The Biggest Mistakes People Make When Trading Cryptocurrencies According to Trader Sam McAnallen
MELBOURNE, Australia, April 8, 2022 /PRNewswire/ -- Being too aggressive is probably the biggest mistake that many investors make when trading cryptocurrencies, according to cryptocurrency trader Sam McAnallen .
MELBOURNE, Australia, April 8, 2022 /PRNewswire/ -- Being too aggressive is probably the biggest mistake that many investors make when trading cryptocurrencies, according to cryptocurrency trader Sam McAnallen.
McAnallen originally from Escanaba, Michigan, now working in Melbourne, Australia is a cryptocurrency trading specialist and helps clients understand these investment vehicles.
He has taught over 1000 clients how to trade in the last several years and held senior roles with a range of international firms. In March 2020 after the huge price crash in many markets, he also managed to invest all his risk capital in Bitcoin, which changed his life.
"People should realize cryptocurrencies are typically much more volatile than traditional investments. Only invest what you're willing to lose. Take the time to learn how cryptocurrencies work and don't invest like you are in a race, but like you're driving your grandmother home from the hospital," said McAnallen.
Investors should also be looking at the deep fundamentals and technical analysis of the underlying cryptocurrency and then learn how to analyze these factors, which could be good or bad for a cryptocurrency, he says.
Some of the basic questions include:
- How will the project create value?
- How many coins are there and will that number increase?
Countries can issue an unlimited amount of their fiat currencies, as can some cryptocurrency creators. Bitcoin on the other hand is capped at 21 million digital coins. That's a major difference and an advantage over fiat currencies, making them more like precious metals than paper money.
"It's like the story that my relative used to say about his sister borrowing his silver coin collection to pay for groceries before the store closed. His sister thought she could pay him back when their mother returned home later," said McAnallen.
When he discovered what happened, he rushed over to the store to collect his coins, but it was too late. The cashier already replaced the silver coins with regular fiat currency. The grocer saw that the silver coins had extra value because they had a limited circulation like Bitcoin.
Cryptocurrencies can also be valuable because, like shares on the stock exchange, the buyer can be investing in a project. Shares themselves don't have any value. It's what shares represent. Bitcoin's market capitalization is actually many times higher than PayPal, yet still less than Alphabet (Google), he says.
"Bitcoin is also an entire decentralized monetary system. It provides sound money, cross-border payments, virtually infallible security, an automatic settlement system, a public ledger, and is self-regulating," said McAnallen.
But just like with shares, no matter how good the project is there is still a high risk of jumping in and out at the wrong times and losing your risk capital. It can be a shock to novice and even experienced traders and it's not for everyone.
Governments are now looking at replacing their paper currencies with digital currencies as well, he says.
The advantages of replacing paper currencies with digital-only currencies are faster transactions, monitoring of all transactions, little need for commercial banks, and no ability for there to be a "run on the bank" as withdrawing to paper money wouldn't be possible.
As some people still use cash, there would also be savings from the costs of printing bills and minting currencies.
"Sometimes I'm asked if Bitcoin and other cryptos are so revolutionary, why don't they replace fiat currencies completely. One reason is that most of its buyers do not want to spend it," said McAnallen.
If one looks at early American Virginia, Maryland, and North Carolina colonists they viewed tobacco as a form of currency. Colonists could pay for anything from food to tools and even taxes.
"So, which leaves do you think they would choose to pay bills or give to the taxman? Of course, the worst quality ones they could get away with. Likewise, it's easier to spend a depreciating fiat currency," said McAnallen.
Note: Past performance is not a guarantee of future performance. Investing is risky and you should consult a licensed financial adviser before making investing decisions. All information contained in this article is general information only and not investment advice.
For further information about cryptocurrencies review, Sam McAnallen's website or contact him at +61426838123 or [email protected].
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SOURCE Sam McAnallen
