Crypto trading comes with a load of promises as well as a fair share of disadvantages. Regardless of your level of expertise in the trade, there are some common mistakes that you might want to avoid in 2018. Some of these mistakes are pretty obvious but some are a bit more obscure.
By determining the common mistakes you are likely to do, you can be able to analyze them and get more details about possible solutions. It is not common for any trader to identify all the mistakes in the industry unless they are actively keeping track of all their blunders. Here are some common cryptocurrency trading mistakes to avoid in 2018.
Getting carried away by coin publicity
There are so many new cryptocurrencies that pop up every now and then. Even though the market already has a countless number of cryptos, innovation has not stopped developers from creating a new currency that is marketed as the most advanced of all the others every few months.
Cryptocurrencies tend to come with so much publicity which could mislead you into prematurely investing in an untested project. In 2018, you should consider being patient and investing more time learning about all cryptos whether they are new or well-known before actually making an investment.
Failing to keep up with information
The coin market is quite dynamic and there are always developments happening in the industry. It is thus possible to wake up to new market dynamics every single day. This means that shrewd investors must always stay informed if they are serious about reaping benefits from their investments. It is not difficult to gather information about the crypto market.
There are sufficient news sources that include websites, blogs, and forums which are dedicated to delivering breaking news to traders. It thus only takes commitment to stay informed on the happenings of the market.
Investing everything at once
So many beginners tend to enter the market and invest all their resources on a single coin. This is a costly mistake that can completely ruin any chances of success of a trader. No matter how attractive a coin might appear, it is never wise to put all your money on it. Even though you have done thorough research and established that the coin presents a huge assurance, the best move is to split your resources and invest separately. The crypto trading industry has great risks. Like any other type of investment, you must always be prepared to lose some investments without compromising your security in the industry.
Investing without an exit strategy
A lot of investors fail to realize that every trade that you get into must have an exit. Any coin can only make profits up to a certain level before it enters the downward trend. New traders thus face a huge risk if they make the mistake of holding onto a currency for too long until it loses all the gains it had made. It can sometimes be difficult to identify the point at which to sell your assets. This is why many experienced traders opt to have several points at which they decide to sell off some of their assets. Selling at several different stages not only maximizes the profits but it also almost completely prevents any losses.
Cryptocurrency trading is a business that involves the transfer of funds from one location to another. All these transactions take place virtually. It is thus common for inexperienced traders to send funds to the wrong destination. This can be very costly as it can lead to the loss of funds. The cryptocurrency business depends on virtual wallets, exchanges, and trading platforms. Each of these locations is usually governed by different rules. The compatibility of a currency, for instance, is not guaranteed when you send it to the wrong wallet. Since there are not any safeguards in most cases, a trader ends up losing their money.
There are other common mistakes like over-investing or over-reliance on leverage which should be avoided. The average trader has a high likelihood of recognizing some mistakes in their routine. Most mistakes in the crypto market are however subtle and often unrecognizable. With the above tips though, you can maneuver the market without worry.