Cryptocurrency is all over the Internet, and it is easy for just about anyone with an Internet connection and a little bit of money to start trading. Sometimes people jump in and stick with a rising star because they think it is going to make them a millionaire. Unfortunately, that is rarely the way it works out. Take a look at the top 10 things to avoid while trading cryptocurrencies.
1. Trading with Real Money Before Understanding the Market
If you don’t have experience and knowledge in the crypto market, avoid jumping in with real money right away. Consider using a crypto trading app to practice with paper money while you are gaining experience.
2. Doing What You See Others Doing
You never want to buy or sell a crypto just because you see it suddenly rising or falling. Cryptos can gain 10% one day and lose 12% the next. Never let FOMO guide your trading strategy.
3. Interpreting Trading Patterns Until You Have Gained Experience
Although you may see patterns that appear to emerge in crypto, they can be deceptive. It takes a lot of experience and knowledge to make accurate technical analyses. Lean on professionals for analyses, and learn from them so that you gain the insight to make these analyses later on.
4. Risking What You Can’t Afford to Lose
All too often, people go into crypto thinking they will be an overnight gazillionaire. The reality is that this is no different from going all in on a lottery ticket. Start with money that you can afford to lose.
5. An Imbalanced Portfolio
It is always a good idea to maintain a balanced portfolio. You should balance your portfolio with long-term holds and a percentage for trading on a daily basis.
6. Trading Without a Stop Loss
If you become emotional and keep waiting for a crypto to turn around, you will lose more than you will gain. Set a stop loss and accept losses and move on.
7. Investing in a Losing Trade
To be successful, you need to make a plan and stick to it. If a crypto is losing ground, do not add to it in hopes that it will turn around.
8. Using All of Your Assets to Become a Trader
Trading cryptos is no different from running any business. You should only invest what you can afford to lose, and make sure that you have enough money to pay your living expenses until you become successful.
9. Emotional Buys
You might be in a group online that says a certain crypto is going to take off. No matter what you have heard, use detailed reports and analyses to make your trades. Always have a plan.
10. Keep a Trading Journal
The way to learn from your mistakes is to keep a trading journal. You can look back and study trends and how cryptos performed, and you will become a more skilled trader.