Crypto trading is lucrative only if done right. Unfortunately, beginners start with crypto trading without understanding how the market works.
As a newbie in crypto trading, you have to note that it’s a high-risk venture, which means there’s a high chance of losing your capital. Although it’s okay to make mistakes since you’re just getting started, it may result in considerable losses in the long run. So, to avoid that, make sure to be aware of the following crypto trading mistakes:
1. Using Real Money Before Paper Trading
Trading is a skill, which takes a lot of patience and hours of practice to master. One of its ground rules is using paper trading before putting in real money and finding a reliable crypto exchange platform, like swyftx.com. However, most beginners who have a gambler mindset and don’t mind losing money use real money to trade before honing their skills.
What you should know is that the crypto market isn’t going anywhere, and even if you spend a few months preparing yourself with paper trading, you won’t lose anything. So, before you invest real money, prepare yourself for the real game by starting with crypto paper trading first.
2. Not Creating A Strong Knowledge Base
Knowledge is a treasure that can’t be stolen or let out. Therefore, building this kind of treasure is what beginners should do when getting started with crypto trading. However, many beginners fail to do so.
By following any trader or going through word of mouth, beginners often invest in assets without knowing the market. For this reason, most beginners end up with massive losses. In fact, in other cases, their entire investment can turn into a loss in just a blink of an eye.
3. Not Using Stop Loss
When it comes to risk management in crypto trading, stop loss is essential as it helps you reduce the losses when your trade goes south. No matter how confident you are about trade, not using a stop loss is a big mistake that beginners usually make.
Fortunately, most crypto exchanges provide this feature so that users can set a stop loss, and others also provide a trailing stop loss feature. If you haven’t used stop loss before, or you often skip it in your trades, make sure to use it today in all of your trades to avoid this common crypto trading mistake.
4. Not Having A Clear Strategy
Building a solid and clear strategy is crucial in crypto trading. Unfortunately, most newbies don’t prioritize it. Keep in mind that no profit or success can be minted without a strong strategy or goal. So, before you invest real money in crypto trading, make sure to focus on creating a strategy first.
5. Trading Many Pairs
If you’re a new crypto trader, you might be tempted to trade as many pairs as you want. However, it’s never a good idea to trade many pairs when you’re just starting with crypto trading.
Once you do that, it’ll only confuse you, and you might not be able to enhance your trading skills effectively. With this in mind, avoid trading many pairs and stick with one pair first for your first 100 trades. This won’t only help you avoid trading like there’s no tomorrow, but you’ll also improve your trading skills.
6. Panic Selling
You should have an iron stomach if you want to master crypto trading since the crypto market has many price movements. This is why one of the mistakes that new crypto traders make is panic selling when the market gets rough.
Although it makes sense to lessen your losses, they’re not really losses until you decide to sell. If you’ll just hold onto your investment, it could go up again. So, if you don’t want to lose money, you should not sell low and buy high.
7. Not Estimating Risk-Reward
If you don’t want to get into risk traders, you should start calculating risk-reward. If you’re losing one after the other, your crypto portfolio won’t be affected over time. Knowing this can benefit you greatly since all successful crypto traders consider it to be an excellent strategy to use for crypto trading.
8. Forgetting About Fundamental Analysis
Another crypto trading mistake that beginners make is trading only in one of the known cryptocurrencies. Although it allows them to gain profits in a short time, there could be instances when that particular cryptocurrency faces a drop. Due to this, it can incur a huge loss. Therefore, fundamental analysis before investing is essential as it allows you to determine your fundamental trading indicators.
Crypto trading is a great opportunity to earn money, but you might also end up losing more if you’ll just trade without understanding how it works. So, be sure to look into the above crypto mistakes that most beginners make and do your best to improve your trading skills by learning more about cryptocurrency.