Humans. We’re a fallible sort to begin with. Add in any type of speculation that has to do with money, pride, greed, anxiety, or other base emotion and that truism becomes all the more apparent.
When it comes to crypto trading, mistakes are a regular and acceptable occurrence. Prepare to make them, just try not to make them more than once. Here are five of the most common mistakes that are made by crypto traders.
This one holds especially true for new traders. Choosing the wrong exchange early on can be detrimental to your entire investment game for years to come. It’s important to learn the market early- as cryptocurrencies are always the same as traditional tradable assets.
Get an exchange that is tailor-built to help guide newbies in understanding the markets. There are a ton out there, but places like Bitvavo are perfect for anyone who is unfamiliar with how crypto trading works. As they provide a comprehensive guide to ensure you’re making the best choices early on. Shopping around too much to find the right price can actually serve to play against you, as you’re actively supplying brokers with advantageous information.
This is something that affects traders of all levels. While it’s important to be hyper-vigilant when it comes to market trends and what’s happening in the world surrounding BTC and other cryptos, checking too often can lead to other issues.
Watching every dip and drop the market makes oftentimes leads to emotional trading, which can then cause you to fall prey to impulse trading. Giving rise to panic and trade euphoria. If it goes well once, you’ll assume you have a full dial in on the marketplace and will make hasty decisions should you see similar indicators. Rarely is this beneficial to a trader.
Panic can also easily set in due to the inherent volatility of crypto markets. As the markets take extreme bearish turns, they also tend to recover quite quickly. If you’re constantly keeping a watchful eye on every turn, you’re much more likely to trade based on small windows and quick over turns.
Fear of missing out, or FOMO, is a trader’s worst nightmare, but something that can easily befall anyone. Especially when it comes to crypto markets, lulling traders into the belief that they should be buying during the obvious and often bullish swings. Only to find that they lose out on quite a bit of money when the market dips accordingly.
Fear of missing out can also see traders holding out on trades they should be making, waiting for lower or higher prices, that never actually come. When it comes to crypto- these massive and regular swings in the marketplace are what make these types of trades not only exciting but also incredibly lucrative. Bitcoin markets are exceptionally stable in one area only- and that’s their inevitability. Cryptomarkets will always be there and the ideal trade is sure to come your way, so don’t FOMO.
This particular mistake is exceptionally common amongst traders that may be well versed in traditional markets, but are new to crypto. Unfortunately, many of the indicators that work famously in traditional markets, aren’t quite as good with their predictive powers in crypto markets.
Certain candlestick patterns, oscillators, and cloud patterns that work well on NASDAQ may not serve you so well for crypto. This is largely because of the way the market behaves. In the grand scheme of things: crypto markets are still fairly new and constantly emerging and evolving. Meaning that the decades of complied data that make these indicators so useful in traditional markets may not directly apply to crypto behavior.
It’s fairly common for new traders to immediately jump in and create a massive portfolio with hundreds of Altcoins and cryptocurrencies. While it’s a great idea to have a few pairs, and put your finger into a couple of different promising pots, the “spray and pray” method is woefully ineffective.
This is largely because there are literally thousands of altcoins in existence, few will ever see more gains than a pittance. It’s recommended that traders start with one or two coins or tokens that they feel good about. This allows the trader to really focus on what those markets are doing and can get a good idea of where projections will be reasonably headed.
Understanding not only the crypto you’re purchasing, but how the underlying technology that any given token or currency supports is paramount to understanding market behavior and making reasonable projections. With any more than a handful of different coins, this becomes quickly confusing and counter productive.