Before buying Ethereum, many mistakes could be made. Not understanding how to use it and not understanding the security risks involved with investing in it all contribute to the potential for mishaps when purchasing Ethereum (ETH).
This article will explore these mistakes and what you can do to avoid them so that your knowledge of Ethereum is sound before you go ahead and purchase any.
Mistake #1 – Investing all your money
If you invest all of your money into Ethereum without thinking, you put yourself at a far greater risk than someone who spread their investment out. If the price goes down, you’re going to be in trouble.
Now obviously, spreading investments out also helps your risk profile and allows for better profits. Still, it’s much easier to handle the risk of losing a few dollars than losing hundreds or possibly thousands.
Mistake #2 – Not doing research
Before buying Ethereum, you need to research it. If you don’t know what it is or how to buy Ethereum, why would you want to invest any money?
It’s not just the technical side of things either. The market itself needs to be understood to determine if you believe it’s a good investment. This is easily done by researching the market cap and volume over time. If no one else on the internet has invested in Ethereum, and there’s no large volume being traded, it gives a very low-price estimate.
Mistake #3 – Taking bad advice
Ethereum is a globally traded currency, so if someone gives you bad advice, there’s a perfect chance that it won’t work. If Ethereum starts to become popular enough, people may start giving bad advice, but until then, you’re likely to be safe.
Look for reliable sources! Start with this website, then move into forums and Reddit discussions. It would be best if you know someone who can personally vouch for the advice they’re giving, but there are other less reliable forms of advice you should still be able to use.
There are different private social media groups that you can seek out, but you should be careful with those as well. Someone who you were working with within a small group may be able to give you good advice to get started, but if they’re constantly trying to sell you Ethereum, it could be a scam.
Mistake #4 – Not prepared to lose money
Ethereum is an investment like any other, so if you’re not prepared to lose money, then it’s not a good idea to invest in any in the first place.
This is impossible for all of us to avoid, but by not understanding the value of an investment and losing money in the short term, you could risk losing large amounts over time. Hence, we highly advise you to put an amount you can afford to lose into it, and if you lose that amount, then no problem, but not more.
Mistake #5 – FOMO
Fear Of Missing Out is buying a currency because you think it could go up in value. It’s one of the top reasons for buying ETH and does contribute to the price increases.
There are plenty of people who will jump on any price increase regardless of whether or not they understand why it’s happening or what effects it has. So always use the time you have to research things before moving forward.
Mistake #6 – Not using a secure wallet
If you’re a long-term investor, there’s nothing wrong with leaving your Ethereum on exchanges. After all, you’ve picked an exchange that has security measures in place and has a good reputation.
But if you’re starting, it’s best to use a secure Ethereum wallet such as an offline paper one or an online one with an extra layer of security.
Mistake #7 – Not using a demo account
Rookies who don’t know the ropes and are just starting are easily influenced by high fives, losing money, and anger.
If you haven’t used a demo account before, you should do so. It will allow you to understand how everything is done within the Ethereum trading ecosystem without risking your real money.
Mistake #8 – Not Understanding Trading Volumes
If you’ve looked into Ethereum at all and have researched it, then you’ve probably seen that its price varies a lot in different time frames over 24 hours. So the question is: why?
Well, this is because of trading volumes on exchanges. The larger the volume of Ethereum being traded, the more volatile it will be in price. It’s that simple.
If you want to increase your odds of making money, then don’t buy at a time when no one is trading (like 3:00 AM EST on a Monday). Instead, wait till there’s more volume, and then pay attention to what the price does for about an hour.
Wrap Up
While all of these mistakes can be easily avoided, it’s not going to hurt to know them beforehand. These will help you if you’re considering purchasing any Ethereum.
If anyone has a mistake that they would like to add, please share it in the comment section, and we will update the list. Thanks for reading, and have a good day!
