You will make a lot of profit this year if you can avoid these 11 worst crypto trading mistakes traders make.
Amongst the several ways to make money in the crypto space, crypto trading is one of those ways that you can use to change your financial status, quit your job, work from any location, pay your bills, and go on your dream vacation.
Crypto Trading
In simple language, Crypto trading is all about buying low and selling high.
Knowing when to exit the market is as important as knowing when to enter because the market can take all the profits it gives.
People have lost a lot of money despite having basic and intermediate trading knowledge.
11 Worst Crypto Trading Mistakes
To consistently make profit without losing all your profit in nine months, there are some crypto trading mistakes you must avoid.
1. Not Taking Out Time To Learn
Mastery is proof that you spent time learning and practicing.
Learning crypto trading may take months or even more than a year of intense studying and practice.
Learning how to place trades, fix stop loss, take profit, buy and sell coins, use telegram or social media signals, or trading tools and navigate crypto exchanges or wallets does not make you a trader.
It’s misleading to think that knowing some of the above-mentioned makes you a trader.
You must spend time understanding the truth about crypto, how it moves and what moves it.
Below are some of the things you should spend time on.
a. Mentorship
Crypto trading should be approached as a business and it’s dangerous to take business advice from any random trader online or offline.
You can’t follow everybody, there are lots of profitable traders and mentorship programs out there, do your research and pick one that has the type of discipline and style you like.
You wouldn’t want to follow someone with bad risk management skills, or a gambler.
Get a mentor with proven results and learn from him/her.
b. Paid courses
There is no argument that you can find almost everything on the internet, but one on one interaction and a well-organized syllabus from one school of thought is far better and saves time.
Most times, we pay more attention when it’s a paid course.
c. Books
Read books on trading psychology, market structures, fundamentals, indicators, price actions, and risk management, just keep reading from time to time.
You will be making a very big mistake if you jump into crypto trading without spending time learning.
2. Not Knowing Why You Are Trading
Don’t be one of those persons who venture into Crypto trading just because everyone around them is trading and it feels like you are not serious with your life.
Why are you trading?
Is it for financial freedom, to pay bills, to help your family, for a better life, to settle loans, to get quick cash, to feel like a serious person?
There are a hundred and one reasons why people move into crypto trading and these reasons will determine if they will ever make it or not.
Your reason for trading defines how you will see the trading space.
It’s either a long-term business or a short-term get-rich-quick space.
3. Using Too Much Leverage
Greed makes you see how much you can make with a very high Leverage rather than how much you will lose.
Very high leverage can give you $500 from a 20% pump or dump and can also wipe $500 of your trading capital if your analysis was wrong.
Practice good risk management, and use the leverage that won’t put you in an emotional crisis if you lose five consecutive trades.
4. Poor Risk Management
Another deadly crypto trading mistake that can cost you every penny you have made is poor risk management.
A simple 1:3 Risk to Reward ratio can keep you profitable all through the year.
Let’s say you are trading a $1000 account and risking 1% on every trade, using a 1:3 risk-to-reward ratio.
For every position you open, you will be risking $10 for $30, and what happens when seven trades are lost out of ten trades?
$70 loss on all seven trades and $90 profit from just three wins, generally keeping you in profit.
That explains Good Risk Management.
Making $20 profit after losing seven out of ten trades.
5. Not Accepting losses
We trust our analysis so much that we feel the market is being manipulated each time we lose.
Every trader must learn to let go, take a break and continue another day.
It’s difficult to accept that a trade that has been in profit the whole day ended up in a loss, this situation leads to uncalculated risk and over trading.
Always accept the losses, and take a break for a day or two before taking another trade.
6. Unrealistic Goals
Always have your weekly goals, monthly goals, quarterly and yearly goals.
Many crypto traders are just trading morning till night without a defined target in percentage, so they end up making so much profit in one day and losing thrice that amount another day.
200% or even 700% monthly may be achievable but is it sustainable?
Have a realistic long-term goal between 5% to 11% monthly and compound interest.
This way, you don’t need to over-trade, over-leverage, or chase the market around.
7. Not Using Stop-loss
No matter how good your trading strategy is, it is advisable to use a stop-loss.
Stop-loss is an order that is used to exit the market to reduce loss or lock profit when the market moves against you.
Adjusting stop-loss in the hope that the market will reverse in your favor is one mistake that can cost you dearly in Crypto trading.
Pick a trading strategy and risk management to allow the use of stop-loss as in the table above, 1:3 RR may move to 2:3 RR if the stop-loss is extended.
8. Impatience
As good as any trading strategy may be, Impatience can be a major drawback to a profitable crypto trading Career.
After spending so much time learning and reading about fundamental and technical analysis, it’s important to master your emotions and not let your confidence push you into losing money.
Learn to wait, it’s better to wait for a clear setup than rush into a trade and wish you didn’t trade that day.
Allow the market to come to you and follow the trend.
9. Trading without A Plan
What type of trader are you?
Are you a day trader, swing trader, or investor?
A day trader should not be holding a trade for two weeks and an investor shouldn’t be checking profit every forty minutes.
Develop a trading plan that suits your type of trading, and endeavor to stick to it.
Trading signals are more like trading someone’s plan, with no clear sight of their account size, risk management, trading goals, or evidence that they are trading the signals themselves.
10. FOMO
We cannot talk about the worst crypto trading mistakes to avoid this year without Fear-Of-Missing-Out, the reason traders buy and sell the same coin at the same time.
It is important to analyze the market and wait for a setup that suits your strategy to print with all the confluence you need before making an entry.
An understanding of the Price Cycle and market structure will help reduce FOMO
The market will always bring better opportunities, so don’t feel pressured when you miss a setup or pump.
11. Revenge trading
The goal to make a certain amount daily amongst other factors can stir up revenge trading, leading traders to open multiple positions in opposite directions.
Work with a weekly target and try not to make hash decisions or feel entitled to make money from the market daily.
Leave the market after a huge loss if you can’t stick to your trading plan and goals.
Conclusion
Success is sure if you can intentionally train yourself to avoid these little but deadly crypto trading mistakes, it may take a while but you must trust the process and keep practicing till you succeed.
This is amazing 👏. Nice work.
Thanks a lot, I am glad you found it helpful.