Are you thinking of getting started in the world of crypto trading? If so, make sure you avoid the most common mistakes. You will be better than most of crypto traders by avoiding these mistakes. The interesting thing is that almost every trader makes these mistakes without even realising it. Without further ado, let's check out those common mistakes. Read on to find out more.
1. Emotional decision making
Beginners tend to trade emotionally. But the thing is that trading has nothing to do with your emotions. As a matter of fact, if you make decisions based on your emotions, you will be heading on the road failure.
2. Buying high and selling low
Another common mistake that beginners make is buying high and selling low. You don't want to get greedy while doing this business. What you need to do is buy low and sell high. This is the only way to make a profit trading crypto.
3. Selling at once
Due to the two mistakes mentioned above, beginners purchase or sell their Bitcoins at once rather than buy and sell them gradually in small quantities. If you ask an experienced trader, they will ask you to sell 20% of your Bitcoin post 50% profit. But the problem is that new traders are too greedy to sell. Therefore, they don't have the money to purchase dips. Some of them sell all of their Bitcoins at once.
4. Buying wrong currencies
New commerce purchase cryptocurrencies that make tons of promises using big words. Suggest using organisations such as Coingecko and Reddit to understand the applications as opposed to the hype you see in the media. I strongly also suggest that you don't purchase any crypto that has increased circa 200% in a few weeks as the price will fall. Place a buy order price similar to before the hype as it will more than likely reach this price again in the short term.
5. Putting your eggs in too many baskets
Because of the previous mistake, beginners tend to invest in a lot of cryptocurrencies. This is not a good idea as it can make it difficult for you to earn large scale profits. Ideally, you may want to invest in 3 to 4 coins. In the world of cryptocurrency, you cannot afford to put all your eggs in tons of baskets.
6. Putting all eggs in one basket
Another common mistake is to put all your eggs in the same basket. Ideally, you must have a well-diversified portfolio. Apart from this, you may not want to deposit all your cryptocurrencies in the same wallet or exchange. What you need to do is make use of a minimum of three wallets. This will help you protect your investment.
7. Placing a Stop Loss
Due to the volatility of crypto, I do not suggest placing a stop loss on your coins. I lived through the 2017/2018 crypto environment where the price jumped from $20k a coin to $3.8k a coin in less than 1 year. Many people panicked and sold in the red or alternatively stop losses were triggered. Many investors have avoided the crypto markets ever since due to the losses incurred. I personally held out and bitcoin has increased to $58k (Today's price).
8. Crypto Exchanges
An exchange is basically a way of transferring your government produced money i.e Dollars, GBP etc (referred to as Fiat money) to Cryptocurrency. I prefer to use Centralised Exchanges for purchasing and recommend Binance, Coinbase and Kraken as a preferred option. Please do your research carefully as there are several fake companies and scams on the internet.
9. Crypto Wallets
If you are placing large amounts of money onto an Exchange. For piece of mind, you may want to hold your coins in a hard wallet. The best way to describe this is that a wallet is similar to a USB type stick where you coins are stored in a folder. Note that you will need to understand clearly how to transfer your crypto from an exchange to your wallet as it is fairly complex. Youtube have great videos and well as Nano who can clearly provide you with step by step instructions. If you do not follow the instructions carefully you are at risk of losing your coins.
10. Exit strategy
Document your exit strategy in writing (basically a written contract with yourself) as to the price point you would sell your coins and use this as a guide when to take profits. Each of us are individual and it is very much dependent upon your risk tolerance. I am prepared to personally hold my coins for the long term as I see the potential with the projects I have invested in. I also have pulled out my original investment so my emotions are in check.
Long story short, these are just some of the most common mistakes new cryptocurrency traders make. If you follow these steps, you will be less likely to make these mistakes. As a result, your investment will be safe and you will be more likely to make a profit rather than suffer a loss. Hopefully, these tips will help you get started as a new trader and make a lot of profit.
Article Source: https://EzineArticles.com/expert/Shalini_M/2609777
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