Cryptocurrency Trading Mistakes That All Traders Do
Find out how many issues you may face when it comes to cryptocurrency trading. This small guide describes the most common mistakes of all traders.
The Worst Missteps for Cryptocurrency Traders
Bitcoin and altcoins can enrich the trader or ruin him. Most often, beginners make the same mistakes that prevent the user from making money. Even experienced professionals who continuously analyze the market and their actions can periodically lose money without understanding the reason. What are these crypto traders’ mistakes and how to avoid them?
The mistakes as neglecting trends, incorrect use of technical analysis, and high expectations are usually the main reasons for the failure of traders. We will describe the common ones in this blog.
Neglecting the Trends
The vast majority of traders trade at a time when, in their opinion, the optimal conditions for entering the transaction are formed. Most often, they lay a certain analysis, technical or fundamental, in the basis of decision-making, and rely on the fact that the price model they determine will work, since history has the property of repeating itself.
However, if one or another model contradicts the current market trend, there is no guarantee that it will work and the transaction will succeed, since the market, as the famous exchange trader Jesse Livermore said, has a tendency to move along the line of least resistance.
Most traders tend to buy at market lows and sell at highs. Of course, this or that deal can be justified. You can immediately recall a dozen tactics that use the overbought or oversold market or the support/resistance levels from which the price can push off to trade against the trend. But such an approach does not provide stability in the long run.
If a trader takes into account the trend and is not afraid to buy a growing asset and sell a falling one, he will at least half ensure his long-term success in the financial markets. Counting on the fact that a falling asset suddenly stops and takes off is not justified either from the position of the logic of price movements or from the position of expectation of transactions against the trend.
When You Blindly Believe & Use Technical Analysis
The main task of technical analysis tools is to identify an asset that can potentially form a definite direction in the price movement and provide an opportunity to join the upcoming or current growth or decline.
Most traders view technical analysis as a predictive tool that helps them understand when an asset will rise or fall. In other words, analysis for traders becomes the primary decision-making tool, while it is secondary to the main factor – directly to price changes.
The price is primary, and technical analysis allows you to determine the moment when the conditions for entering the market amid the developing price movement are optimal from the perspective of the risk/profit indicator. Trying to understand on the basis of indicators, levels, where the price will stop, at what moment it will go up or down – this is the incorrect use of analysis tools and more likely a guessing game than the correct use of analytical tools.
Price movements, primarily trends, should be the primary tool of the trader, while technical analysis tools can help to find optimal opportunities for opening and closing a deal, but to a lesser extent should be the reason for a deal.
Another major mistake that leads to significant losses is inattention. The cryptocurrency market is so volatile that it is almost impossible to keep track of everything. Nevertheless, professional traders are required to do this to make a profit.
Do not neglect the observations and market analysis when trading tokens for good luck. Part of it happens that there is an opportunity to buy altcoin at a reasonably high cost. But due to carelessness, the trader may not see that large banks and cryptocurrency exchanges plan to turn it off from the trading list. This will accordingly reduce the cost, so the purchase will be unprofitable.
The Purchase of Cheap Cryptocurrencies
Even before investing, you can see how the currency will develop. If this is not a risky investment, then you need to calculate what the result of the investment will be. A coin can grow, but it can also be a fraud. You can not invest in currency, just because it is cheap.
Many inexperienced users are used to thinking that most low-cost altcoins are simply underestimated. This is because there are already many stories of a sudden increase in value. But this is not so – not all cryptocurrencies are profitable.
When You Expect the Unexpected or High Expectations of All Traders
Stability and financial freedom for most traders are the goals for which they come to markets, in particular, to the cryptocurrency market. However, there are no guarantees that the trader will profit every week or every month from the market. There are unsuccessful trading series, there are even months when you can’t get ahead of the benchmark, or also make money. This is normal. There are no guarantees of earnings in the financial markets.
If a trader agrees with this statement and does not, by all means, try to jump above his head and earn money at all costs, then he will remove from his shoulders the heavy burden of responsibility for meeting the requirements that are usually presented to successful traders.
The most important thing is stability in the long run, and it can only be achieved if unsuccessful trading results are accepted as an integral part of working in the markets. Profit and stability will come themselves as soon as the trader realizes that everything is a little more complicated in the financial markets than in books on how to make money trading.
The cryptocurrency market is a big area for making money, which is especially convenient for traders. Previously, financial traders bought and sold shares on exchanges, but today you can trade cryptocurrencies. If you perform correctly and avoid mistakes, then you can quickly earn regardless of the market’s performance.