Introduction
Given the complexities and risks associated with cryptocurrency trading, it’s not advisable to venture into it as an amateur.
Especially now that there are several avenues to learn, going into cryptocurrency trading without proper knowledge is wrong. However, you can sometimes get lucky and have your investment blow up into massive profits. It is still very likely that you will end up with losses.
Here are some of the reasons why Amateur Cryptocurrency Traders will likely lose
VOLATILITY
Cryptocurrency trading is known for its extreme volatility, which can be challenging even for experienced traders. For amateurs, this extreme volatility poses a more significant challenge.
On the other hand, volatility is why many love investing in cryptocurrency, as they believe they can make quick profits. To be profitable in a volatile market, traders need to possess some key analytical skills, such as Technical Analysis, Fundamental analysis, and Sentiment Analysis.
These forms of analysis can be so complicated that even experts don’t always win the market; how much more amateurs?
The risk of losses due to volatility can be heightened because many amateur traders are unfamiliar with the nuances of trading and cannot assess the market accurately.
Cryptocurrencies are extremely volatile compared to other investment instruments, so much so that one can get wrecked in minutes, which happens often. On the bright side, one can also make a lot of money in the shortest possible time.
As much as making a lot of money is possible, the odds are not in your favour as an amateur.
LACK OF EXPERTISE
To succeed as a crypto trader can be difficult when you lack the technical know-how to navigate the market.
As an amateur, you are prone to make many bad decisions, which can result in significant loss.
Traders who lack expertise are prone to Emotional Trading. This happens when traders make impulsive decisions based on emotions rather than logic, leading to poor investment decisions such as FOMO, Panic-Selling, etc.
Greed and Fear are the key drivers of emotional trading; these are familiar demons that most traders face in the market. As an amateur, you’d hardly be able to control these emotions.
SECURITY RISKS
Cryptocurrency trading can be risky due to the high potential for security breach. Amateur traders are usually unaware of the risks associated with trading and may not be familiar with the security protocols that must be followed. This can lead to losses due to bad decisions or malicious activities.
For instance, if you forget your private keys, your coins could be lost forever. If you expose them unknowingly, someone else can easily steal your coins.
Other complex security breaches such as social engineering, dusting attacks, and phishing can also be used to steal cryptocurrencies, especially from amateurs who don’t know how these things work.
Another instance can be when you invest in scam projects designed to Rug all the investors. As an amateur, it’s difficult to tell which project is legitimate and which is not. Amateur traders are more susceptible to experiencing a RUG-PULL.
LACK OF REGULATION
Cryptocurrency markets are largely unregulated, making them vulnerable to manipulation and fraud.
Bad actors mostly go unpunished, and there’s no adequate regulatory framework that’s been set up to criminalize a lot of illicit activities happening in the crypto space.
GET EDUCATED
From the above, every crypto trader who wishes to become successful requires education and experience. With the proper education, one will have clarity and better insight into how cryptocurrency works and how price movement can impact him if he’s invested in any cryptocurrency.
The importance of education cannot be overemphasized, as the risk of not being properly educated is overwhelming.
Therefore, Roqqu, a prominent cryptocurrency exchange in Africa, has taken up the charge to give everyone who cares a proper education in order to prepare them before venturing into the cryptocurrency market, which is filled with opportunities and risks.
Head to the Roqqu website now and start learning. ⇒ www.roqqu.com
CONCLUSION
Overall, while the potential for returns may be tempting, it’s evident that without proper training, an amateur is likely to lose in the long run due to several factors ranging from complexity, security, lack of expertise, lack of regulation, etc.
It is, therefore, necessary to be well-informed before venturing into cryptocurrency investments.
