by Brett Sims
Today, people are still making money through Bitcoin trading. However, the crypto space doesn’t have easy money anymore. The Bitcoin market is risky. Nevertheless, people who study and analyse the crypto market can build wealth with time.
Today, people purchase this digital currency on platforms like Bitcoin Circuit using fiat money. You can also sell this virtual currency on the platform to cash out your investment with profits or losses. Essentially, Bitcoin trading is not always profitable. You can make profits or losses whenever you trade this digital asset. What’s more, the crypto market has many traps to watch out for if you want to maximise your gains. Here are the top pitfalls to avoid with Bitcoin trading.
Stop Drive
Stop drive happens when a crypto exchange realises where a user stops. With this knowledge, the platform can hit Bitcoin’s price with a feign move to sweep up all profits. A crypto exchange can do this by selling the actual coins, thinking it will generate more revenue on the stop than it can lose by selling good coins, thereby crashing the price within minutes and repurchasing them.
Stop drive that involves selling enables you to get the coins back due to stop covering. A trader can also play this game. However, it’s the crypto exchange that plays it most of the time because it has adequate information at the right time.
Crypto exchanges that play this game don’t allow stop and leverage because it’s in the trader’s interest. What’s more, this technique enables the platforms to show users that Bitcoin trading doesn’t happen in a caring environment.
Therefore, make your stops mental when trading Bitcoin to avoid this trap. Although you can use leverage, make sure that it’s low. If you must use high crypto leverage, track all your positions.
Exit Scams
Maybe you’ve come across small crypto exchanges that play this game. The idea is to get the money during the initial coin offerings or via a crypto exchange and run with the funds. Some Bitcoin exchanges hold coins and allow users to trade with them. They can also sell the tokens elsewhere while allowing users to continue thinking they are using them. Ideally, a crypto exchange can play with the accounting system to prevent traders from noticing this trap.
Unfortunately, these scammers are not easy to track down because of digital currency systems’ unregulated, anonymous, and decentralized operations. To avoid this Bitcoin trading trap:
- Don’t keep a significant amount of tokens in your crypto exchange account.
- Withdraw your coins regularly and store them in an off-exchange wallet.
- If you notice that a crypto exchange isn’t paying out quickly or communicating effectively, dump it immediately.
Ponzi Scheme
With this Bitcoin trading trap, somebody promises investors vast profits, after which they run with the funds that traders put in the schemes. But Ponzi schemes require a lot of effort to persuade potential clients to invest. For example, a Bitcoin project can promise annual returns of almost 10% put down as the Ponzi.
The Ponzi pays previous investors with the capital of the current traders. It also requires investors to keep spinning. Thus, profits don’t come from messy businesses but the recently scammed individuals’ wallets.
The scheme collapses upon losing money, although it falls apart once the criminal behind it starts feeling the net is almost catching up with them and vanishing. To avoid this trap, stay away from any Bitcoin project that requires you to find and recruit new investors into the scheme.
Successful Bitcoin trading requires extensive research to understand how it works. Also, do your due diligence and avoid anything that seems or feels suspicious.
