9 Deadly Mistakes That Beginner Crypto Traders Make

The cryptocurrency market has been around for a while, but that doesn’t mean that beginners can’t make mistakes.

In fact, many traders have been burned by greedy ICOs and worthless altcoins.

If you joined the crypto trading community recently, and you’ve been struggling to make consistent profits – Then you need to read this article!

I’ll teach you about the top 9 mistakes that beginner crypto traders make so that you can avoid falling into the same traps.

You’ll learn what to do, and what not to do so that you can start making consistent profits – starting today.

This article will help you identify common trading mistakes so that you can avoid falling victim to them.

Now let’s jump right in.

1. You Don’t Understand How Cryptocurrencies Work

Bitcoin and other cryptocurrencies are still a mystery to most people. If you’re thinking about investing in cryptocurrency, you need to take the time to learn how they work.

You must also understand that they fluctuate in value so there’s always a chance that your investment will decrease in value.

You also need to understand that investing in cryptocurrency is risky. There is not governing body that regulates the market and cryptocurrencies are traded on a free market.

This means that there is no insurance to protect you against fraud or theft, and no authority to hold accountable those who manipulate the market to their advantage.

Many cryptocurrencies also trade on exchanges that aren’t regulated which means that you’re also at risk of hacking or fraud.

Before you invest your money in cryptocurrency, you need to understand how it works and the potential risks involved with investing.

2. You Trade Without Proper Research

There are many traders who trade without properly researching a stock or market. They are impulsive traders and jump into a trade without properly analyzing a stock.

They usually do this because they are afraid of missing out on a good trade or because they think that trading is all about luck.

When trading you must realize that trading is a skill that requires a lot of patience and determination. You will not be able to become an expert trader overnight.

You must learn from your mistakes and take advice only from experienced traders who have worked on improving their trading skills for years.

Don’t trust the advice of random strangers online who are promoting a trading strategy that they are selling you – it’s not worth losing money over.

Take the time to research your trades thoroughly before you commit your money to the markets.

Make sure that you’ll avoid making decisions based on impulse and try to be patient with yourself.

3. You Don’t Understand The Risks And Rewards

When trading, especially in the beginning, it’s common to make risky moves and put yourself in a bad position.

When you are trading, always ask yourself if the trade that you’re going to make is worth the risk. If the answer is yes then go ahead and take it.

If the trade isn’t worth the risk then just don’t do it.

It’s ok to make mistakes as long as you learn from them and don’t make the same mistake twice.

Remember that if a trade doesn’t work out for you, then you can always close the trade for a small loss instead of taking a loss that is bigger than you expected.

It’s also important to realize that not all trades will work in your favor and that you will lose some trades.

If losing a few trades is okay, then losing 10 trades isn’t.

You need to take calculated risks when trading and not gamble with your hard-earned money in the hopes of making a big profit.

4. You Don’t Know How to Read Chart Patterns

Learning to read chart patterns is part of becoming a successful trader.

Chart patterns are simply price formations that occur on the chart that repeat themselves over time. The formation and repetition are what define a pattern.

Pattern formations are a result of human nature and psychology. People find patterns and form them.

That’s to say, chart patterns are the result of price movements and people’s beliefs about those movements.

For example, when traders find a bull pennant appearing on a price chart, they can easily predict that the market will continue trending upward. You can learn more about the bull pennant pattern here.

The chart patterns you look at are created by traders who trade financial markets. Traders don’t just magically know these patterns exist.

They learn them by studying the market.

Chart patterns are used by traders and non-traders alike. Most people believe these patterns exist, but don’t know they exist.

The patterns are formed by traders who recognize them and form them.

Chart patterns are formed by traders who statistically see the same patterns over and over again, and they trade these patterns.

Once you have learned to identify chart patterns, you then have to decide if the pattern is a valid signal and if it is valid, you must decide if the pattern is tradable or not.

Chart patterns can go both ways. They can signal a trend change or trend continuation.

5. You Buy a Lot of Coins at Once

Buying a bunch of coins at once is a very common mistake that people who are new to cryptocurrency do.

They usually rush to do it because of the excitement of the new asset class.

When buying cryptocurrency, the rule of thumb is to not buy more than you can comfortably afford to lose. This is mainly because of the volatility.

Things can happen fast in the crypto world and your entire investment can disappear in hours.

You wouldn’t want to buy a car you can’t afford, right? The same principle applies here.

If you are investing money that you aren’t comfortable with losing, then don’t do it. Wait until you have enough savings to comfortably invest your money.

Once you’ve accumulated enough money to comfortably invest, then you can consider buying more coins at once to increase your overall portfolio value.

6. You Abuse a Margin Account

When you open a position in your margin account, you risk more than your actual investment.

Your broker lends you money based on a percentage of your account balance, which is referred to as a margin.

If the value of your positions drops below a certain percentage, your broker will issue a margin call, meaning you now owe them more money than you have in your account.

To cover this shortfall, you are required to deposit additional funds into your account. If you fail to do so, your broker will sell your positions and liquidate your account.

Never use margin to trade until you have the discipline to follow the rules and never risk more in your account than you can afford to lose.

7. You Fail to Manage Your Crypto Assets

We’ve all heard about the astronomical gains that crypto traders have made in the past year. We’ve seen people buy Bitcoin for $1,000 and sell it for $100,000.

But lately, we’ve seen a lot of investors get burned when Bitcoin dropped 50% from their peak.

Properly managing your crypto assets is just as important as trading them.

Crypto assets are still considered new and immature as a currency. This means that regulators are still trying to figure them out as well.

This lack of regulation means that crypto assets tend to be more volatile than other currency markets. As a result, investors need to be extra careful when investing in them.

Also, trading crypto assets is different than trading stocks or Forex currencies. The average investor needs to be extra careful when trading them.

For instance, if you invest in one crypto asset and then trade a different one, your profits and losses will be directly correlated.

This means that if one crypto asset drops in value, all of your other crypto assets will as well. So you’ll have less diversification and less protection.

You also need to keep in mind that crypto assets are still extremely volatile and shouldn’t be treated as any other assets of that class.

8. You Don’t Have any Risk Management Strategy in Place

As a new trader, you may not have any money to trade with and your $500 account balance is precious. That’s why it’s vital to set a realistic risk level for each trade you make.

Make sure that you set a percentage of your account balance as your risk per trade. For instance, if you have a $500 account and you risk $200 per trade, then your account will be wiped out in 3 losing trades.

Some traders make the mistake of risking too much per trade. They risk a lot on a trade expecting to win back the loss on the next 3 trades.

What if the trades don’t go their way? They end up losing the entire account in just a few trades!

The risk management strategy will help you determine your maximum loss on any trade and the maximum amount you can lose on any one position before you have to cut and run.

You should always make sure that your positions don’t exceed this limit and trade accordingly to avoid losing your entire trading account on a bad day in the markets.

9. You Don’t Keep Up With Crypto News or Updates

There’s a ton of cryptocurrency news out there and it’s easy to get overwhelmed.

As a result, crypto traders never stay on top of things and end up missing out on opportunities as a result.

If you’re not careful, you’ll start missing important news updates that can affect your bottom line.

For example, the crypto markets often rise and fall based on news events.

As a trader, you need to be on top of things and you need to analyze how news affects the value of your holdings.

If you aren’t doing that, you’re setting yourself up for failure in the markets.

Also, there are tons of people making big moves in the cryptocurrency space all the time. You need to follow them to stay competitive in the market.

Final Words

When starting out in the cryptocurrency space, there are mistakes that new traders make frequently.

It’s crucial that you understand these mistakes and how they impact your bottom line as well as your ability to succeed in the markets.

The first mistake that new traders make is not understanding risk. They think that because the price is volatile they can risk more per trade.

This thinking leads to many losing trades that deplete their trading capital quickly.

They also fail to understand volatility and how it plays a role in price movements.

Too many new traders expect the price to go one way and when it doesn’t they go on another trade hoping the price will move their way.

This approach to trading doesn’t work because you can’t control the price. That’s why you should always trade based on support and resistance levels on crypto charts.

Keep in mind that this is not trading or investment advice, and you should consult with a financial advisor before making any decisions.

Always make sure that you’ll trade with money that you can afford to lose, and avoid trading on hype and emotions instead of from a chart’s perspective.

Trading on hype and emotions leads to losing trades and losing capital quickly.

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