Trading doesn’t seem too complicated, right? As prices can only go up or down, all traders have to do is pick a direction, sit back, and wait for the money to roll in. Well, not quite. Trading is a lot different than that and a lot more complex than that.
Trading cryptocurrencies is an exciting world. Yet, it is also full of risks. And, making mistakes is often part of the learning process and can actually shape you into becoming a more experienced and successful trader. But wouldn’t it be better if you’d skip the trial-and-error process and not lose money or motivation? We’re guessing, “yes”. You can do so by learning about the most common mistakes beginner crypto traders make when they first join the cryptocurrency market and how to avoid them.
Here are the cryptocurrency trading mistakes to avoid at all costs as a beginner:
Treating cryptocurrency trading like a make-money-fast thing
This misconception that many beginner traders come with when they first join the trading world is something that you can blame marketing for. More precisely, false or exaggerated marketing on how trading can help you make a lot of money fast has given aspiring or beginner traders some unrealistic expectations.
You probably heard about millionaires who made their fortune from investing in digital currencies. And, they were, most likely, a significant part of your motivation to join the market. But, find out that the truth is that there is a lot of work behind all those millions of dollars.
Being successful with trading is actually a long-term process that involves consistency, commitment, and constant improvement. Even if you get lucky in your first trades and win some significant amounts of money, this will be far from reaching your peak. Only consistent trading will help you become a successful trader and improve your wins.
Trading more than you can afford to lose
You need to keep in mind that the cryptocurrency market, like all financial markets, isn’t risk-free. By trading digital money, you won’t just win high returns. There will also be moments when you will lose some significant amounts of money. So, trading more money than you actually afford to lose is a colossal mistake that shows that you’re not aware of the risks.
As a beginner, you don’t have the experience, knowledge, tools, or even intuition to make the best investment decisions. As a beginner, you’re still learning how to become a better trader. So, investing a significant amount of money that you don’t actually afford to lose is simply a bad idea.
If you lose, this will take you out of the investment game, possibly for good. If you win, you’ll have a good return, but this isn’t something that will keep on happening. It is only the exception to the rule.
So, make sure that you learn how to efficiently manage your bankroll right from the beginning. Make plans on how much of your capital you can afford to risk on each of your trades.
Not choosing the RIGHT broker
This one is a HUGE mistake! The broker you choose to trade with has a massive influence on your overall trading experience. So, pay a lot of attention here.
There are many mistakes that traders can make when choosing a broker, including picking a random one, not checking if the broker is legit, focusing only on finding the cheapest trading costs and ignoring cybersecurity features. All these mistakes can cost a trader really big.
Choosing a broker that has a trading platform that performs outstandingly, is reliable, and offers plenty of tools and learning materials can help you launch a successful career in trading. In contrast, a broker that isn’t trustworthy, doesn’t invest in the user experience you have on their platform, and doesn’t provide you with any benefit, and doesn’t consider cybersecurity will make you have very poor trading experiences.
So, make sure that you spend a good amount of time screening brokers and choosing the right one. Look for an outstanding, fast, responsive, and intuitive trading platform. Check the reputation of the broker. And, you also need to consider the crypto assets offered by Forex brokers, especially if you have certain digital currencies you’re planning to invest in and trade.
As a novice in the trading world, you may not know that global events and news can significantly impact how financial markets move and perform. The cryptocurrency market is no exception to the rule.
Digital assets are also heavily impacted by certain events like economic events, political crises, natural disasters, or even a famous person’s statement related to a particular cryptocurrency. So, you need to stay on top of what is happening around the world, who posts what, where are there any political or economic crises, and learn how all these things can impact the direction a currency’s price can take.
You can only be prepared to act fast by staying up to date with the latest financial and political news, whether that means buying or selling a particular digital coin. So, download any relevant news app you can find and turn on all notifications. Also, check if the broker you’re planning to trade with offers a section of the latest relevant news.
Not diversifying your investments
Diversification is one of the best strategies to avoid losing everything at once in the investing world. Here’s the deal: if you invest in a single digital coin and something bad happens and lose all your money, that’s pretty much it. All your trading and investing efforts are annulled. But, if you have a diverse investment portfolio, the chances for all digital assets to perform poorly at the exact same time are basically inexistent. So, you won’t lose money with all your investments. On the contrary, if you have a diverse portfolio, you may lose some money with a specific digital asset but win with another.