Cryto Hopper is a message board where I (a professional trader) and other professionals gather to discuss technical analysis and trading in the crypto market, with a special emphasis on the mistakes that beginners make.
To put it plainly: you cannot be successful in cryptocurrency trading if you don’t fully understand both technical analysis and the crypto markets.
The original title of this website was “7 Most Common Mistakes Investors Make” but it was considered too long so now I have changed it to “A blog about common mistakes that investors make”.
If you want to make money, you probably don’t want to do this. But it can work out if you follow the rules.
If you are reading this guide, then you have probably never heard of crytography. But don’t worry: chances are that if you commit the seven most common mistakes, it will be impossible for anyone ever to find us again.
The first mistake is to think about investing as a way of getting rich quick. The second is to think about paying yourself first. The third is about getting rich too fast or too big and risk-averse because of the fear of missing out on big gains and the fear of losing all your money when markets crash. The fourth is that you’re not investing enough in things outside your control, like people and ideas. The fifth is not diversifying enough, which means taking on more than one kind of investment at once, because small risks in large numbers add up and can do more damage than good. The sixth mistake is thinking that everyone else has a better idea than you do; it’s a form of hubris.
The seventh mistake is looking at the markets through rose-colored glasses and making too many assumptions about how they work, which leads investors to buy investments they don’t understand or
One of the biggest problems that investors have is that they spend too much time doing their research and not enough time actually investing. If they did, they would realize that one of the biggest mistakes they can make is to try to time the market.
The biggest mistake of all is to try to time the market by reading financial papers and trying to figure out what stocks are going up in price. There are many more important things to worry about than trying to guess which stocks will be the winners. You should be spending less time trying to predict the future and more time investing in the companies you really want, not guessing if someone else has made a good call on which stocks will go up or down.
Everyone makes mistakes. Even the best investors start out with the wrong portfolio, and by the time they are twenty-five or thirty, most of their money has been made on that one mistake. There is a good chance you will do better than average only because you have more experience than your competition, which is hopefully a sign that you’re not doing too badly.
But what’s really important is your ability to avoid those mistakes in the first place. The biggest single mistake that investors make is not knowing how to take care of themselves financially. This means planning for retirement, saving for emergencies and emergencies in general, understanding when it’s time to buy a house, making sure your children are educated, insuring against risk–all these things should be at the top of your in-box (and if not, write them down).
There is no such thing as “investment profits.” If there were, everyone who had ever been an investor would have made them already. The money you put into a stock or bond or other investment comes back to you through dividends and interest payments. You can’t collect those profits until later; if your stock loses money, it doesn’t pay a dividend or a coupon worth anything until next year.
Common investors’ mistakes:
1. Overpricing assets at the peak of the market
2. Trying to time the markets, especially when they’re in a bull market
3. Excessive leverage/borrowing (high debt)
4. Basing investment decisions on past performance or future expectations
5. Being too timid and adapting to the market instead of calling out and making a stand (a la Peter Lynch)
6. Failing to diversify assets in a well-diversified portfolio
If you’re like most investors I know, you have a mental list of stocks you love. You have a mental list of stocks you don’t love. You have a mental list of stocks you like more than you dislike. And then some other stocks that are somewhere in between.
But there’s another category: stocks that are just not working out for anyone. They might be great companies with terrible fundamentals, or they might be lousy companies with great fundamentals. Maybe one is much more likely to be outstanding than the other! Maybe one is so outrageously cheap that it should be a no-brainer buy!
I’ve seen a lot of these misbegotten investments over the years, and I’ve never seen one that worked out as well as everyone expected. You can’t make money in this business by ignoring them. But how do you decide whether they’re misbegotten enough to sell or whether they’re misbegotten enough to hold?
Here are seven things to watch for when evaluating a stock ahead of time:
In the first post of this series, we talked about the important difference between risk and uncertainty. The latter is different from the former in a way that most investors are not aware of: The risk of an investment does not fluctuate with its expected return, only with its expected volatility.
This is a crucial point. In order to make money, you have to take some investments that have low expected returns, but low volatility. You have to take some investments that have high expected returns, but high volatility. There are fewer of these two kinds than you might think–and it is the difference between those two kinds that often makes the difference between making money and losing it.