Be you a “newbie” or “oldbie” there are some crypto trading mistakes you will want to avoid this year… in fact at anytime altogether. There is the common trading saying “buy low, sell high” that almost everyone knows but not everyone practices. Actually most people tend to practice it at the start of their crypto-trading careers until they get caught up in the FOMO (Fear of Missing Out) and FUD (Fear Uncertainty and Doubt) and they totally forget about this very potent advice.
Some seasoned traders might scoff at some of the guide lines about to be listed here but learning from mistakes of rookie days and trying as much as possible not to repeat them is what makes a great and outstanding crypto-trader.
Avoid P&D’s – one phenomenon of the crypto-trading world are the Pump and Dump (P&D) activities that occur. This is mostly perpetuated on lesser known coins with low volumes by a few individuals with deep pockets (whales) who are capable of ensuring wide swings on these lesser known cryptocurrencies in order to cash in on a windfall. Seeing a decisive green candle stick shooting confidently northward is usually a beautiful sight to behold for especially for traders who were able to make purchases at the bottom, but it is usually wise to avoid buying a coin when its charts are showing a consistent upward movement within a particular time frame because you just might be buying at the top as the currency prepares for either a natural dip or a dump by whales who had previously pumped it up for profit.
Sometimes buying a coin during its upward movement might pay off sometimes because it is yet to reach saturation point at that material moment and might still have more gas to jet it up, but it is usually rare – especially for day trading.
Avoid Setting the Wrong Price – Some seasoned traders might not want to admit this but it is quite easy to misread or mistype a decimal point or number of zeros. You could set your sell order ridiculously low because you misread the market or made a typo and by the time you realize the mistake or before you are able to correct it, another trader sees the walking opportunity and quickly snaps up your trade and viola you’ve just made a loss or far less profit than you could have realized. For example, you could have placed a sell order at 0.0005 BTC instead of 0.005 BTC and that one extra zero can cost you significant funds whiles another trader smiles all the way to his or her wallet. Try to double check your “sell” and “buy” orders every single time before a trade order is placed.
Avoid Sending the Wrong Coin to the Wrong Exchange or Wallet Address – There have been instances when people have mistakenly sent the wrong coins to the wrong wallet address and have lost funds. For instance, it is possible to send bitcoin to say a bitcoin cash or bitcoin gold wallet. It can also happen that Ethereum could be unintentionally sent to an Ethereum classic wallet or some other digital currency or asset with close-resembling names. This mistake could mean that you have lost your coins forever; unless the wallet or exchange service provider where the receiving address is domiciled has a super-responsive customer service team and even with that, you will have to go through some hassle to get your coins back. It is also very important to make sure that you do not have mining pool rewards paid to your exchange wallets – this should be avoided at all cost.
Avoid Markets with Little or Low Liquidity – It is important to note crypto-coins with relatively high volumes and stick with those. For a coin to appreciate in value there must be a crowd of potential buyers to drive up demand. If you go on owning lesser known coins or trading on small exchanges, you might get your capital locked up. And in the eventual case that you get a buyer, the price offer might be lower than your expected cash-out point.
Do not Overtrade – Trading excessively has the potential of spoiling the gains you have made – some people might disagree, but this is quite true. The temptation to overtrade can be quite high especially when you are new to trading and you are making all these profits. For example, as a newbie to crypto-trading, you buy a coin and the next day you realize it has appreciated northwards of 20% in value, you might want to quickly cash out and take profit, but then again, if you had probably held on a bit, you could see that coin witness higher and more astronomical increase in value over the next couple of weeks to months – several coins on the cryptocurrency markets have seen value growth in the thousands over the last couple of months to years.
It will be quite naïve to sell an asset only because you have realized profit when there is a possibility for greater gains. It could be quite frustrating seeing the market climb higher after taking profit at a low market point. Taking little gains and re-entering the market in a consistent cycle will only see profits get eaten up as a result of exchange fees.
Avoid Emotional Trading – One sure way to losing money is trading with emotions. You are probably angry that you missed out on buying a coin before it mooned or maybe you lost a trade bet on a coin as such you intend to pile up the rest of your entire funds into another with the hope of making windfall profit – this should never be a trading strategy. Despite human nature, emotions in crypto-trading should be avoided as much as possible. Trading should be informed by the right Technical and Trend Analyses (TA’s). Detaching emotions from trade transactions gives better and objective perspective which is an important tool to making profit.
Shun Overconfidence – Confidence is good, but being overly confident and throwing caution to the wind by virtue of previous successful trades is something to avoid. Overconfidence could lead to one ignoring market signals and just placing trades based on hunches. This could work sometimes, but there is a high probability that such trades transactions based on sheer whims and caprices will likely lead to loss of funds. It sure is important to have self-belief and even sometimes advisable to go against the markets, but too much of this can be detrimental in the long run. It is important to perpetually study and read wide since the cryptocurrency world is a fast moving and changing one which could leave one rusty if continuous education and research are left to chance.