“Trade the market for what it is, not what you trust it to be.” – Rasarab
There is more to crypto trading than simply placing a trade. Just like any other form of trading, crypto trading is best-done following sound principles and guidelines
So if you are new to trading crypto, here are 64 mistakes to avoid
Failure to carry out Fundamental Analysis.
You should study the asset you are about to trade before you decide to invest your portfolio in it. Due diligence is a factor that would determine which of the two results you have.
Many inexperienced crypto traders simply start trading crypto assets based on their popularity without looking at other more important factors. Your chances of losing money are higher using this method, l. pump & dump tokens Are a good example of how popularity can be manipulated. They gain instant popularity only to dump later, causing a lot of losses.
A good method of research is Fundamental Analysis. An excellent fundamental analysis of a token would give you adequate information concerning areas like token utility, tokennomics, the future outlook of the coin, the management team or the powerhouse behind it, etc.
With these resources, you can find assets that are worth trading. you should avoid those that do not meet your satisfaction. Better to be safe than sorry.
Not Using risk management
Stop losses are the holy grail of trading. It helps you minimize and manage risks. It is there to protect your portfolio in case a trade doesn’t go in your favor. Confidence in trade is of no consequence. It doesn’t matter how confident you think you are in the trade. The goal should be to be profitable, not to be right. The best crypto trading and exchange platforms offer a stop-loss feature. This should show you how important it is.
FOMO – Fear of missing out
This is one of the biggest mistakes newbie traders make. It’s not surprising that most of the information that circulates concerning the crypto space is gotten from social media and the Web.
This could lead to major losses, as viral information could influence a massive rally of trading decisions, influencing some traders to jump in just because they see others doing so.
FOMO is caused by extensive hype, or by a sudden, fast, and continuous upward price movement, which could lead traders to invest in assets they didn’t research about. This results in a higher chance of failure than success.
A survey done in 2021 saw that 24% of crypto traders get their trading information from social media. You don’t want to be one of these people. It also showed that about 27% get their information from crypto exchanges. The survey reveals just how ill-informed some traders are. Simply relying on social media to guide your trading decisions is a recipe for failure. Posts on social media go viral simply because they resonate with what the public wants to hear. That a post is viral does not mean it is true.
Never follow the crowd in trading. Always do your research and do independent research via company websites, whitepapers, etc. trading decisions can also be better informed by looking for more objective and impartial sources of information.
No trading plan
An endeavor without a plan is on its way to failure. This holds true for cryptocurrency trading. Before you venture into trading, you must have drawn out your trading plan. Some details that need to be in your trading plan include risk reward ratio, daily profit or loss limit, entry and exit plans, and principal investment amounts.
Without a plan, you could stay on a loss-making trade for a long time, further sinking your portfolio potential. If you trade a spot, have a plan for exit and entry. If it’s futures you trade, have a plan for technical and fundamental analysis, market structure entry and exits, stop losses and take profits, and have a concrete plan for risk management.
Just as important as having a plan is, having a journal where you record your trading activities is also crucial. You could record your reasons for taking a certain trade, your analysis of the said trade, and the results of the trade.
Did the trade go your way or what made it go against you? By looking at the analysis that you recorded beforehand, you could easily spot mistakes and mishaps you could work around later.
Final thoughts
Recognizing these mistakes is the first step to overcoming them. Almost every professional and profitable trader has made at least one mistake in their trading career. These common mistakes can be avoided. Your goal should be to minimize losses, maximize profits and create your unique style.
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