There is no denying that cryptocurrency trading can help you make a lot of money. The massive gains it offers have drawn the attention of traders all across the globe. It had slowed down after the peak in 2017, but the crypto space picked up once more last year when the global coronavirus pandemic struck. Since then, thousands of people have made money via cryptocurrency trading. Unfortunately, there are also those who are unable to profit from this space and this is primarily because of some trading mistakes they are making.
If you are new to the world of cryptocurrency trading, you should learn to avoid the top trading mistakes mentioned below in order to make the returns you want:
Selling at the bottom and buying at the top
The cryptocurrency market changes quickly and these digital assets can be manipulated easily. Therefore, price swings are a common occurrence and traders often get caught up in this, which may end up costing them money. Newbies in crypto trading are known for panic selling, especially when they first get started and face some sharp drops. Once a sell order is placed, you will lose money. In some cases, it may be wise to cut your losses by selling, but most cryptocurrencies spike quickly and traders end up buying it at a higher price. Beginner traders commonly lose their funds in this way.
Getting attached to a specific cryptocurrency
You should bear in mind that no cryptocurrency will continue to rise forever, not even the pioneer crypto i.e. Bitcoin. There will be good days, and there will be the most horrible of days. The crypto space is constantly evolving and new opportunities come and go every day. If you believe in the potential of a cryptocurrency, holding onto it for the long term is the right approach. But, if you want to make quick money through crypto trading, then it is best not to get too attached to anyone coin.
The cheaper it is, the better it will be
This is certainly not the right approach. Just because a coin is below $1 doesn’t make it automatically suitable for investment. While it is true that a coin is more likely to go from 5 cents to 20 cents than a coin going from $100 to $500, you could also lose a chunk of your investment if a $0.05 coin goes down to a cent. The point is to not purchase a cryptocurrency just because it is cheap because this is no guarantee of profitability. You need to do your research and find out why a coin is cheap and if there are any developments that promise a boost in price.
Not keeping up with current events
If you want to be successful in crypto trading, then you should understand that technical analysis will never be enough. You also need to follow all crypto news and stay up-to-date with the developments and current events. The crypto market is a speculative one and it responds to both positive and negative events. If you want to be a successful trader, you have to stay informed.
Investing everything at once
Another expensive mistake that a lot of newbie crypto traders make is investing everything they have in just one coin. If you believe you have found the right price for buying the coin you want, you should still only invest a percentage of your money and then hold onto the rest to see what happens to the coin after your purchase. If the coin drops, you can buy more and if it goes up, you would have made a profit on what you already own.
Not knowing when to exit
After you have bought a coin at a reasonable price and you have already experienced significant profits, what should you do next? Most new crypto traders don’t set points at which they will take profits from the market. They keep on holding to the coin and at the end of the day, they end up losing all the gains they have made over time. Of course, this is not something you want to see, so you need to set up a point where you will sell off some of the assets for profits.