In the current cryptocurrency environment it’s rather easy to make “newbie” mistakes when trading. As a plethora of alt-coins enter the market so do new traders, many which don’t have sufficient knowledge to make informed decisions.
Making mistakes is part of learning although there are some common mistakes that can be avoided from early on to navigate around potential losses. Here are some of the top mistakes new crypto traders make and solutions to remedy them:
Many new traders focus entirely on the price of the coin. They see a penny coin under $1 and think of the exponential gains they might make with the many units they can buy. You can’t simply buy coins based on price or you’ll regret it.
It’s important to take into consideration how many coins are circulating in the market. A good approach is to evaluate cryptocurrencies based on their market capitalization. You want a coin with a low market cap that has strong technology behind it and a bright future. DYOR (do your own research) and invest in the low market cap coins with a powerhouse team, whitepaper, and overall solid foundation.
There is a common falsehood that you need to trade crypto full-time to make money. The fact is that you can trade crypto part-time and even maximize your return on your investment. You don’t need to be monitoring the crypto market full-time. In fact, the old buy and HODL usually remains the most effective method.
I agree that those who are analyzing the market with technical analysis or TA are making the most informed decisions but many times the best way to invest in crypto is to identify the coins with the highest growth potential, buy when it dips and HODL. Spend some time and make sure the coins you’re buying are right for the portfolio you envision. Diversifying your portfolio is important as you don’t want to put all your eggs in one basket. Being patient is of equal importance so make the right decisions early on and it’ll pay off exponentially down the line.
There are many other coins that offer far greater returns than Bitcoin. Many people are buying Bitcoin because it’s trendy without understanding the true value.
Although almost every token currently follows Bitcoin’s price, they also go up or down exponentially with it. Do your research and you will find other coins with unique technology that you have the opportunity to not miss the train on. The crypto space is constantly evolving, offering new coins with technology built on the flaws or errors of previously built coins which reveals new opportunities.
A common mistake is to buy coins at their all time highs or as they are sky-rocketing. Many times traders will find out about a coins increase in value after it’s too late and make the wrong decision to buy-in over FOMO or other factors.
Your best bet after a coin has risen to it’s all time high is to wait and be patient until it corrects itself or drops a bit. While at many times it’s difficult to predict the bottom it should not be as difficult to avoid buying when a coin has already risen sharply.
There is a common mistake that early traders make by selling their coins at the bottom of a dip. Almost always, there will be a technical bounce (if the price action is not completely driven by news) and it’s important to not panic sell, but to wait for the moment when the correction happens because it almost always does.
Don’t trade with your emotions, but be more methodical and calculated in your approach.
There are instances where traders send coins to the wrong address and lose their funds. Pause for a moment when transferring coins and make sure you have the wrong address. You can only hope for a very fast acting customer service team on the other end or your coins will be lost forever for sending them to the wrong address. If they can be saved, it is a large hassle to get them back.
These are just a few mistakes or common misconceptions beginner trader make many time. Keep in mind that you’ll need to make mistakes to learn in the crypto trading world. If you lose a little money at first don’t give up on it. Instead become a better trader by learning from your mistakes and experiences.