Here are 4 crypto trading traps you should watch out for.
4 Crypto Trading Traps to Watch Out For
1. Bull Trap
A bull trap is when a rapid price increase entices traders to buy the currency. However, the currency usually stabilizes, and the price goes back down. After the trap phase, the currency usually begins hemorrhaging cash.
2. Bear Trap
A bear trap is a rapid price decrease for a cryptocurrency. These are usually very enticing and encourage traders to open up short positions. However, the trap here is that the price of the currency usually stabilizes very fast. After the trap phase, you’re left holding the bag.
3. Pump and Dump Schemes
Have you ever heard of BitConnect? No. Well it was huge. It was said to be the platform that would change people’s lives with a small investment. However, it turned out to be a pump and dump scheme. Scams like that are a dime a dozen. Quite literally. $9 million are lost every single day in cryptocurrency scams. So, if you’re investing, make sure you’re doing it in an established cryptocurrency and not a ponzi scheme.
4. Trading on an Insecure Platform
Make sure you’re trading on a secure platform like Coinbase or Coinmarketcap. These are established names which have secured hundreds of millions worth of crypto assets and have tight security in place. They are also regulated and pay taxes and fines.
Without these security assurances, you shouldn’t trust an exchange with your capital.
Using this knowledge, you can be more careful about the choices you make. To learn more, you can check out websites like Liquid and Investopedia.