Crypto trading is far from easy. So far, there isn’t a rule book or dependable strategy you can follow for success in cryptos, as the digital currency market is still fairly new. Everyone, including those who’ve been trading in cryptos, are bound to make crypto trading mistakes, although that doesn’t mean you can make glaring errors and get away with it.
There are certain crypto mistakes that you simply can’t make unless you want to grow poor. This article will give you a lowdown on the 5 worst trading mistakes you should avoid in cryptos.
1. Having no plan
Many people enter the crypto market thinking that it is a get-rich-quick scheme. The truth, however, couldn’t be further from that. Cryptos are like stocks, in a way; the only exception is that they’re more volatile. But, you can counter the volatility by having a sound trading strategy. So, it is essential that you have a plan in mind when operating in the market. Not having a trading strategy after pumping thousands of your hard-earned rupees in the market is a disservice to your hard work. So, ensure that you build a trading strategy and adapt it according to the market conditions.
2. Not analysing enough
Many new crypto traders avoid fundamental and technical analysis before making an investment. It is another glaring mistake that you should avoid if you want to make returns trading cryptos. There is enough data in the market that you can use to conclude the long as well as short term future of a currency. Start by learning what a currency does, what is its future outlook, who manages it, and what is the token economy. Use these parameters to create a list of tokens that you would like to trade. You can, alternatively, use various analysis tools.
3. Being too ambitious
While we understand that ambition is the reason why people come to cryptos, it also pays to be realistic and not too greedy. Risk and reward go hand-in-hand when it comes to cryptos, so it makes sense to apply upper and lower limits. Ensure that you don’t lose too much when chasing profits by adding stop losses. It will help minimize the losses when your risky bet doesn’t come off. Not using a stop loss can undo all the good that you’ve ever done in the crypto market. Almost all the best crypto exchanges offer this feature, with some even allowing trailing stop loss.
4. Trading on “calls” and “tips”
If you buy and sell cryptos based on tweets from Elon Musk or “calls” from Discord and Telegram groups, you are bound to fail. No one can predict how the market is going to behave, so following a random person isn’t sensible. Always trade when you feel the timing and price are right. This will make you a better trader.
5. Paying high brokerage fees
The lack of market regulators gives crypto trading platforms the freedom to decide their brokerage fees. Many of them exploit traders by charging insanely high brokerage fees. In order to avoid falling into the same trap, study the brokerage fees of various platforms before making your choice. Binance and CEX charge the lowest fees among all brokers.