What to Avoid When Trading Cryptocurrencies

There is a massive learning curve that you have to overcome when you start trading cryptocurrencies. Bitcoin was first introduced in 2009, but as opposed to other markets, cryptocurrency still remains relatively new, and one that is still evolving. Whether you are a newbie or an experienced trader, cryptocurrency trading can come off as something hugely complicated and it is extremely easy for just about anyone to mess it up when they are getting started. It is true that there is a lot of information out there about the cryptocurrency market, but you should remember that not all of it can be trusted. 

So, what should you not do when you are trading cryptocurrencies? Here are some of the things to avoid:

FOMO

One of the top things that every cryptocurrency trader should avoid is FOMO. This is a common term used in the cryptocurrency community and refers to Fear of Missing Out. New traders in the cryptocurrency market are very much susceptible to FOMO, but this doesn’t mean that experienced traders cannot fall in its trap. FOMO never leads to a good outcome, whether it happens in situations where you are selling a crypto too quickly because you are scared of making a loss or when you invest in sketchy projects because someone has told you it will be the next big thing. It is possible for traders to resist FOMO and they just need to be patient, follow their strategy, and only trade reliable cryptocurrencies.

Diversification 

This might come as a surprise to some; after all, diversification is advised as the best way to minimize your risk. Indeed, diversification can help you reduce risks, but only in moderation. Brokers give you great opportunities to diversify your crypto investment as they have an extensive asset index. But, you need to remember that this market is a volatile one, and spreading yourself too thin over multiple cryptocurrencies with a small market cap rather than a few bigger ones can be dangerous. There are brokers like Solid Invest, which give you the chance of investing in big cryptocurrencies like Bitcoin and Ethereum and altcoins like Dash and Monero as well. 

Putting in Too Much Money Too Quickly

When starting out as traders, most people have humble beginnings and that’s not a problem. But, one of the top rookie mistakes that you need to avoid is trading above your means. Taking out a loan or emptying out your savings is a huge mistake. It is important to remember that even professional crypto traders can make losses and if you do as well, you could lose everything. Even if you think you have done your research, remember that making too risky moves, particularly in the early days can be very costly. It is best, to begin with, small amounts and slowly build up your portfolio. In this way, you will be able to minimize the consequences of a wrong trade.

Not Using Stop Loss/Take Profit 

You will come across this instruction a thousand times when you are learning the art of crypto trading; never enter a trading position before you place a take profit and stop-loss order. Look for a broker like Solid Invest, which offers you leverage trading and learn how you can position your orders. The best thing about stop loss and take profit orders is that they allow you to prevent your losses from eating away your entire capital and they let you walk away with at least some profits in a trade. 

Always Avoid Overtrading 

There is no doubt that it can be very tempting to close all your positions manually so you can see when you have made a profit or loss, but it is not the best strategy. Instead, it is better if you keep your initial position and put your trust in stop loss and take profit orders. You shouldn’t check your positions all the time. You need to trust your strategies to do the job. 

These are some of the things that every cryptocurrency trader needs to avoid when they are starting out. As long as you bear them in mind, you will be able to achieve the kind of returns you want.