Currently, the market value of the blockchain market on a global scale is around $10.2 billion. With the value of the crypto market being so high, there are about 43 million traders that are currently active in the market for obvious reasons. Crypto trading can be rewarding if you have a trading strategy that works.
The truth is, making large sums of money trading crypto, especially when you’re not sure what you’re doing, can be a lot tougher than it would seem. Trading crypto is very high-risk.
Keep reading as we lay out the top four mistakes for cryptocurrency traders that every rookie should do their best to avoid.
1. Making All-At-Once Investments
All-at-once investing, or lump-sum investing, might not be the way to go as a new trader. Sure, it will increase your market exposure right away, but it will also put you at a higher risk for losses, all at once. If the crypto market takes a downward dive, everything you invested will go with it.
Whereas if you diversify your portfolio and look more into dollar-cost averaging, you will be able to recover faster from negative swings in the market and increase crypto trading profits. A good place to start would be to analyze the market and determine if certain assets have a use case and how much of a logical investment it would be.
For example, dogecoin is one coin on the market with the most promise for 2022 and this might be a good asset to start with. Start by learning where to buy dogecoin and hold the asset while building your portfolio.
2. Panic Selling: This Is Always a Bad Move
Panic selling is a form of larger-scale selling of any investments that drive an immediate decline in crypto prices. Ways to help stay away from this would be to never invest with emotion and to try investing based on long-term trends rather than the short-term ride of a wave.
Panic selling is not a good crypto trading strategy, and it means that you will be selling your assets any time you’re afraid of prices dropping and having your trades go into the negative. It will be hard to make a sustainable career in crypto trading with this tactic.
3. Not Noticing the Importance of Risk Management
If you want to make more money from trading crypto, you need to manage your risks. This will help you control your losses.
One of the best ways to do this is to work with a fixed percentage of the capital you invest per every trade. For new traders, this means trying not to risk more than 1% per trade when you’re getting started to better your chances of increasing your return on investment.
4. Remaining Unaware of the Benefits of Fundamental Analysis
Keeping your portfolio out of a consistently red state is the main goal of crypto trading. One of the biggest mistakes for cryptocurrency traders that you will see newbies make is going with the crowd and only following popularity to make their stakes. This might prove to work for a while, but it’s not the smartest move if you want to have consistent success.
Learning the importance of fundamental analysis is essential for this reason. The point of conducting fundamental analysis for different options for cryptocurrencies is to help identify the actual value of the asset you choose.
Mistakes for Cryptocurrency Traders: Learning to Avoid Them
Learning how to navigate the crypto market is the best way to stay ahead of downward shifts. There are long lists of mistakes for cryptocurrency traders to avoid. If you learn how to analyze assets, navigate the market, manage your risks, and trade based on more than just low buy-in prices, you can make a successful stand in the crypto world.
To learn more, keep reading our content and try out our tips in practice.