10 Crypto Trader Mistakes
It is not scary to make mistakes along the way, the main thing is to draw conclusions from them and correct your behaviour in the market.
In this article, we will look at the 10 most common mistakes, the knowledge of which will help you feel more confident in the world of cryptocurrency and trading.
Overweight of aggressive tokens in the portfolio
High-risk assets are not always good. With their help, there is a chance to increase profits many times over, but even in the event of a drawdown, the portfolio runs the risk of being devastated. It is always necessary to strike a balance between aggressive investments, standard tokens and stablecoins.
It is important to divide the portfolio into medium-term and long-term investments, as well as for daily, short-term trading.
Lack of portfolio diversification
Relying on one or more tokens is fraught with risks of losing your investment. It is considered optimal to invest no more than 15% of the portfolio in one asset.
Excessive portfolio diversification
Also, do not overload the portfolio with assets. Efficiently keeping track of multiple tokens is difficult and time-consuming. Optimal presence in the portfolio of assets: 7-12 different assets.
Absolute trust in algorithms / robots
Don't count on the "money" button. Programs will never fully earn for you, they are only an auxiliary tool, but you will have to make decisions. Programs can break or be hacked.
Lack of accounting for non-permanent losses
Intermittent losses occur when farming 2 tokens in a liquidity pair, such as BNB-NMX. The so-called impermanent loss occurs when there is a difference in the price of 2 assets.
There are calculators to account for such changes.
Misreading Market Phases
As with standard markets, the cryptocurrency market has typical periods of accumulation, expansion, and decline. It is believed that in order to save assets during periods of recession, it is preferable to convert funds into stablecoins, and during periods of growth, invest in riskier tokens.
Market phase indicators:
• time before halving;
• Altseason and BTC dominance;
• index of fear and greed;
• capitalization of the crypto market.
Mistakes in microtrends
The market changes frequently, and it is important to correctly see its transitions, which can lead to new trends and a complete change in the situation.
Investments in shell projects
There are a lot of fake and fraudulent projects in the DeFi field. If you do not study the real values that the company offers, then there is a risk of running into a scam.
Even if you have invested in a newly born project that does not inspire confidence, it is better to withdraw profits from it in the early stages.
The pursuit of super profit
Profitability of tens of thousands of percent lures many people, but you need to understand that unjustified profit often carries with it huge risks of losses and scam. Almost all companies that positioned themselves as a project with huge profits ended very sadly.
It is better to farm stablecoins with an APR of 20% better and more reliably than to take too much risk.
Do not take profit
Each trading period has a beginning and an end, profits must always be fixed. Fear and greed here can be both helpers and do a disservice. Always have a plan and strategy to make a profit and don't get carried away by emotions.