Cryptocurrencies are the digital assets, and the crypto trading means buying, selling or holding of the cryptocurrencies with another crypto. Basically, in the crypto trading, you trade with different sets of cryptocurrencies to generate profit from short, medium or long variations in their price.
Crypto trading is not as easy as it seems to be. You can either generate a long series of profits through the trading or can lose everything in a short interval of time.
Crypto trading is a long process and requires time to understand each and every aspect of information related to crypto trading. There are many things which people do wrong while trading in crypto.
In this article, we have disclosed 15+ mistakes that people commit while trading in crypto.
1. Blindly Trading without a Trading Strategy
Crypto Trading is not a gamble, where you Trade and wish your luck will shower money on you. Crypto trading requires a proper strategy as there are many things to look for before making a move while trading.
Before trading, Trader should understand each and everything about the trade Chart and most importantly the market. Market analysis is very crucial before stepping into the world of trading.
Crypto Trading requires a formulated and determined strategy, to stay in this field. Many traders who made money while trading cryptocurrencies, had just not blindly been into the market and tried their luck; instead, they used a proper technique and strategy to be in this business. An ample number of strategies are available in the market; the only thing one can do is to find one best strategy that suits the market and apply it and start trading.
2. Crypto market research
Having a good strategy is not all one needs while trading. Traders also lose their money even after having a proper strategy. The main reason behind losing the trades is the lack of Market Research. The market has its working dimensions, and before entering into the trading zone, one needs to accurately and adequately examine the market and then accordingly act while trading. Many Bitcoin traders have committed the same mistake and lost their Bitcoins.
Crypto Trading strategies work according to the market. Sometimes just for the namesake, the trader does the market research without detailing it and end up losing the trade. Market Research and the trading strategy works side by side. If you have a good strategy, but you lack market research, then most of the times, you will lose the trade. However, if both things are appropriately understood, then there are very fewer chances that one will lose trade.
3 Trading Groups, and Channels
The most important thing while doing Crypto trading is to stay away from social media Groups, and Channels who claim, that they know the market and they will provide you signals. However, never trust them; they are there to confuse and misguide you. Most of the social media and channels who provide signals make you trade randomly resulting in losing.
These kinds of groups are started by people who can’t make money with their strategy, so they sell signals to people to make money. Never trust these groups and channels and only trade with the strategy you have, because there are no such things as easy money.
4. Investing all you have at Once
Crypto Trading is not a gamble. One has to properly make a proper investment plan to be in this field for the long run. The investment plan is a very crucial part of Crypto trading. Trading cryptocurrency is highly uncertain and volatile. However, the traders don’t realise that the Crypto trading is all about managing their investment so that they don’t lose their lump sum of money in a single stroke.
Rather than investing the massive amount of money in a single stroke, the trader should make properly distribute their investment. Properly distributing your money in different currencies will help you to make good profit from different coins.
5. Emotional Attachments to Cryptocurrency
Cryptocurrency value is bound to be uncertain; each day there are fluctuations in almost every Cryptocurrency. Some traders are very attached to a specific coin which is not good.
With a sufficient number of Cryptocurrencies in the market, you should take note of the price chart of the Crypto coins before trading them in the market. Attachments with coins will only hold back the trading, and as a trader, one should have a deep understanding of the coins, which includes price history and future predictions about the currencies. This will provide in-depth insight into planning for further trades.
6. Emotional trading
All Crypto and Bitcoin Traders Should not let their emotions influence their trading. Most of the time, a tremendous amount of money is lost just because of emotions that played during that time. To trade successfully, one should keep his emotions at bay and have his full attention to the strategy and the market.
While trading you should never fear about the losses encountered because it will hamper traders upcoming trades which you about to take. The only thing that should matter while trading should be the strategies and the market; a trader should not let their emotions influence their trading.
7. Fake Crypto Experts
Believing in fake articles and rumours is one of the biggest mistake traders do. Traders get influenced by the news and predictions on the internet. Many fake experts claim to have a significant amount of knowledge about cryptocurrencies share their predictions and news about coins which misleads the traders.
The trader should always trade based on his research and not on someone else’s guesses. A trader should avoid news from such fake experts. They should trade only after analysing the market trend and following their trading strategy.
8. All eggs in one basket
The one thing a trader should keep aside while trading is greediness. The most common mistake a trader does is investing all his capital into one single coin expecting something big might happen. The crypto and bitcoin trader should strictly avoid this as once the Crypto start slumping, the trader loses everything.
A trader should divide his capital into various Cryptos and plan his trade accordingly rather than investing all in one coin and losing everything.
9. Pump and Dump
Another thing which you need to avoid is pump and dump. This usually happens when crypto coins are overhyped on the social media and people start buying them, which ultimately leads to pushing the price of the, and once it reaches its spiked limit, people sell off their coins which then creates the dump situation.
During this pump and dump situation, traders should avoid trading as it shows the most unexpected fluctuations in the market and most of the time the trades are lost by the traders. Never trade whenever there is any news about the overhyped coins as it will hurt your investment.
10. Trading and investing are very different
Although Investing and trading are closely related, they have different agendas related to cryptocurrencies.
Investment is a long-term process wherein people after a detailed and formulated analysis buy the crypto coins and are not concerned with the short-term analysis. After analysing the price charts and its future predictions, investors buy and hold off their particular crypto coins for longer terms. Investors ought to stay in the long run despite the current situations of the cryptos in the market.
On the other hand, traders are in the for the short-term goal. Traders work according to the current charts and accordingly trade in the Crypto pairs. Traders goal is only to trade daily with their cryptocurrencies and generate their income. After a detailed analysis of the current market, they accordingly plan their strategy and play in the market. So decide properly what you want to do in the crypto world.
11. Crypto risk management
As a trader, the priority should be to protect the capital. Many traders lose their money and quit trading, just because of their lack of risk management. So, the first step for a trader should be to strategise their risk management strategy and accordingly trade in the market.
There are certain things, which can help manage the risk while trading, like starting the trade with a small amount and moving slowly with the market. This will help the trader to be in the long run in the market. Having a proper detailed plan about the strategies can also reduce risk management. If you are winning a series of trade continuously, stop losses should be used to reduce the further risk of losing trades. If the market moves in the opposite direction, then stop loss will be there to protect your account. The trader should have a proper plan, and risk management should be the priority before stepping in the trading markets.
12. Unsafe Crypto Exchanges
As Cryptocurrencies are getting mainstream in the market, protecting and keeping them safe is one of the toughest jobs. With the increase in the Cryptocurrencies hacks, threats of losing the investment are increasing day by day. So selecting a safe and trusted crypto exchange is very important. Before funding your account in any crypto exchange make sure you check the history of the platform and also its reviews. This will help you analyse how safe the platform is.
13. Understand the market trend
Market research and analysis is the most vital thing before entering in the crypto trading. Formulating past trends and price fluctuations can give ideas about the future volumes and price trends which can help the trader to plan the next move to trade appropriately. In simple words, what has happened in the past with cryptocurrency market trading trends can hint the trader about how the market trend will move in the future.
Analysing market trend gives traders a set of ideas about the market, based on the data. The trader should decide his next move. Researching about the coins and its trend will help you make a proper decision. Coins should be thoroughly researched before trading.
14. Avoiding major crypto news
News plays a significant role in influencing the price of any crypto currency. The cryptocurrency market is a hypothetical market. It responds to every positive and negative news, and not following them regularly can lead the trader to lose their money.
Cryptocurrencies are very volatile, and not following the news in the current market can probably make you lose the trade. So being aware of the current news is very important. Major News can help the trader to plan his strategy accordingly.
15. Revenge Trading
To be a successful trader, control on the emotions is essential. Most of the times, due to an emotional breakdown, Traders tend to take wrong trades. While trading, emotions should be kept aside and the thing which should matter are trading strategies and data from the market.
Revenge trading starts with negative emotions. Revenge trading generally happens when we lose some trades and we panic.Traders start thinking about how can they lose so many trades and during that phase, we keep on trading until they win. This thing should be avoided as it will only lead to the downside. Trading should be done with technicality and statistics rather than human emotions.
16. Securing your Trading account
Securing the trading account is very important for the trader, as the account will contain all their respective capitals and all their trading information. Reputed brokers should be chosen to safeguard the account and secure their data appropriately.
Many times, the trader’s account gets hacked, and all the capital is stolen. The trader should keep his passwords and Ids changing continuously to make the trading account secured. Never share the details of the account with anyone. Securing the account should be the priority of the Traders.
17. Trading without any target
Trading requires a proper plan and goal. The trader should target a particular milestone before entering the platform. Without any target, the trader is likely to achieve that specific goal, that has been planned earlier. Target sets a sense of motivation, which leads the trader to work according to the target. Many bitcoin traders have invested their money without any specific target.
Once the target is achieved the trader should plan for the next goal, which ultimately boosts the confidence of the trader and simultaneously sharpen his skills. So, having a target while trading is very important.
The crypto trading has benefitted many people in making a profit, provided they acquired each and every information about the specific niche of the crypto market. The crypto trading will either make you money or will make you lose it, depending on the level of knowledge you have about the market.
All the points mentioned in the article will help you avoid mistakes, and if correctly follow the points mentioned in this article you will start making good profits in crypto trading.
Article written by Shre from https://xcryptomarket.com/