Because Bitcoin and Ethereum’s price has gone down by about 50%, new traders have a chance to buy into these volatile markets. If these coins go up in price, the return on investment would be outstanding.
But cryptocurrency trading can be confusing, especially if it’s your first time. The market is still new, so many people make mistakes when they jump into it and lose their money as a result. If you want to be a successful trader, you need to avoid these mistakes as much as possible.
Here are common cryptocurrency trader errors that cause traders to lose money.
Making rash decisions with trading can ruin your success. You need to keep yourself calm and think through the situation. The best way to do this is by having a crypto trading strategy.
Follow your strategy every time you trade, so your emotions won’t cloud your judgment.
Failing to Research the Market
Many new crypto investors rely on online forums and chat rooms to get information about cryptocurrencies. These are not reliable sources of data. The same goes for social media accounts on Twitter and Facebook.
A trader must use a dedicated crypto exchange platform with charting tools to conduct research on the market.
Not Having a Plan
Without a plan, it becomes much easier for emotions and distractions to get in the way of your trading. A well-thought-out plan will help keep these things at bay.
Your plan should include:
A list of cryptocurrencies that you want to buy
How much money you plan on investing in each coin
The type of investment strategy that works best for you
Keep in mind that there is no one-size-fits-all approach to trading cryptocurrencies. If something works well for another trader, there’s no guarantee it will work for you.
Attempting to Predict the Market
The cryptocurrency market is hard to predict because it’s so volatile. At times, this volatility can be a positive thing. It gives traders the opportunity to make money by buying low and selling high.
However, many people try to predict trends in hopes of making huge profits from small market movements. This can be a risky move that could cost you money if things don’t go your way.
Not Knowing How to Sell USDT
One of the best ways to fund trades quickly is to sell USDT. This is particularly effective when you have a large amount of USDT and want to get into a position against it. Here’s how to sell USDT using Binance:
Click the Trading tab in your Binance account
Hover over Balances
Select the pair you want to sell your USDT for (such as BTC)
Enter the amount
Click on Sell
You’ll see a confirmation window pop up that shows how much BTC you’ll receive.
Using Low Stop Losses
A stop loss is a price at which you will automatically sell a cryptocurrency if it falls to that level. It’s an important tool for protecting your investment, but only if you set it up properly.
The disadvantage of using too low of a stop loss is that it could lead to unnecessary selling. This can result in missed opportunities where the price might have continued increasing.
Avoid These Common Cryptocurrency Trader Errors
These common cryptocurrency trader errors can be costly. Avoid them by learning the basics of money management. Read our finance articles for practical advice on managing your money.