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May 29, 2022
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Guide & Analysis

Common mistakes made by novice traders

How can we start in this market, which by the way is on the rise, without making those common mistakes that the vast majority of beginner traders make? Let’s point out some situations that can help

Since I started working in the crypto and blockchain field, I have met so many people with very common mutual mistakes and I am already convinced that the rate of serious mistakes is incredibly high. Realizing this reality, I will point out some situations that I believe are interesting to be evaluated, to improve your trader.

Trading on a cryptocurrency exchange is a type of activity that involves working to extract profits from the trading process. As in any other type of activity, in negotiation it is essential to develop the specific qualities needed to achieve high competence, in particular, an analytical mind and attentiveness.

Many come to this market hoping to cash in on an exchange rate difference quickly, with minimal effort. However, reality makes its adjustments, and a novice trader can soon be disappointed in this type of activity.

Reluctance to study the situation on your own

Either way, you are the one who will spend your money on buying cryptocurrencies. If you don’t understand the product and its value, but just listen to the “experts“, who tell everyone when to buy and sell currency, you will have big problems and lose a lot of money.

If your decision to buy a currency depends on someone else’s opinion, then you will have to rely on that opinion when selling. Don’t be a layman. Explore the market you work in.

Putting in the trade the money you can’t afford to lose

As an example, we’ll take all your available savings, or more importantly, loan funds, into the deposit.

Not a single person is insured against failures and mistakes, even professional traders often experience significant financial losses. The stories of newcomers who managed not to make any of the typical mistakes at the start of the trading journey can be called anomalous, or at least unlikely, with independent trading from scratch.

Mistakes must be made, unintentionally, of course, because learning from your mistakes is far more effective than learning from others – this is a hallmark of acquiring practical knowledge. The best thing you can do before starting exchange trading is to minimize the consequences of initial mistakes in advance. The rest will come with time.

Following excitement, emotions and unconfirmed information in decision making

Of course, avoiding this mistake can be difficult, especially if you follow the news from the cryptocurrency world on Twitter, with messages like, “so it looks like bitcoin has come to an end, it’s better to sell“, or “Bitcoin’s next stop is, $500K.”

Let there be any truth to these reports, it is physically impossible to keep track of everything at once, and in general, the most patient still win.

No one on Telegram will divulge real insiders (private information about price prospects), moreover, even pay channels advertised frequently provide more misinformation than true. Rely primarily on your experience and double-check the data received.

Peak price sales

This ain’t great, wait and don’t sell“, advised experienced investors. The thing is, you never know how much a specific token will go up.

For example, if you bought bitcoin for $10,000, you probably experienced an incredible urge to sell it when it jumped to $20,000. But today you would really regret it when you look at it at $50,000.

To sell cryptocurrencies, you need a strategy. Set a goal and strive for it, no matter what. Yes, with the market crashing, it will be extremely difficult to watch how the money flows. But is it worth panicking and selling everything at once? The answer is one: no.

Buying Cheap Coins

Even before applying the resources, analyze how the currency will appreciate. If it is not a risky investment, it is necessary to calculate what the investment result will be. A currency can appreciate, but it can be a fraud.

You cannot invest money in currency just because it is cheap. Many inexperienced users are used to thinking that most low-priced altcoins are merely undervalued. This is because there are already many stories of sudden value growth. But not so – not all cryptocurrencies are profitable.

Safety

This is perhaps the most serious mistake possible in the crypto community today. Hundreds of millions of dollars were lost because people trusted all their data to an exchange that was hacked or a service that stopped working.

With the development of technology, scammers and hackers don’t stand still and where the money is free, without enough control. Even if you have a little money right now, and even if you don’t plan on staying in the market for very long, you should carefully approach the security of your data: two-factor authentication, use of individual computers, data encryption – these are a must.

And, of course, make physical copies of the data.

You need to write down all your passwords, secret keys, print them out and hide them in a safe place. That way, if something happens to your computer, you can restore everything to another device. And best of all, use physical wallets and leave only what you will use in the trader at the brokerage.

FOMO

Fear to lose. It manifests itself in situations such as, the early sale of an asset for fear of losing profits, buying at the maximum because of the feeling that something important is missing, or the fear of missing a promising ICO, so you are investing in dubious projects. . It is the fear of losing profit most of the time that leads to the fact that we lose profit.

Getting rid of FOMO is hard, but you can fight it. To do this, create a set of rules for trading on exchanges or choosing a project, as well as limits on possible losses and profits allowed.

Be above it. Understand, new opportunities in the world of cryptocurrencies appear every day, so relax and let that fear subside.

Patience is the key to trading cryptocurrencies. Don’t be afraid of losing any deals – the market is so big and developing that there will be enough money for everyone. However, remember that it’s easy to make money in the market, but it’s hard to keep what you’ve earned. Don’t let greed get the best of you.

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