Trading is one of the fast growing and popular activities involving cryptocurrencies. Crypto traders leverage the volatility associated with various crypto assets to speculate the prices and earn profits. The profit-making potential in crypto trading is far higher than that of traditional assets, making it attractive to the masses. In fact, the first thing any crypto investor does is trade so that they earn more along the way.
Although high returns can be made with crypto trading, there is also high risk due to the volatility. This makes it all the more important for a trader to time the market right and have an appetite for risk.
The widespread distribution of crypto assets and easy accessibility to trading platforms has made crypto trading convenient. As a result, many investors irrespective of their experience rush into trading without taking time to understand the involved processes. It leads to them making mistakes that could prove costly.
A list of few such mistakes will include the following
Relying on Hearsay and Noise
People can end up placing a bet on the wrong crypto asset due to the lack of basic understanding of the principles. Most new traders invest based on hearsay from other community members and noise surrounding a particular coin. By doing so, without evaluating the crypto asset in question or understanding the fundamentals, they may end up putting their money on something that knowledgeable community members would generally prefer to stay away from. Such actions increase the chance of incurring losses.
FOMO and Reacting to the Markets
The fear of missing out (FOMO) on a huge profit-making opportunity by not investing on a crypto asset when its valuation is still low stems from Bitcoin’s growth trajectory. The rise of Bitcoin from less than a dollar when people made fun of it, to over $38,000 and more has made people look at cryptocurrencies in a new light. This has driven people to constantly look for tokens available at lower price or those that have been endorsed by influencers and investing in them without doing any research on the asset’s utility or tokenomics.
The lack of understanding of the token fundamentals further affects their trading strategies as they will end up reacting to market movements rather than making use of it for their benefit. As a result, they end up buying assets when their value is rising or already at a high, and the moment the price starts falling they sell it, incurring losses in the process.
Research and understanding of the crypto asset and its utility could help people form an idea on whether it is worth investing in or recover from falling valuation. It will help them deal with the situation better to minimize losses and turn profitable. Good knowledge about the assets and the market will help crypto traders embrace volatility to their benefit.
Blindly following trading strategies of other investors
When it comes to trading crypto, there is no one size fits all approach. Every trader has their own risk appetite and each person’s knowledge, and experience helps guide them through trading crypto. Each investor needs to figure out their own risk appetite and gain market knowledge through experience and understanding of the industry.
Risking more than they can afford to lose
Most new investors end up risking more money than they can afford to lose due to promising opportunities. But either due to their lack of understanding of the crypto market fundamentals or unexpected market movements, they risk registering huge losses which could even cause a considerable impact on their finances and living standards.
MetaChain arbitrage trading- A simple and safe way to earn profits
Arbitrage is a tried and tested method of trading to earn profits from differences in the value of an asset on different exchange platforms. The price of any asset, especially multichain tokens varies from one DEX to another due to factors like available liquidity and demand. Arbitrageurs can buy such assets from one DEX at a lower price and sell it on another where it commands a high price, pocketing the difference as profits.
Arbitraging crypto assets on multiple DEXs across different protocols can be a hassle, requiring users to connect their wallets to multiple platforms and paying transaction fees in different cryptocurrencies. The blockchain agnostic Metachain Arbitrage Solution by ShuttleOne simplifies it by providing a single interface where users can monitor multiple supported DEXs to find arbitrage opportunities and execute necessary trades.
Once they buy the desired token on one DEX, it can be transferred to the protocol of choice using the Metachain multi-blockchain two-way bridge to sell on the respective DEXs at a higher price. Further, to switch protocols and execute trades on ShuttleOne’s Metachain Arbitrage Solution doesn’t require native protocol tokens to pay transaction fees. Instead, the ShuttleOne arbitrage product enables users to pay all associated fees with the ecosystem’s native $SZO token for added convenience.
The ShuttleOne Multichain Arbitrage solution is designed to be user-friendly, enabling anyone with a basic understanding of cryptocurrencies to place high-frequency arbitrage trades using a conventional cryptocurrency wallet.
More information about the ShuttleOne Crypto Arbitrage Solution is available here.