10 Bad Habits To Avoid When Trading Cryptocurrency
You can make a lot of money trading crypto currencies. Many investors have entered crypto currencies as a result of massive gains. This can be seen as the crypto market has grown nearly $ 1 trillion over the last year. Unfortunately, not everyone earns money through simple mistakes that are easy to avoid.
Long-term traders hold their investments best; Daily traders can also be profitable in the short term, so they can increase their investments much faster.
If you’re new to crypto-currency trading or just exploring your way into the exciting new market, here are ten mistakes in altcoin trading you should avoid altogether.
Sell low, buy back higher
The market can change and cryptocurrencies can be easily manipulated. As a result, the price fluctuations are regular, and investors often get into this situation, causing them to lose money. Panic selling is common among newcomers to crypto-currency trading, especially when they first get their hands on the trade without research and when they are confronted with sharp slumps.
The problem with this technique of trading is, once you have placed a sell order, you will lose money. Although selling to cut losses is a wise decision in some cases, most coins rise again within a few days, if not hours.
“Get stuck” on a special coin
No Coin will go on forever, not even Bitcoin. They are obliged to see good days or even months and also to experience some terrible days. The crypto market is developing daily with opportunities. If you believe in a coin, holding for long-term gains would be considered the best approach to being able to make quick money you must have no emotional attachment to any coin.
With the Bitcoin price falling from its all-time highs of $ 19,900 to under $ 8,000, the best approach would be to stay in the long term. However, there are many traders who sold it between $ 10,000 and $ 20,000 and bought it back down between $ 6,000 and $ 10,000, thus earning some extra profit in BTC.
Even though the price of a particular coin may peak as a result of a major announcement, it is easy to double or triple your investment in this way. Although you need to check the price and the development to make sure that the price increase has not already occurred. Otherwise, you can lose money and feed the “whales”.
The cheaper, the better
A coin under $ 1 does not mean that it’s the best time to invest in such a currency. While it is true that a coin at 5 cents could easily turn out 20 cents in a short period of time, compared to a coin at $ 100 that turns out to be $ 500. A $ 0.05 Coin could be worth a penny, which will lose part of your investment.
The most important thing is not to buy a coin because they are cheap, which does not guarantee profitability. It is important to find out why a coin is cheap and what developments are imminent that promise a price boost in the near future. Not making this mistake will save you from constantly losing in crypto trading.
Looking for the next big coin
Last year we saw Bitcoin go from $ 1k to $ 19,9 k, which is pretty impressive. Also Ethereum and Litecoin have massively increased. It is important that not all coins make such profits.
Due to the large supply and some other factors, some coins are regulated to certain prices, an example of such a coin is ripple. Investing in such coins and hoping to make over 2000% profit is not a good idea.
As a trader, it is important to have a deep understanding of every coin you trade; this includes the price development and future forecasts. This will give you a better insight into the proper planning of your business.
No need to track current events in the crypto market
Technical analysis is never enough if you want to be successful with crypto currency trading, you need to keep track of cryptocurrency news and keep up to date with current events / developments. The crypto market is very speculative and fluctuates to both negative and positive events. To be a successful trader, it is very important to get informed.
Invest all you have at once
This is another expensive mistake that newcomers make by investing everything they have in a given coin. If you find a real place to buy your favorite coin, you will have to buy with a percentage of your money, up to 50%, then keep the rest to see if that coin falls after your purchase. When that happens you will have more to buy the dip. On the other hand, if there is a continuous increase in the price after the purchase, you can place more and more buy orders as the market continues its upward trend. This secures your trades and prevents you from moving all in to a position that goes in the opposite direction. This is especially a problem when you do margin / leverage trading.
Crypto Margin trading has its own risks
If the price goes against you, you get liquidated – no matter if the price rises 5 minutes afterwards. Your whole trading portfolio is gone- forever. Many traders make this mistake and end their trading career forever in a split second. Don´t be that trader. Read some guides about margin trading before you lose everything. A good guide for margin & high leverage trading can be found here: https://www.bestbitcoinexchange.net/margin-trading/
See a great opportunity in every coin without doing any real research
Each newcomer joins a telegram group or follows a top crypto trader on social media for signals. While there’s nothing wrong with that, it’s also important that you do your research. There are tons of people who promote coins and market movements across various social platforms for their profits.
If you listen to these people and invest your money in these coins, you will probably lose your investment. Most of these guys are paid promoters who generate unnecessary hypes to get many people to buy what they sell.
Proper research is essential before investing in the crypto currency market. You must understand the use case of a coin, the price movements and the stage of development of such a coin. Investing in a coin as a result of the price movement is very catastrophic.
Invest all you have in one single coin
Even the best coins have experienced significant collapses while other coins remain green. Crypto-currencies are unpredictable, no altcoin, also Bitcoin, is guaranteed in the long term.
If you are a long-term investor or just a day trader, you can not afford to put all your money in one coin. Investing in multiple crypto-currencies is the key to successful trading and finding good entries in different coins will increase your profits. You can find tons of tips about that here.
Not knowing when to get out
Now that you have bought a coin for a reasonable price and have made a considerable profit, the question now arises: What now? Most newbies do not have any points to profit from the market. They hold the coins as the market goes up and up, waiting to lose all the profits they have made over time, and will have to hold on until everything is gone or everything goes up again.
This plan can be nice if you are a long-term investor, but when you trade you have to have a point where you sell something for profits. Although you can see that the price is rising continuously, this is expected. However, a good strategy is to sell in stages rather than at once. That way, you’ll get some profits right away and still benefit if the price goes up.
No basic knowledge of technical analysis
Many traders consider technical analysis / understanding of price action to be complicated. There is no doubt that market movements and coin prices have patterns that, once identified, can be used to increase the chances of successful business.
Although there are no guarantees in the crypto market and in the highly speculative and emotionally driven market, charts sometimes fail.
However, anyone serious about trading in the crypto currency market is critical in understanding the basics of charts such as candle formations to determine levels of support and resistance.
As a basic requirement, you should understand the levels of resistance and price ranges that a coin has fought or has not breached. Support zones, on the other hand, are areas where prices pick up again. Identifying these points on the chart will significantly improve your trading.
Trendlines are also fairly straightforward, displaying higher highs and lows, and a downtrend is indicated by lower and lower lows.
