Barriers to entering the crypto market are very low. With a computer or a smartphone, an internet connection, and a bit of starting capital, you can become a trader. As a result of the ease of entry into the crypto market, most beginners just get started trading without learning the basics.
Most beginners who just jump into crypto trading without learning how it works may likely make mistakes which can lead to huge losses.
Some of the common mistakes most beginner traders make are discussed below. Ensure you avoid these mistakes at all costs.
Common Mistakes Crypto Beginner Traders Make
Some of the common trading mistakes crypto beginners make include:
1. Trading with real money rather than paper trading
One of the common mistakes beginner traders make is that they use real money to trade instead of using resources and platforms that allow them to paper trade. A common example of a platform that allows paper trading is TradingView.
If you want to become a professional trader, first develop a system based on simple entry, exit, and risk management sets of guidelines; this shouldn’t be done with real money. Keep on paper trading until you can meet or exceed your monthly percentage return goal for 4 consecutive months.
2. Trading without a stop loss
Most beginner traders trade emotionally and so, they don’t easily accept losses. The ability to accept a loss, learn from the loss, and move on to the next trade is one of the most essential skills a trader must possess.
Many traders lose money because they fail to accept losses. Set a stop loss, and avoid moving it when the trade does not favor you as this can blow up your account.
3. Failure to keep a trading journal
The failure to keep a trading journal is another common mistake most traders make. Successful traders keep a journal; they record the details of their trade in a journal. When you record details of your trade, you can always refer back to it to learn and avoid the mistakes you made in your last trade.
Keep a trading journal, and record your emotional state, thought process, and trade results on it. Doing this will help you greatly.
4. Risking more than they can afford to lose
Most people believe they can earn life-changing money on crypto if they can be in the right place at the right time and so, they go all-in on crypto. While it is true that crypto trading can earn you lots of money, it is important for you to only invest money you don’t need for essential things in your everyday life.
Don’t risk all your savings at once in crypto trading; only put in money you can afford to lose. This is an important risk management tip in crypto trading.
5. Acting on trade patterns and indicators they’ve not clearly understood
As a beginner trader, chances are that you don’t understand technical analysis. When you incorrectly identify patterns and indicators on a chat and act on them, you are likely going to lose your money.
Develop a simple system for trading and don’t make trading decisions based on patterns or indicators you don’t fully understand. Begin with simple indicators or support and resistance that are not difficult to grasp like exponential moving averages.
6. Investing without making proper research
Many beginners do little or no research in their choice of crypto before investing. Investing without proper research can lead to massive losses. As a trader, it is important for you to do appropriate research to identify the solid foundation of a coin before investing. If you fail to do this, you may end up investing in scam coins or rug-pull coins.
Trading is hard. However, with proper knowledge of how to trade and risk management, you can succeed and make profits. Develop a plan for trading, and ensure you stick to that plan no matter what happens. This will help you make correct trading decisions and not emotional ones.