Cryptocurrency is attracting more and more attention from investors and traders. However, despite all its advantages, working with digital money can be complicated and risky, especially for beginners. Let's look at the main mistakes that amateur investors make when working with virtual currency and how to avoid them. If you are just getting started with crypto, these tips will help make your interaction with these new assets efficient and safe.

Investing All Your Money at Once

Cryptocurrencies are a highly volatile investment vehicle. This means that their price can change drastically and go down, and the investor will lose most of the money invested.

By investing all the money at once, you are breaking one fundamental rule.

It sounds like this:

Invest only 1% in the shares of a single company or one crypto project. The maximum is 2%.

Remember this rule. It will save you a lot of money and help you survive any crisis.

The more companies you have from different areas and sectors of the market, the better. Then you will look at your portfolio with pleasure.

Investing the Too Much in One Coin

Another typical rookie mistake is investing all the money in one asset. Warren Buffett always taught us — don't put all your eggs in one basket. No matter how great the asset you buy is, there is always an invisible and powerful market risk. You run the risk of losing your entire investment at any moment. So, it's better to spread your funds across many different coins.  

Then, if you get a loss on one token, the profit on another asset will cover it. It's better to analyze on your own and select the most promising and strongest projects.

Blindly Believing What Is Written on the Project's Website

There are a lot of frauds in this sphere. Never take your word for it, but check.

A good way is to see if large funds invest in the shares of the company or tokens of the crypto project you want to buy.

There are many fraudulent projects in the cryptocurrency market that close down as soon as they grow in value.

Out of 22,500 cryptocurrencies, about 50% are questionable. So, it's important to analyze more carefully the projects you want to start investing in.

Before investing in any project, read information about it on the internet and in forums. Study investor reviews. Look at when the project was created.

Copying Other Investor's Portfolios

Remember that everyone has their own investment goals. Someone is saving for retirement, someone wants to double their capital, someone plans to earn income for dividend payments, and so on.

Everyone has a different risk tolerance and trading strategy. Find one that you are comfortable with psychologically.

Keeping All Profits in the Exchange

Most exchanges are safe. However, there are cases when the exchanges themselves impose restrictions on the withdrawal and turnover of their funds. Moreover, in cases of suspicious transactions, they can simply block the account.

Most exchanges are centralized. This means that they have access to your crypto assets, which already sounds unsafe.

It's better to store your cryptocurrency on decentralized exchanges or wallets that only you will have access to.

Having Exaggerated Expectations

Many traders come to the market inspired. They think that they will learn a little bit, and a constant flow of millions into their pockets will begin. But in reality, it isn't easy to make profits from the market, and few traders can show profits in their first years of practice.  

Success depends on two factors: knowledge and psychology. If you don't have knowledge or strong nerves, you won't be able to make money.