Newbie traders face the same problems when entering the cryptocurrency market. How to avoid them and what to look for when choosing a cryptocurrency trading platform?
Cryptocurrency as a tool for investment and earnings is becoming more and more popular. Instant success and quick earnings is a very real opportunity for advanced traders. However, when a tool provides many opportunities to make money, there are always just as many opportunities to lose money.
Often, investors invest all their money in crypto assets and lose them during the next market decline. Few people share negative experiences, beginners are under the illusion of making money quickly and easily on cryptocurrencies, and the markets continue to grow.
When investing in volatile assets, losing the entire deposit is a very real risk. What are the most common mistakes to avoid when trading cryptocurrencies and how to multiply your investments?
Lack of understanding of how the market works
Many beginners rely too much on the opinion of “experts” and do not study the market themselves. What is the liquidity of the market? Does the cryptocurrency have enough potential? To choose the right time to make trades, you need to understand what drives the market. First of all, you need to conduct your own market research and study all the important information
Lack of trading skills
Often there are traders who have been trading for more than a year, but do not know how to use a candlestick chart or market indicators. It is very important for every trader to stick to their own trading style. This will help to refrain from making rash transactions. Many cryptocurrency exchanges publish educational materials on trading, and some even offer the services of personal cryptocurrency trading advisors.
Emotional trading
Trading under the influence of emotions is a common problem. In the hope of making a big profit, beginners often make rash decisions. When the price of a crypto-asset decreases, it is usually the newcomers who are the first to sell their assets, which deprives them of the opportunity to capitalize on the market growth in the future.
Some trading platforms and “whales” benefit from this behavior by implementing “pump and dump” schemes. In addition, for each completed transaction, the user pays a commission to the exchange – the more transactions, the more the trading platform earns.
Be patient and stay in control. It is worth investing in the market gradually and investing in different crypto assets in order to diversify your portfolio and hedge risks.
No stop orders
Trading without placing a stop loss (to stop losses) or a take profit (to fix profits) is like driving a car for a long time without rest. No person can watch the markets around the clock and make trades on time to avoid losses. Trading is a long distance race, and one of the keys to a successful finish is the right stop orders.
How to choose the right exchange
There are no less platforms for trading cryptocurrencies on the market than the cryptocurrencies themselves, but many of the exchanges turn out to be frauds or the quality of their services is very low.
A low-quality cryptocurrency exchange may charge unreasonable fees or not notify the user of all fees at all before the transaction is made. Market analysts suggest that some large sites are deliberately manipulating the market. Every year, many exchanges close and disappear, and with them, user deposits. In addition, the trading mechanisms and rules of some exchanges are so complex that it takes traders a long time to master them.
When choosing an exchange, you should pay attention to the availability of a demo account option. With a demo account, the user can practice trading strategies, learn to control their emotions and analyze the markets. Successful traders learn to analyze the market, stay up to date with market news and constantly try different strategies. A good demo account serves as a sandbox to improve your skills and get familiar with the rapidly changing market.
The copy trading function can also be a help for a beginner – you can start making transactions without a thorough knowledge of the cryptocurrency market. Copying the trades of experienced traders will also help you learn the trading strategies of professionals.
