5 most common mistakes of Crypto Traders (and how to avoid them)

5 most common mistakes of Crypto Traders (and how to avoid them)

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If you are going to try yourself in cryptocurrency trading, you should keep in mind, that without the understanding of essential rules and principles you will only lose your money (just like most of beginners do). For not to get disappointed, avoid these common mistakes, which are being made by most of newbies.

 

Mistake 1: buying on peak

There are two general feelings moving people on crypto market: fear and greed. If the coin has already reached its heights, you can suffer the feeling of missed opportunity (so-called FOMO). Greed and wish to get at least small part of the profit make unexperienced players to buy currency at the moment when experienced traders are already thinking of selling it.

How to avoid this situation?

Don’t buy any coin is there is not objective reason for it to continue the growth, and when several prolonged green candles have already taken place (have a look at the chart below).

Pay attention to resistance levels, and never buy currency when its price approach them. If you want to buy certain coin, wait until it breaks the resistance level.

Always check trading volumes of any currency you want to invest in.

 

Mistake 2: selling a currency after its lost of a market value

 That’s a typical mistake made by every trader at least once – but in this case the main feeling moving the trader is fear to lose. Panic among the community and negative news only aggravate the situation. Suffering mental pressure, unexperienced trader sells all his assets in hope to keep at least small part of his investments. What happens later? … The panic seller finds out, that the rate has stabilized and that the lack of patience has led him to significant financial losses.  You can view this situation on a graph below.

 

How to avoid this situation?

Fix your losses by setting Stop Loss order right after purchasing. If the positive forecast happens to be wrong, you will lose only a small part of your assets (not more than 10%).

 Don’t sell your currencies if there are not objective reasons for the total crash down. If you have already lost a lot – just hold it till the rate drops to its bottom and wait for a turnaround.

Remember: experienced traders are waiting for you to sell at a loss – that will allow them to by currencies for cheap.

Mistake 3: exiting the position because of the small correction.

The market is cyclical. The growth can’t be eternal as there will be always people who want to sell. If the coin sinks for a little bit or remains flat, that doesn’t mean that the trend is going to turn into descending one, and that everyone are going to sell. Before buying a currency, you should consider the investment horizon. If you’ve provided careful analyze and selected a reliable coin for long-term investments, you shouldn’t care about any price corrections.

 

How to avoid this situation?

Always follow the news concerning the currency you’ve invested in.

Set a take-profit order on a mark a little bit under resistance levels.

Close the position parts by parts.

 

  

Mistake 4: investing into currencies which don’t have real value

This mistake is the result of a greed. Unexperienced players, who can’t detect pumps, purchase coins which were artificially overrated whith no having any significant value which makes it attractive for mid- and long-term investments.

 

How to avoid this situation?

Always analyze any project you want to invest in. Evaluate its importance, developers team, trading volumes, news background.

Never invest in pumps – especially is pump has already happened.

 Never invest in suspicious coins, which are not listed on authoritative resources like CoinMarketCap or Investing.com.

Purchase coins with daily trading volumes no lower than $1 million and market cap above $10 millions.

 Invest only in coins listed on major crypto exchanges.

 

Mistake 5: the lack of strategy

Most of beginners don’t follow any certain trading strategy; they don’t diversify their risk and often invest in scam projects.

 

How to avoid this situation?

Don’t invest more than you are ready to lose.

Don’t invest in one currency; choose several projects.

Don’t invest in ICO promising suspiciously huge profit.

 

 And the last one recommendation. Before taking a decision always consider all the factors which can affect coin’s price in the future. That can be:

1)Fundamental analysis

2)Technical analysis

3) Statements of developers

4)Changings in developer’s team

5)Trading volume and current situation on the market

6)Public opinion (forums, social media, Github etc.).

Invest safely with CryptoCurrencyUnivers!