Once in a while, a crypto trader makes trading mistakes. Although it’s part of the game, you can still avoid these mistakes. Other than lacking balance in the portfolios and being overexposed to digital assets, the crypto space can make traders vulnerable to mistakes without strategic plans.
If you are a new crypto trader, take a look at the following crypto mistakes and try to avoid them.
Using Real Money Instead of Paper Trading
Many beginners make a mistake by starting with real money instead of paper trading. Be aware that using real money makes no sense since there are plenty of platforms and resources that you can take advantage of like bmmagazine.co.uk
If you want to be a professional trader, you need to plan and develop a system according to a simple set of guidelines for your risk management, exits, entries, and exits. Make sure that it should not be done using actual money.
Adding to Losing Trades
Keep in mind that trading is different from investing. An investor averages down positions in sound assets through a long-time horizon. As for the trader, he or she has defined invalidation and levels of risk.
Once your stop loss his, there will be an invalidated trade. So, you should move on to another asset.
No Balanced Portfolio
Did you know that successful traders exert effort in maintaining a balanced portfolio? You can consider rebalancing, where your portfolio will return to its target asset allocation. Meaning, it will be outlined based on your investment plan.
Trading with No Stop Loss
One of the most noticeable things about beginning traders is that they trade according to their emotions. They find it hard to accept that they lost a trade.
If you want to be among the successful crypto traders, you need to accept losses and move on to the next trades. Most traders lose money because they fail to accept every loss. The best thing you can do is to set a stop loss. Make sure that you will not make a move until a trade goes against you.
In crypto trading, it’s a big NO to use leverage. Based on a popular investment cliche, leverage can be a double-edged sword as it can either boot returns to give you profitable trades or worsen your losses on losing trades. An advanced trader can only use leverage because it have been consistently profitable for years.
Another common mistake made by beginning traders is that the promise of profitable trades is blinding them without getting out of their comfort zone. This mistake especially occurs when they have no significant amount of capital to trade with.
If you aim to be a professional trader and support your entire life with trading, then you need to ensure that your profit can cover your living expenses without the need to eat into your trading capital.
No Trading Journal
Successful traders develop a plan and keep a trading journal. When you are trading along with a strategic plan, it will help you hold yourself accountable for actions to make. Make sure to record the details of your trades. This will help you avoid and repeat a particular mistake since you have a journal to refer back.
One of the best things about the cryptocurrency market is that it is very easy to enter. As long as you have a computer or smartphone, a strong Internet connection, and a small starting capital, you can be a trader. However, new traders have a vulnerability to mistakes, leaving them broke. Fortunately, you can avoid and learn from them.