When you are trading in cryptocurrency, there are some common mistakes that traders make. This is something that I want to address today because it can help you not lose all of your money in the crypto markets.
It’s really hard to get into the cryptocurrency market without making a mistake or two along the way, and this is one of the reasons why so many people give up. However, if you know about these mistakes before they happen then you can avoid them and keep your head above water while trading cryptocurrencies. For avoiding mistakes as much as you can, you should visit invest in cryptocurrency UK, where you will get guidelines of very professional and well-known strategies for perfect crypto trading.
Not Taking Profits When You Have Them
I hear this mistake over and over again from newbie cryptocurrency day traders: “My biggest mistake was not taking profits when I had them.” Well guess what this mistake is going to cost you a lot of money, and it’s one that you don’t want to make. Taking profits as soon as they come will increase your position size, and this can help you avoid big drawdowns in the cryptocurrency markets which can wipe out your trading account.
The second biggest mistake that traders make is being greedy and trying to squeeze too much value into their trades. Now just because someone calls themselves a “day trader” does not mean that they are an experienced trader . For example, after hitting resistance during an uptrend, price may bounce back up slightly before continuing lower. A newbie day trader might see this as a reversal and try to short the coin even though there is still plenty of momentum behind the uptrend. By trying to squeeze out more value than they originally intended, newbie day traders end up risking all of their capital and losing a ton in the process.
Trying to Make Too Much Money
This next mistake that I see over and over again is when traders try to make too much money without understanding how risk works . When you’re trading cryptocurrencies, this means that you’re going to be holding positions overnight which does increase your risk quite a bit as compared to trading on an exchange such as Binance. So if you don’t understand how market cycles work it’s really easy for you to get trapped into a position with little support and lose everything. But honestly, this mistake should be obvious to most traders; nobody should ever risk more money than they can afford to lose.
Borrowing Money to Trade Cryptocurrency
This next mistake is one that I see a lot of stock and forex traders make because it’s probably the easiest way for them to get into cryptocurrency trading . They use their credit cards or borrow money from family members just so they can put up an initial amount of capital and start trading. However, what they don’t realize is that the only people who ever become successful day traders are those who control their emotions and take small losses as opposed to big ones. If you go out and use your credit card or borrow $2,000 from someone just so you can try and trade bitcoin, then you’re most likely going to lose everything and be stuck with a huge debt.
Trading Cryptocurrency on Margin
This next one is another big mistake that traders make when trying to get into cryptocurrency day trading . Leverage makes the world go round in forex trading , but it can also cause your account to get blown up if you don’t know what you’re doing. I’m talking about trading cryptocurrency on margin which means that instead of putting up 100% of the money required to enter a trade, you put up like 50% or sometimes even less than that. This isn’t something that any trader should ever do because it’s incredibly risky (if not foolish) and opens yourself up for failure in the long run.
Failing to Keep Tabs On Your Trades
Another terrible mistake that day traders make is not managing their trades correctly . For example, if you’re in a trade and price moves against your position by 20%, then you should cut your losses at this point (assuming your stop loss is well-placed). The reason why it’s important to take your initial loss is because sometimes these coins will recover after the big drop which means that if you didn’t sell off then within a few hours or days you could be up 100% instead of down -20%. So even when it seems like nothing is happening, always stay vigilant and follow good risk management practices.
I am Robert Alexander, one of the most well-known financial advisors known for his amazing crypto trading strategies. I wrote many famous books on crypto trading that are giving readers a complete roadmap of how to become successful in crypto trading along with the strategies of how to deal with market fluctuations.