Trading is not something new; this concept has been around for decades, but crypto trading is still relatively new. After all, the first cryptocurrency hit the market about a little more than a decade ago in 2009. Bitcoin started it all and now it is one of the fastest-growing financial markets that can be found. Even during this short time span, there are a number of people who have managed to make solid returns via cryptocurrency trading and this is all because of the asset’s volatility. Nonetheless, you have to remember that this also comes with risks.
A key part of trading is to learn from mistakes and blunders, but they don’t necessarily have to be your own. In today’s age of information and awareness, you can find out the common crypto trading blunders people make and then avoid them. What are these? You can check them out below:
Lack of trading plans
A lot of people end up jumping on the crypto trading bandwagon because they are eager to follow the ongoing trend. However, this can actually turn out to be a mistake because you will not have a proper trading plan in place. This means that you will not have focus and will be trading erratically and recklessly, which is a recipe for disaster in a market like cryptocurrency that has become renowned for its unpredictability. Your trading plan should involve allocating your capital to different cryptocurrencies, some for trading right away and others for holding, as this can help you balance the risks.
Fear of Missing Out (FOMO) is another blunder that can bring down the most successful crypto traders. Everyone is emotional, but it is something you need to keep in check during trading, or else it can set you back in the long run. If you are following a crypto and it shoots up suddenly, you would immediately want to buy. But, before doing so, you need to evaluate and determine if this is a short-term increase, or the beginning of a larger price increase that will go on. Likewise, there are other factors that need to be considered. You have to follow the same thought process to avoid panic selling as well.
After you have decided to open a position, you need to stick to your trading plan. You should be confident about the trades you have made and you will definitely benefit, if you have followed the rules. Consider the profits you want to make from a position and once you do, it is best to safeguard it by selling some of this position. Don’t play the in an out game with a cryptocurrency, which means buying and selling repeatedly because this also increases your cost. Your goal should be to buy low and sell high.
Cryptocurrency projects also have a dark side in the form of scammers. They come up with get-rich-quick schemes that are difficult to resist for anyone because they are offering such high returns in a very short time period. But, this should act as a warning sign and you should learn to steer clear of any such promises. These schemes prey on the greed of people to make some quick money.
Trading on a bad crypto exchange
You can find a ton of cryptocurrency exchanges operating in the market these days, but not all of them can offer you the same quality of services. Do not sign up on an unheard exchange, just because they are promising a low fee, or offering something similar. This is a big mistake because you may not be able to find what you are looking for and end up making a bad deal where your trade is concerned. Be thorough and look for a decent and professional crypto exchange that can give you a well-rounded and comprehensive solution for trading different cryptocurrencies.