It is well known that cryptocurrency investment and trading is a risky process. Since we already had a look at the popular trading tips, it is time to see the most common mistakes that traders often make, and how to avoid them.
Relying on good luck
First and most commonly made mistake is relying on luck. Earning money from cryptocurrencies, without doing any work, sounds nice, but it is hard to happen without the knowledge on how the crypto market works.
Profitable trade is not a matter of luck, but a matter of skills. So, before you start, you must dive deep into the art of crypto trading. Fortunately, there are a lot of guides and tips, you just have to find the reliable ones.
Starting without having a plan
Crypto trading has to be supported with the right strategy. How do you plan to profit from it?
Actually, you can either hold it for the long term, or you intend to day-trade.
Holding the coin for the long term, means holding it for months, maybe years. Day trade means buying the coin, and selling it on the same day.
Many investors buy crypto, hoping for it to go up. And a strategy is needed for that, too.
Buying cheap coins
Many traders jump into buying the cheapest coins on the market and feel that this is the right strategy to become a crypto millionaire. Actually, it is important to look for a cryptocurrency with a high market capitalization. Furthermore, before you put your savings into a coin, you should consider if it is possible to profit from this coin, who the developers are and what is the project, standing behind it.
High broker fees
Broker fees are something crypto beginners forget about. Actually, they can eat a huge amount of their trading profits. The key here is to go for an exchange with low trading fees, and high volume and liquidity. This is the best way of gaining a profit from cryptocurrency trading.
Seeing the profit as an absolute gain
Another classic mistake crypto traders make at the beginning is seeing the profit or loss as an absolute gain and not as a percentage. It is important to look at every trade as a percentage improvement, so you can get a clear picture of the actual profits and losses.
Skipping fundamental analysis
Choosing a popular cryptocurrency and trading with it, is another common mistake often made by novices. Of course, there are chances of ending up with a good profit, but it is also possible to end up with a big loss.
To avoid this, it is better to start with a fundamental analysis of the coin. Find more information about the coin's purpose, what is its future outlook, who is the team behind it, etc.
That way you can make a list with tokens, worth trading.
Trading based on unreliable signals
It is not a secret that there are a lot of Telegram and Discord groups, providing signals for buying and selling cryptocurrencies. Well, they don’t always work.
As a beginner, it is better to avoid such schemes.
Those groups are not practical, since there are thousands of users acting on the same signal.
The reliable groups are small, usually paid, and their owner is a reliable pro-trader.
Anyway, you can always use these signals as an indicator, but not as an actual trade.
Not following your style
To be a successful crypto trader, you must follow your own style. You can see how everyone is trading differently, and there is a reason for that.
Of course, for beginners, it is normal to follow someone else's style, but over time, you should create your own unique style, and there you will see the beauty of trading.
As we can see, crypto trading is much more than just buying and selling different assets. Mistakes are an inevitable part of the whole process, but that is the way to perfect your skills and move ahead in the cryptocurrency trading journey.
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