multiply the number of coins that are currently circulating by the price of a single coin.
You may also want to check out a few more tips on how to avoid crashing your cryptocurrency trade at this web page: https://changelly.com/blog/crypto-trading-tips/
Now, Ripple is a fairly low-priced coin. The only way it has any impact on buyers is that psychological moment of “Oh, this is cheap.” If one Ripple costs a thousand dollars and there is a million of them, your situation is the same as though Ripple cost just one dollar but had one billion coins going around – the end number is the same.
So, when you are considering which coins to invest in, forget the price-per-coin figures and look at the market cap instead.
Online guides usually share techniques, but not secrets. So, take this advice from the horse’s mouth. If you are just starting out in the world of cryptofinance, or if you dabbled a bit but want to dive deeper, definitely avoid these mistakes and you’ll be good.
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