As Bitcoin prices hover around $66,000 and experts continue to be optimistic about the prices going up further, cryptocurrency seems to have become the new age investment mantra. Elon Musk’s recent endorsement of the Bitcoin and tweets on Dogecoin and Bitcoin has made new investors sit up and take notice. But is crypto trading as easy as it sounds? Yes, it is. Crypto trading has become much easier with the advent of so-called auto trading bots like immediate profit. With immediate profit software, a person can easily execute the trade without any knowledge or prior experience in trading. But, the Newcomers will tell you it isn’t because the market is highly volatile and unpredictable. Crypto trades are hard to navigate and mistakes like these discussed below are more common than you think:
Top mistakes made by crypto traders and how to avoid these:
- Depending on the luck factor: If you think you can make successful trades based on luck, you are sadly mistaken. This is most common amongst inexperienced new traders who have hopped onto the Bitcoin bandwagon simply because others are doing the same. You need to spend time researching a coin’s whitepaper and understanding how the crypto market behaves.
- Trading without plan/strategy: If you start trading without following a well-defined strategy or having a plan in place, you will not be able to profits. You will find many strategies like swing trading, scalping, day trading, hedging, and hodling. Not all strategies are meant for everyone. Choose one with care and stick to it to see results.
- Buying cheap coins: Many crypto traders rush to buy cheap coins in the hope that they will turn millionaires overnight. This may be a huge blunder, landing you in big losses. You need to investigate whether you can make profits from a coin, evaluate the developer team behind the coin, the project and how it can develop in future, etc.
- Putting all your eggs into one basket: Beginners tempted to make a lot of money through crypto trading often allocate too much money for Bitcoins. In doing so, they can end up with insurmountable losses when the Bitcoin crashes, something that has happened many times in history. Instead, you must diversify your portfolio, assigning funds for different tokens and coins. This ensures that losses incurred through one asset will be compensated by profits made through another.
- Not checking market cap: You need to check a coin’s circulating supply prior to making an investment. However, most inexperienced traders don’t do this. When you trade coins having low market supply it can be dangerous. Chances are high that you will be abandoned by the crypto’s early investors. Coins with high market cap have high potential for growth.
- Following the hype: This is one of the biggest mistakes which crypto traders make from time to time. Media frenzy about a coin and talk of cryptos by celebrities can catch your attention fast. You end up making investments in haste without knowing about the coin in-depth. You will probably become a victim of the pump-and-dump schemes and end up losing millions.
- FOMO: The fear of missing out may convince you to buy coins when prices are low and sell these when prices are soaring. This is a common trading mistake because prices usually start to fall when you sell coins for a high rate. Risks are lower when you trade during times when prices are between the resistance and support levels.
So, research well and learn the art of technical and fundamental analysis to make better trade decisions. The bottom line is that you must never invest more than what you can afford to lose.