9 out of 10 day Bitcoin traders fail and lose money.
The odds are against you if you’re planning to venture into crypto trading. However, don’t let this discourage you, as crypto trading is one of the best ways to generate revenue in this digital era. All you need is to understand the errors with crypto trading that cause most traders to lose money.
These things impair these people’s judgment and cause them to make the wrong trading decisions.
Read on to discover ten common errors with crypto trading and how to avoid them.
1. Skipping Paper Trading
Most people are too eager to start earning, and that’s why they jump in with real money. These people skip paper trading and argue it’s a waste of time. Yet, this is a fatal error that leads to massive losses.
Without the right knowledge, trading with cryptocurrencies is a risky venture. You’ve no idea the key things to check when deciding which crypto coins to buy and sell. To curb this risk start with paper trading to get insights on how crypto trading works without risking your money.
You want to know the key things that affect crypto coins prices movements. Besides, you’ll get data that helps high volatile coins to avoid. As a beginner, you should be cautious and only trade with stable coins before moving to volatile ones.
2. Paying Too High Brokerage Fees
Most beginners ignore brokerage fees when picking a crypto trading platform. They assume that these fees are negligible and don’t significantly affect the profits, yet they do. Many crypto trading platforms charge exorbitant fees, which eat out a huge chunk of your profits.
That’s why you should take time to compare the brokerage fees that different crypto trading platforms charge. Also, weigh the option of buying and selling cryptocurrencies using an ATM. Use resources like Byte Federal to know more about how a Bitcoin ATM works.
Your objective is to know how much it’ll cost you to buy Bitcoin online versus using an ATM. So, with this data, it’s easy to pick the cheapest options, thereby reducing brokerage fees and maximizing your crypto trading profits.
3. Ignoring Stop Loss
Despite crypto exchanges offering the “stop-loss” feature, many new traders ignore it. Most of them don’t know how this feature works. They think that it only matters when you’re carrying out huge crypto traders.
Yet, even without small traders, you can leverage the stop-loss features to minimize your losses. You want to place an order to liquidate your crypto investment when the value falls below a certain point.
4. Allowing Emotions to Take Over
One of the worst mistakes beginners make is relying on their emotions when making crypto trading decisions. Due to fear of losing, they sell crypto coins they should be holding. Also, the excitement of earning massive crypto trading profits makes them ignore the risks of volatile coins.
Others fall in love with a given crypto coin and refuse to sell it even when it’s in their best interest. They hope that the coin’s price will shoot up soon, and it’s okay to hold it despite the rapid decline in value. All these emotions blind their judgment leading to severe losses in the long run.
Avoid this mistake by managing your emotions when evaluating various options for cryptocurrencies. Don’t buy a coin just because you like its name or feel an emotional attachment to it. Instead, check its price movement and make crypto trading decisions backed with hard data.
5. Following the Masses and Skipping Research
Most beginners argue why do crypto trading research when you can get social media tips? After all, every 3 seconds, a new bitcoin post appears on social media. And most of these posts are from people advising you which crypto coins to buy and the ones to sell.
Although there’s nothing wrong with following these tips, don’t substitute them with research. You must allocate time to find out as much as you can on various crypto coins. Read these coins’ whitepapers and know their blockchain.
You want to get information that directs your trading decisions and maximizes your crypto trading profits.
6. Going All In Without the Right Knowledge
Most beginners go all in and invest all their life savings to boost crypto trading profits. They believe that the more they invest, the higher the returns they’ll get. And that’s why some of these investors borrow money to use in crypto trading.
Sadly, these investors chew more than they can shallow and incur massive losses. That’s why as a beginner, you should start slow with amounts you can afford to lose. You want to use this phrase to learn more about crypto trading risks and returns.
Once you gain this knowledge, you can increase the amount invested in crypto trading. However, exercise caution only adds up amounts that don’t risk your financial stability.
7. Chasing After Losses
As a beginner, it’s normal to make losses from your first crypto trades. The problem is when you start chasing after losses and keep up depositing more cash to your crypto trading account. You fall into the sunk cost trap and keep trading with hopes of recouping your money.
However, the more you trade, the more you lose and the more money you keep depositing. And it became almost impossible for you to break this vicious cycle, and you risk ending up broke. That’s why you must learn how to cut your crypto trading losses.
You need to know when to take a break from crypto trading and rethink your plan. Take time to understand why you’re picking losers and change your strategy.
8. Failing to Develop a Crypto Trading Strategy
Most people are too eager to start making money that they skip developing a crypto trading strategy. They assume that they can wing it and still make profits. Yet, this is almost impossible as, without a crypto trading strategy, it’s guesswork picking coins to buy and sell.
Besides, you’re likely to keep holding on to a coin with hopes of earning more profits, yet you should be selling it. The problem is when you hold too long, and the price suddenly drops. To mitigate these risks, you must develop a crypto trading plan.
You want to have a strategy that guides you on how much money to allocate for crypto trading. Also, you want to specify the things to direct you when to buy and sell various coins. Finally, your crypto trading strategy will direct you when to take a break and stop chasing after losses.
9. Ignoring Current Crypto News and Trends
Most people are partaking in crypto trading as a side hustle to earn extra cash. These people feel that they don’t have the time to keep up with the latest crypto news and trends. And that’s why they make crypto trading decisions without this information.
Yet, ignoring trends leads to making the wrong crypto trading decisions. That’s why you must create time to follow crypto news and trends. The great thing is that with the internet, it’s easy and convenient this data.
All you need is to find reliable online platforms that share credible crypto news and trends. You’ll rely on this information to know the best coins to buy, which have a huge prospect of growth. Besides, this data will guide you on when to liquidate your investment, maximizing your crypto trading profits.
10. Trading Only Popular Coins
Most beginners focus solely on popular coins such as bitcoin and ethereum, ignoring all other coins. The reason is that these coins have fairly stable prices, thereby picking them lowers risk. The problem is that it’s hard to generate huge profits relying solely on these popular coins.
That’s why you must diversify your crypto trading portfolio to boost your returns. Although most unpopular coins are highly volatile, they offer incredible returns. The trick is to learn how to balance off this risk by investing in different crypto coins.
So, take your time to find information on different new crypto coins and decide the ones to buy.
Avoid Errors With Crypto Trading to Boost Your Returns
To set yourself apart from other traders, you must avoid the above errors with crypto trading. So, take advantage of paper trading to know how crypto trading works before putting in real money. Also, control your emotions and don’t fear and excitement push you to make the wrong crypto trading decisions.
Finally, develop a crypto trading strategy to direct your decisions. You want to have a blueprint that guides you on how much money to allocate for crypto trading.
Please see our other articles for more Cryptocurrency, Laptops, and Technology content.
User Review( votes)
- 1 1. Skipping Paper Trading
- 2 2. Paying Too High Brokerage Fees
- 3 3. Ignoring Stop Loss
- 4 4. Allowing Emotions to Take Over
- 5 5. Following the Masses and Skipping Research
- 6 6. Going All In Without the Right Knowledge
- 7 7. Chasing After Losses
- 8 8. Failing to Develop a Crypto Trading Strategy
- 9 9. Ignoring Current Crypto News and Trends
- 10 10. Trading Only Popular Coins
- 11 Avoid Errors With Crypto Trading to Boost Your Returns