The 11 Worst Mistakes DAO Rookies Make and How to Avoid Them
DAO, popularly known as Decentralized Autonomous Organizations, is undoubtedly one of the fascinating concepts successfully implemented through blockchain technology. They work via intelligent contacts and remove the interference of central government authority. Hence, the name DAO.
DAOs are fully public, transparent, and open. The foremost fully working DAO is considered to be Bitcoin. It has functions working automatically. But not every DAO is as successful as Bitcoin.
All the members of DAO have to agree on a particular change, or it won’t be implemented and its funding is focused on crowdfunding.
1. Lack of Stop Loss
Stop-loss allows you to lessen the volume of losses when your prediction or assumption about your trade goes the other way around. It’s okay to be confident and have faith in your anticipation but not using stop loss because you’re overconfident is a big, egoistic and silly mistake.
2. Paying More Brokerage Charges
The fees brokers charge can cost you a fortune, a portion so big, it can eat an identical amount of your trading earnings. Opt for a high-volume liquidity broker who doesn’t charge much.
3. Trading Based on Fraud Calls
Various social media groups give out data for the trading of crypto. If you’re a beginner, you must watch out for these fraudsters.
4. Trading With Real Money Before Paper Trading
Trading isn’t something you can learn from books, and it needs practice, patience, and determination. Using paper trading first is one of the ground rules. This is the most boring part of crypto yet an important and beneficial one. Here, the risk factor is high.
5. Trading Various Pairs
If you trade several pairs, it will almost surely leave you confused and questioning your own judgment. Always take baby steps; going all in for the first time can make you a big-time loss. Never trade out of excitement like there’s no tomorrow!
6. Revenge Trading
It’s just like the feeling you get if you find how your partner is cheating on you — you get rage for revenge. It never ends up good. The more you let your emotions overpower your trading skills, the riskier it gets.
Never sell an asset just because you need money. Assets could be a big boon at some point, and randomly selling them for fast cash may be a regret one day. Overtrading can end up leading you to spend a fortune on exchange fees.
8. Not Researching Your Selection
Not all DAOs are the same; some can be outright scams or suffer from vulnerabilities. As a result, you should know what you are choosing. Therefore, research the project and its founders to gain more information. You can also read the whitepaper of the project to determine if it is legit. Additionally, browse the media for opinions from the crypto experts.
9. Being Unaware of the Jurisdiction
DAOs can be spread across more than one jurisdiction. Additionally, there is no legal framework to guide or regulate their activities. As a result, any legal recourse or action could turn out to be highly complex. Therefore, always be aware of what you are involving yourself in and study the legal nuances to avoid expensive mistakes.
10. Ignoring User Comments
Users are the best sources for verifying the credibility of a DAO. Therefore, take to Reddit and other forums to find out what users and the community are saying. You can also turn to social media for the same.
11. Not Staying Updated
You should always be in the loop in the crypto world. Otherwise, you might miss updates that could influence the value of any DAO. So, it’s a good idea to subscribe to popular channels that publish crypto news.