Cryptocurrency attracts the attention of investors because of the possibility of massive gains in it. However, crypto trading is a very risky affair as the market is extremely volatile. Traders are required to have in-depth knowledge of the fluctuating market conditions. And of course, you can never cut slack on the dedication along with a bit of luck to make money out of the crypto market. Even the maestros bear losses if they don’t take well-informed decisions regarding their investment. So if you are looking for bitcoin trading bots, give this article a read first.
The crypto market is highly volatile and manipulative. Price fluctuations are commonplace and investors often lose their money due to this. Selling in panic is prevalent among the emerging investors and particularly when they invest in a currency without proper research and analysis. The reason why I have compiled a list of mistakes that are very often committed by amateurs and must be avoided at all costs:
Investing only in low-priced currencies
If a cryptocurrency is low-priced, it doesn’t mean that investing in it would actually fetch you a profit in the long run. The truth is that not all cryptocurrencies are worth investing, they may have frail essentials or corrupt groups promoting them. So, it is essential to find out the reason why the currency is low priced: if it is a mere dip or something more material. Investing in a company that is just experiencing a dip is more logical, because of the possibility of the price bouncing back again.
Being unaware of pump and dump groups
Groups of investors often get together and buy lots of any particular cryptocurrency forcing an upsurge in its price and then selling it at a profit. But, all of this happens so fast that non-members of such groups fail to enjoy the leverage. Such groups are called Pump and Dump groups. Smaller investors who get attracted to the particular currency when the price rises are helpless when the price falls suddenly. So, traders need to be vigilant about the floating prices.
Getting overpowered by greed
Greater risks give greater profits- don’t follow this saying blindly. Accept smaller profits too. Often, traders lose their money in expectation of an even greater gain. A logical strategy would be to sell fractions of your holdings and not the whole investment. For instance, you can sell 25 percent of your investment and wait a bit longer on the remaining 75 percent.
Indulging in panic selling
You need to be brave enough to trade in the crypto market. The most common mistake newbies make is selling as soon as they experience the first sharp dip. It’s important to eliminate losses but these aren’t losses until you actually sell. Buying high and selling low is a foolish game in the crypto world. So, hold on to your investment, but not at all times!
Not knowing when to leave
Most traders are clueless about what to do once they make some money off their investment. You don’t want to hold on so long, that you begin to incur losses. You also don’t want to sell so soon that you miss out on the bomb of a profit. So, practice, practice, and practice. That’s how you’ll know your cue to leave.
Going all-in on one coin
As Warren Buffet says, “Don’t put all your eggs in the same basket”. Diversify and invest in other coins too. You can invest 90 percent of your capital on one but 10 percent on others. No currency can guarantee profits. Even if you believe wholeheartedly in a currency, don’t bet all of your money on it. There’s a reason why all the crypto trading masters, have their wealth well diversified in different varieties of coins.
Look for the next coin that’s going to rule the crypto market
We saw the rise of Bitcoin from $1K to $20K which took the market by storm. But not all coins would see such gains. Investing in currencies and expecting to make massive gains from each one of them is a bad idea. As a crypto trader, you need to do a detailed analysis of each of your investment, their history, and the expected future price. This will help you make better strategic decisions.
Not having enough capital
You need money to make money. Traders are often attracted to the crypto market because of the notion of making truckloads of money without risking much. But the truth is that you need to have sufficient capital to trade successfully. A professional trader must be able to earn his livelihood from the money he earns out of successful trades. You require at least $50,000 to begin with and a monthly profit of a minimum of 10 percent to continue crypto trading. It may sound very easy at the moment, but trust me, accomplishing it is an entirely new ballgame altogether!
Letting emotional sentiments cloud your judgement
No currency will be on the rise forever, not even the king of crypto: Bitcoin. Each currency will have its highs and lows. If you have full faith in a coin, holding on to it as a long-term investment is the best option. But if you are looking to make fast money, don’t let emotions overpower you and leverage from the constantly changing figures.
Adding on to your losses
This is the most disappointing mistake often made by a trader. It is good to be confident about your decisions, but you have to base your decisions on evidence and not be wholly driven by your intuition. A piece of advice often heard by newbies is “buy the dip” – even the dips are only profitable when the currency is on the rise.
All the best!
Crypto trading is difficult and risky. But it comes with the possibility of massive gains. Never invest money that you are not in a position to lose. Don’t alter your strategies much. Make sure to conduct a detailed investigation of the currency before actually investing your money in it.
However, there’s nothing that you can trade with the knowledge that comes with experience. So, don’t give up and keep learning from your mistakes, the numbers are sure to multiply!