Making mistakes while trading crypto is very common among beginners. If you avoid these mistakes, they are not hard to correct. As we are all impatient to gain more, it is much better if you fix them as soon as possible in order to enhance your trading experience.
Before getting into the market, it is important to study, learn, and understand the fundamental reasons for getting into the market. The first thing to do is to understand that all markets are not the same. The cryptocurrency market is different from global financial markets in that regulation is not implemented and it lacks proper supervision by the government.
Guessing the future of the market can be dangerous and may lead you to make wrong decisions. Before placing your trade order, you should know how far you can bet on a certain digital currency. Only trade if you are sure of your position while placing your orders because losses in cryptocurrency trading can be huge.
Table Of Contents
- 10 Big Cryptocurrency Mistakes to Avoid
- 1. Lack of self-control
- 2. Not putting stop loss orders
- 3. Not knowing about technical indicators
- 4. Not having a risk management plan
- 5. Not going for small profits first
- 6. Trading with money you cannot afford to lose
- 7. Following emotions to make trading decisions
- 8. Not planning the trade
- 9. Putting All Your Eggs in One Basket
- 10. Trading against the trend
10 Big Cryptocurrency Mistakes to Avoid
1. Lack of self-control
Understanding the market and knowing how far you can win is important, but you need to have self-control in order not to get greedy. As most people start trading with small capital, they tend to keep on increasing their positions. As a result, this leads them to make mistakes. You can end up losing your hard earned money if you are not cautious enough. You should have a clear idea of how much you have invested from the very beginning, in case it’s a significant amount.
2. Not putting stop loss orders
The best way to protect your investment is to put in stop loss orders when trading crypto currency. As it is the nature of crypto trading that there are ups and downs in price, you need to be ready to protect your investment if the market moves downwards. The moment a trader takes a profit, he can set a stop loss order at a certain level where he can smoothly exit the trade without any losses.
3. Not knowing about technical indicators
Technical indicators such as moving averages, MACD, and Bollinger Bands are very important in cryptocurrency trading. They can help you understand the market conditions and predict the trend day by day. To use technical indicators effectively, you must have an understanding of them before starting trading on cryptocurrency exchange platforms.
4. Not having a risk management plan
As we have already discussed, the crypto market can be very volatile. Therefore, it is essential to have a proper risk management plan. If you already have an investment strategy and know about trading psychology and its basic rules, you should start trading. Also, make sure that your trading capital is sufficient enough to cover all your expenses if something goes wrong.
As it is very common among traders, they tend to avoid calculating risk management as they only focus on gaining more profits from trading cryptocurrency. If you are not taking proper risk management, you could lose all your money very soon.
5. Not going for small profits first
It is advisable to take small profits in a short time frame rather than taking big profit in a long-term time frame. As the crypto market is very volatile, most traders need to trade on short-time frame charts to profit from the price changes of coins.
6. Trading with money you cannot afford to lose
It is true that you must invest money to make money in the crypto market. However, you should invest money that is not a part of your regular income or that you can afford to lose.
7. Following emotions to make trading decisions
Trading decisions should be based on careful analysis and research. Do not trust any random source of information without verifying it. It is always better to wait for the market to prove your assumptions right or wrong than taking quick decisions.
8. Not planning the trade
Before entering the market, you need a strategy and a set of rules that you can follow to succeed in crypto trading. You should have proper knowledge about what you are doing and what you are expecting in return before jumping into the market.
9. Putting All Your Eggs in One Basket
You need to diversify your portfolio. It is not good to put all your money in the same coin. Diversifying your portfolio is important, because then you will be able to take profit off of multiple coins when the market goes up.
10. Trading against the trend
Always follow a certain direction on the chart rather than moving against the market trend to make a profit from it. The market will always go up or down, and you should be able to analyze that to make better predictions of how it will move, because if you catch the trend, it will result in huge returns.
Crypto trading is quite similar to conventional currency trading. For instance, the way stop losses work in crypto exchanges is exactly like how they work in global financial markets. As there will be ups and downs, it is much better if you learn how to handle them properly in order to safeguard your investment and start making profits every day.
Cryptocurrency is getting more and more popular with each passing day. The most important thing you should remember is not to get involved in something which you are not well-informed about. Use the 10 common mistakes to avoid them and start trading safely. You can also read our article on How to Buy Bitcoin anonymously(Without ID Verification)
After reading this article, you should be able to understand some of the basic mistakes that beginners make while trading cryptocurrency. It is important for you to find out about these mistakes yourself before making them and impacting your performance in the market. As all markets are different, it is important for you to have a complete knowledge of the market before taking your next step towards trading cryptocurrencies.