It has become quite well-known that cryptocurrency trading is one of the most effective ways of making money these days. But, it should also be noted that the road ahead is full of scams and pitfalls. If you are joining the crypto market to make long-term gains, the best strategy is to invest in a cryptocurrency and hold onto it. However, if you are more interested in earning profits in the short-term, casual and day trading is the way to go. The problem is that not all cryptocurrency traders are able to make money. If you are a newbie and you don’t want to suffer from heavy losses, you should avoid some prominent mistakes. Check this link, here digital asset management explained very well.
These mistakes are quite common amongst newbies and are the top reason that they end up quitting the market. Knowing what they are can help you learning how to avoid them. Read on to find out these mistakes:
Mistake 1: Not researching properly
The importance of research cannot be stressed enough. Yes, you can follow successful crypto traders on social media platforms for picking the right signals and you will also come across influencers endorsing some cryptocurrencies for trading. But, you cannot blindly follow these people when your hard-earned money is on the line. There is a chance you can end up losing all of it because most of what happens on social media is because of pump and dump teams or fake accounts. Their purpose is to generate FOMO (Fear of Missing Out). Instead of doing all this, you need to do your own research and learn everything possible about a cryptocurrency.
Mistake 2: Not learning charting fundamentals
A lot of traders assume that technical analysis or charting is over-rated or too complicated. If you talk to experienced traders, they will tell you that market movements and coin price value patterns can assist you in making successful trades. Similarly to everything else, there is no guarantee in cryptocurrency trading. If you are serious about crypto trading, then you need to understand charting fundamentals like resistance zones, trend lines, candlesticks and support. Some reputable brokers, such as Primecapitec, provide their clients tons of educational resources to help them understand charting fundamentals.
Mistake 3: Panic selling due to movements in prices
This is a classic mistake that cryptocurrency traders often make. The cryptocurrency market is a volatile one, which means that price swings are considered normal rather than something out of the ordinary. If you are unable to control your emotions and panic a lot, then you will end up losing a lot of money. Panic selling is a common mistake that newbie traders tend to make. When they see prices falling, they panic and then sell their crypto quickly, which results in losses. The problem is that most cryptocurrency prices usually bounce back after the initial drop. You will have to buy again at higher prices, which only leads you to loss city.
Mistake 4: Not having an exit strategy
After you have bought a few cryptocurrencies and prices have gone up, what next are you going to do? Should you keep on holding it or exit the game? In most cases, newbies prefer to just wing it and just see where the market goes. They do not have an exit strategy in place, which is a major mistake. With cryptocurrency trading, once you have made some profits, you should take your profits and exit the trade as the markets can turn very quickly. You certainly don’t want to lose. Likewise, every broker out there gives you the option of using stop-losses as well that can help you get out of losing trades.
Mistake 5: Putting all your eggs in one basket
Another rookie mistake that every newbie crypto trader should avoid is investing all they have in a single cryptocurrency. Authentic brokers, such as Primecapitec, offer their clients a wide range of cryptocurrencies to trade, so why invest everything in one coin? Even the most popular and hyped coins will incur major losses at one point or another and you will have to deal with the consequences. Spreading out your capital ensures that you can minimize your risk as much as possible and earn substantial returns as well.
