The world of crypto currency trading is a fascinating case study in the power of community and innovation combining together to create something world changing. In January of 2009 the world was introduced to Bitcoin. And it forever changed the world of finance.
Since then the world of crypto has become a monolithic market. The decentralized nature of cryptocurrency means that anyone, in theory, can create their own currency. And by their very nature, crypto currencies can’t be artificially inflated since there is always an upper limit to the number of tokens that can exist. The prevailing idea behind crypto currency was to take financial power away from the banks and governments and put it into the hands of the general public.
And, to a degree, this has been a massive success. In the grand scheme of things crypto is still in its infancy. Every year we see hundreds of new currencies being created. Some are successful. Others wither into obscurity. Some are, unfortunately, designed to be a quick ‘pump and dump.’ A scheme to scam people out of their money.
One of the best things about the world of crypto is that anyone can dive into it with relative ease. There is so much education surrounding it online. And so many veteran traders are willing to share their hard won experience. But the sad truth is that not everyone has your best interests at heart. Some people give out purposefully bad advice with the hopes of steering your investments astray. So it begs the question; how can you separate the good crypto advice from the bad?
Spotting purposefully bad advice is vitally important. People often assume that any advice that leads to a loss is bad. But the sometimes volatile nature of the market means that the best advice in the world could end up being a dud. Whereas purposefully bad advice has been designed to make you lose money no matter what.
We briefly mentioned the term ‘pump and dump’ earlier. This is a market tactic where a crypto currency, often a new one, is artificially inflated to make it appealing. Then, when people start buying the token, the creators will sell all of their tokens to make a quick profit. And, in the process, tanking the value of the currency. It has become all too common in recent years. So you need to be vigilant. When people create currencies designed to be a pump and dump they will often spread a lot of bad advice around online. Making this new currency seem too good to be true.
When you see advice suggesting you invest in a new coin you should stop and check all available sources. Where is the poster getting their information from? If it’s a Reddit account maybe they have been sponsored. You should check their post history. If it’s an article you should see what sources they have cited. And check to see if the website has a history of sponsored posts.
The most important thing to do is a deep dive on the crypto currency itself. This involves researching everything about it. Including the creators of the coin and their background with technology and finance. If the coin is created by someone with no experience, such as an internet content creator, chances are the advice is bad.
So how do you know which advice is good? Well this is just as tricky as spotting the bad advice. A lot of crypto advice you will see is based on people’s hunches. Estimations on which way the market is going to swing. But, even with a hunch, you can check the validity of the advice by doing some research into the person posting it.
Let us look at Reddit. It has become one of the primary hubs for crypto discussion on the internet. Previously a lot of the more sensible voices were drowned out into the mass of people posting bad crypto advice. But websites like redaccs.com now allow veteran crypto traders and experts to boost their accounts to ensure that their voices are heard. Sites like this might seem like a double edge sword, since anyone can use them, so it is important to still check the users post history.
You want to look for the level of technical advice they are offering on other peoples posts and their own. How deep is their knowledge of the crypto market? Are they actively engaging in discussions surrounding a variety of crypto currencies and other financial markets?
Good crypto advice will also often be focused on helping you maximise your investment potential across a range of different currencies. Anyone with any sense knows that you want to diversify your portfolio where possible. To both maximise your potential profits and to avoid losing everything.