The most common mistakes of beginners in the crypto market, and how can they be avoided?
The first mistake: lack of patience
This is one of the most difficult mistakes to avoid. The cryptocurrency market is very volatile, and it is very difficult to predict which direction the market will take, so you should not give in to your impulses and desire to trade, as trading is not a game. If you are not an experienced trader, it will be difficult for you to be patient, however those who are patient will be rewarded in the long run.
Impatience makes you make rash decisions, may break your strategy, but worst of all, it can make you fearful of missing out.
The second mistake: not realizing the risks
Since the volatility of cryptocurrencies is much higher than in the stock market, the potential gains and losses are also greater. So you must have good risk management. So when investing in this market, you should always keep in mind that it is possible to lose all your money.
The cryptocurrency market is not yet a regulated market, and the values in it are purely speculative. Most reckless investors resort to bank loans of several thousand dollars to acquire more cryptocurrencies and expand their portfolio, so the risk here is very high, especially if these investors are inexperienced.
Mistake 3: Selling at the lowest price and buying at the highest price
Since the crypto market is very volatile, as we mentioned at the beginning of the article, large price fluctuations are common. If you get afraid of the slightest drop, you will lose money. If you decide to sell during panic and fear, or what is abbreviated as “FUD” (an abbreviated word in English that refers to fear, uncertainty, and doubt), despite its simplicity, it is a common mistake. In this case, the mistake is entering the market without doing the necessary research.
Then, faced with a sudden drop or bad news about the cryptocurrencies you want to invest in, you hastily sell your positions in an attempt to minimize losses.
The problem with this approach is that once you sell, you effectively make your losses happen. Although minimizing capital losses makes sense in some cases (such as activating a stop loss), here the decision would be unreasonable. The crypto market is known to be a long-term bull market, so acting and selling at the first drop is a wrong move. The same can be said when the same people see a rise, buy back at higher prices, and repeat the cycle.
As for those who buy at price peaks, they feel fear of missing out, or what is called “FOMO” feelings. Once they buy and a short period of time passes, the price begins to fall and fall until reaching the lowest price. Here the feelings turn to anxiety and fear, which leads them to sell at the decline, which means an realized loss. .
Fourth mistake: not securing open positions
Stop loss is very popular in the cryptocurrency trading market and other financial markets in general. However, unfortunately, many traders and investors overlook it and do not realize its importance until it is too late.
Stop loss is very important to preserve capital. This capability offered by many trading platforms translates as “protection” and automatically applies sell orders. Whereas, you set a limit at which you would like to place a sell order if the currency price declines.
Often placed at support levels or at certain bounces, placing a stop loss in particular will allow:
Preserve funds.
Prevent a bad situation from getting worse.
Guaranteed profits
#StartInvestingInCrypto #ETFvsBTC #Write2Earn #EarnFreeCrypto2024 #MantaRWA $BTC $ETH $SOL