The Top 8 Cryptocurrency Trading Mistakes
Avoid these Trading Mistakes
“You’ve got to know when to hold ‘em
Know when to fold ‘em
Know when to walk away
And know when to run
You never count your money
When you’re sittin’ at the table
There’ll be time enough for countin’
When the dealin’s done
Every gambler knows
That the secret to survivin’
Is knowin’ what to throw away
And knowin’ what to keep
’Cause every hand’s a winner
And every hand’s a loser
And the best that you can hope for is to die
in your sleep” -Kenny Rogers The Gambler
Studies report up to 95% of crypto traders lose money.
In this article, we examine the reasons almost all crypto traders quit within a year.
There are 4 basic types of trading, including day trading, swing trading, position trading, and scalping.
We feel traders should limit a minor amount of their portfolio to trading, with the sheer majority in long-term holds.
Let’s take a deeper look, shall we?
1. FOMO: Fear of Missing Out
“FOMO” really sucks.
Of all the mistakes in trading, this might be the worst one.
Despite it rarely working out, crypto traders continue to FOMO into crypto coins.
The problem with FOMO is the entire lack of strategy.
Assuming markets continue rising in vertical lines, investors emotionally buy at local peaks just before the coming retrace or reverse downwards.
2. Starting Trading with Real Fund
There are valuable resources for trading practice, such as Tradingview.
One can learn to trade through simulated trading.
Naturally, losing fake money in fake trades only costs time and no money.
In order to play the game, one must stay in the game, and losing capital is the fastest way to exit.
3. Failing to Learn from Lessons
The great business coach, Dan Sullivan says, “always make your learning bigger than your lessons.”
And in crypto, this proves true over and over, as traders repeat the same mistakes.
With a simple journal, a trader can identify which of their patterns led to favorable and unfavorable outcomes.
Simple, right? Keep a journal.
4. Risking More Than One Can Afford to Lose
Going “all in” is unwise in anything, and can be even riskier in something as volatile as crypto.
There is always a distinction between a calculated and blind risk.
Overexposure to the market can do some major damage.
Crypto traders will often trade either too much of their portfolio and/or have too much of their overall net worth in crypto.
5. Leveraged Trading
Unless you want to risk starting with $10,000 and ending with ten bucks and a burrito, avoid leveraged trading.
Only advanced traders should engage in leveraged trading.
And even many advanced and successful traders avoid leveraged trades because they know how deep in the hole they can go.
Just say no!
6. Failing to Set a Stop Loss Limit
Losses mount when traders trade on emotion and adrenaline.
Amplifying losses, damages increase when one is unwilling to accept small losses.
Seasoned traders accept losses with little emotion, quickly moving on to their next trade.
Simply setting a stop-loss limit allows one to minimize losses.
7. Dollar Cost Averaging in a Losing Trade
More often than not, one can’t just slap paint on a pig.
This creates the same problem with increasing damage already done.
As Kenny Rogers said, “you got to know when to fold them.”
Instead of digging in deeper, taking the loss and closing the trade is often the wisest play.
As mentioned, having too large of a portfolio in trading is not optimal for nearly all crypto investors.
Trading is not the same as long-term investing.
When over-trading, one is absorbing excessive trading and transfer fees, and worst of all, often missing out on bigger market upside moves.
Just like trading with too large of a portion of a portfolio, shifting from day trading to longer-term trading can serve as most helpful to the crypto investor.
Like anything worthwhile, it takes time and effort to learn how to trade.
The emotional rollercoaster and pressure of trading are not for everyone.
Following solid planning and executing with discipline, one can trade for profit.
What are your thoughts on trading?
Do you day trade, swing trade, position trade, or scalp?
What percentage of your portfolio is in trading?
What exchange do you like to use for trading?
Would you leave me a comment below?
Your Friend in Prosperity,
Disclosure/Disclaimer: This article is not an offer to provide financial, legal, or tax advice. This article represents an opinion, as you should not rely upon this subjective opinion, instead of your own independent research. All investments pose the risk of loss to the investor, with any investment posing up to 100% loss of investment. Always consult your financial, legal, and tax advisor prior to engaging in any investment. Always do your own research and invest at your own risk with complete awareness and acceptance of all risks. I am choosing to disclose that I have a financial interest in all tokens discussed in my articles.