The crypto market is a fast-paced market. as such traders are required to always be in a good frame of mind as any mistake could sabotage their goals to maximize profits. As a result, we have put together 10 common mistakes in the crypto trading sphere.
Failing To Learn From Mistakes (Losing Trades)
Experiencing loss is inevitable in crypto trading. However, traders’ attitudinal response to losses determines how frequent and significant these losses are. Many traders fail to analyze the reasons why they incurred losses. Consequently, the probability of the reoccurrence of these mistakes and eventually more losses are high. A trader should do a comprehensive analysis of losses in order to detect where he or she got it wrong.
Missing Critical Trades Due To Inactivity
Crypto trading requires a level of commitment as the crypto market is fast paced and it doesn’t wait for anyone. One of the differences between a winner and a loser in the market is their response to profit-making opportunities. Many traders fail to take advantage of price movements due to inactivity or loss of focus. Therefore, it is important that you set alerts which will notify you when the prices of assets reach the point you intend to sell or buy. This will put an end to frustrating situations where you fail to capitalize on critical trades.
Having No Strategy
It is quite easy for anyone to access the crypto market, however, surviving the volatile market requires planning and oversight. The mistake many newbies make is that they do not have a concrete profit-maximizing strategy. Instead, they depend on luck which will definitely run out. As a result, you need an investment plan that incorporates risk management, fund allocation and target marking strategies. Making viable profits in the crypto market requires planning, strategizing, and quality analysis. Without this, it is impossible for traders to maximize profit and reduce losses.
Letting Emotions Get The Best Of You
All trading decisions in the crypto market should be analysis-driven. The obvious mistake traders make is that they trade when they are emotionally imbalanced. Consequently, these decisions come back to bite them as they often lead to significant losses. There is a need for traders to access quality analysis before making investment decisions so as to be sure that his or her decisions are emotion-free. Also, quality analysis lets a trader verify if his or her predictions are powered by instincts or by emotions.
Another mistake that causes traders to incur losses is revenge trading. This is the act of holding on to poor performing trades just because you think that it has to cover the loss you have incurred. Most times, this leads to significant losses that could cripple a trader’s finances. It is important to note that the market is indifferent to your losses, therefore, thinking that it owes you could extend your losing streak. Learning to count your losses and move to the next opportunity.
Not Using Stop Losses
Utilizing stop losses as a failsafe is one of the ways to manage losses in the crypto market. Traders that fail to set stop losses for each trade are at risk of incurring losses. Also, traders that ignore their stops because they believe that their trading technique is effective are exposed to reoccurring losses. Therefore, it is important that traders set stop losses on all their trades because the volatile nature of the market demands it.
Over And Under Trading
It is easy to get carried away by the fast-paced crypto market, as such, it is common to see traders try to achieve bloated profit goals in just a day. This is over trading and traders that indulge in this are prone to making rash decisions and maxing out. Traders should take time out to analyze their position, gather more Intel, and wait for the right time to post trades instead of jumping at every opportunity and chasing losses. However, it is important not to mistake this strategy for under trading which is simply taking too much break. Traders that have just experienced a losing streak tend to under trade and miss critical and quality trading signals. It is good to analyze your losses and reevaluate your techniques, however, taking too long to this could mean that you are hiding in fear.
Having Favorite Coins
It is likely that traders return to coins that have once generated huge profits, even when signals show that this might be a bad idea. This is an emotion-based trading decision and it is a common mistake which leads to huge losses.
Putting All Your Eggs In One Basket
One of the most effective ways to manage risk is to diversify your portfolio. This will eliminate your reliance on the performance of a particular market or cryptocurrency. Therefore, the failure of a coin or asset to perform well will not necessarily jeopardize your finances.
Investing In Too Many Coins At Once
Although it is important to diversify once portfolio, you should not over diversify. Over diversifying your portfolio will stretch your funds across too many trades which will, in turn, limit your profits.
It is vital that traders learn to avoid the above-listed mistakes in order to maximize their profits. One way to achieve this is to access quality trading signals and information that will help improve a trader’s technique and strategy. By signing up for our trading services, traders are guaranteed to access quality and live trading signals that will help them negate emotions and trade the proper way.