There’s no doubt that the crypto hype has been attracting ambitious new traders. But without some general knowledge, a solid strategy and a reputable crypto exchange in your back pocket, it’s easy to fall into the pattern of some common and panic-driven mistakes.
So here’s how to avoid them.
What kind of trader are you?
Determining how you trade (or want to trade) will allow you to understand your risks and how you’ll handle spikes and dips in the market.
Are you a daily trader —trading often depending on the trends?
Or are you an investor — buying coins (especially when the market dips) and holding them long-term?
You can also be a mesh of both.
The safest strategy is to invest in coins for the long-term — minimally adjusting them according to trends and holding them for substantial growth in the future.
However, if you’re looking for quick short-term profits, trading often will allow you to get there much faster but of course with much greater risks.
But for you new daily traders out there, keep in mind that the most common mistake is over-trading.
So start slow, observe and study the market to keep your risks to a minimum.
Where are you trading?
There’s a handful of crypto exchanges to choose from, but which ones are the most reputable and reliable?
If you’re still new to trading, you’re going to need an exchange that supports fiat money (like dollars, pounds, euros) at first, to exchange them into cryptocurrencies. These exchanges allow you to sync with your bank account so that you can start building up your coins.
Coinbase ––
By far one of the most popular exchanges, it’s backed by investors and used by millions around the globe — a great and reliable entry point.
Other optimal exchanges include Coinmama and CEX.io.
And if you’re in it for the long-run?
You may rely less and less on fiat money and end up needing a crypto exchange that can offer a lot more coin varieties and features.
Consider Binance —
An exchange based in Malta, currently standing as the world’s leading and fastest cryptocurrency exchange offering really low transaction fees (0.05% per trade). An extremely popular choice with a mega user-friendly mobile app to make trading even easier.
Other great and advanced exchanges include Kraken, Bittrex, and Changelly.
Why not give yourself the most optimal set up?
You can also get a more in-depth view on different crypto exchanges here.
Understand your coin(s)
Prepare yourself for the waves of rumors and unsettling “tips” from Twitter, Telegram groups and the internet to convince you to sell and buy like a brainless puppet. Realize early that most of these are fake accounts, paid promoters or those who are trying to purposely manipulate the market and influence you through FOMO (the fear of missing out).
FOMO is the tide in the crypto world — it’s the push, pull and the PANIC that influences new traders to buy and sell.
Ditch the puppeteering gig and understand for yourself where your coin is in its development stage (some stages will shift more) and you will start to notice its average swing margins and trend lines.
The market will always fluctuate, but you’ll stay on top if you can spot the bigger dips.
Have a profit exit strategy
As a trader, there will be times when your holdings will surge.
Then what?
Will you collect your profits at the first spike or will you push your luck and keep on holding?
Many new traders fail to establish an exit strategy for their profits.
A good rule of thumb is to sell in stages instead of selling all your coins at once.
This way, you still collect some immediate profits but also leave some room for the rest to potentially grow.
Diversify
Investing entirely into one coin isn’t bad, but it’s risky— and we’re all about trying to minimize risks.
Every coin (no matter how popular) will eventually (and temporarily) go down hard at one point or another, even if the market as a whole is doing well.
On this side of the economy, nothing is guaranteed.
Study up on other coins, start diversifying your investments and taking risk management seriously.
By doing this, your portfolio will be set well enough to handle the rise and falls of the market and will even increase your chances of gaining profits from different coins as they’re all in different growth stages.
Being aware of the initial common pitfalls in trading can help you stay cautious, ahead of the curve (as much as one can be) and minimize unnecessary risks.