The NFT market can be extremely volatile since blockchain-based assets are highly speculative. However, many still opt to partake in NFT ‘flipping’, a loose term for buying low and selling high. Flipping NFTs is a high-risk, high reward. Many have made millions trading tokens, however, many have endured huge losses as well. While the art of flipping NFTs requires specific skills, the route to victory varies depending on the trade. Here are the top 10 mistakes flippers make, and how to avoid them.
1. Don’t get attached to your NFTs
When flipping NFTs, traders should be stone cold. Do not get attached to your NFTs or trade with emotion. Flippers have suffered because they traded with their emotions rather than their minds, resulting in large losses, missed profits, and wasted opportunities.
4 emotional moves I made that constantly lost me money in NFT’s:
1. Buying after a huge pump
2. Selling on a dump despite my thesis not changing
3. Not taking profit (My mutant was once worth $250k )
4. Not converting any profits to USDC
Emotion loses money 100% of the time
— NFT God (@NFT_GOD) June 25, 2022
2. Profit is profit. Once a trade happens, don’t look back
A feeling that traders carry with them is regret. Once an NFT is sold and the trader profits, the sold asset may skyrocket in value, leaving traders with an intense feeling of FOMO. Looking back at past trades affects your mental state, and eventually plays a role in future flips. Many will make the mistake of buying back into the collection to hopefully catch the runaway train, however, will the trade likely end in the red.
3. One W makes up for all the L’s
Traders often beat themselves up for losses in the space, however, don’t realize that one trade can compensate for all the losses. If flippers practice risk management and cut their losses at between 10% and 20%, large profits can be made through game-changing flips.
4. Be careful about which alpha group you join
Many alpha groups are either consistently wrong or use their members as exit liquidity, leaving flippers holding the bag. When choosing which alpha group to join or which pass to purchase, research and check the track record of both the project and the alpha caller.
Always verify any leads coming from your alpha group. Being the founder / researcher / mod in an alpha group doesn’t mean they always right. Too many alpha calls nowadays & the success rate is very slim. Be careful! Dont get FOMO!#nft #NFTs #cryptocurrencies #opensea #Etherum
— GOKU (@itsrealgoku) March 23, 2022
5. Giving in to FOMO
One of the most common issues flippers face is FOMO. After a trader has already exited their position, they may feel inclined to re-enter the project if it moons in the hopes of making a profit. However, it’s a risky play because if traders enter at the top or near the peak, they could lose most of their money.
An NFT project just declined 40 ETH in floor price in 3 days.. FOMO is a serious drug, be careful out there .
— Ameer Hussain (@AmeerHussainn) April 26, 2022
6. Not using tools, charts, and proven data
Trading blindly leaves a lot of flippers wrecked. Invest in trading essentials such as icy.tools or NFTNerds. When trading without tools, traders leave themselves exposed and unprepared when dealing with volatility and new projects. Without data, it’s impossible to view trends and predict volume, meaning you are solely trading based on intuition, the equivalent of gambling.
7. Sell during negative price movement
Practice risk management when trading. If the volume and the floor price surge, be prepared to sell. Greed hurts a lot of flippers as they endure dumping floor prices and poor volume with the hope of seeing skyrocketing prices.
8. Being greedy
Many flippers refuse to take profits since they believe their bags will continue to pump. However, most of the time, the trade will fall after a price surge, meaning the flipper will hold an unsellable token, leaving possible profits in the past.
9. Not having a plan
The most profitable traders always have a plan before entering a position. They know whether they will hold for a long, medium, or short period and when they will exit the play. Their plan is clear and they set a clear cut-loss point. Practicing good risk management is of the utmost importance.
NFTs are cool but there’s a lot of flipping activity. Feels like game of musical chairs for so many of these drops.
My approach to buying NFTs is:
1. I like it
2. I like the creator & what they stand for
3. I plan on holding & enjoying the pleasure of seeing the NFT
— Santiago R Santos | #9159 (@santiagoroel) August 14, 2021
10. Waiting For The Bounce
A common mistake amongst traders is waiting for a bounce. Many flippers hold bags that are diminishing in value in anticipation of a bounce that often never arrives. As the NFT continues to fall, they are left with a worthless JPEG.