As of 2022, there are over 350 million crypto users worldwide, which grows daily. This shows that more people across the world are learning more about cryptocurrency daily and also making a choice to invest in it.
We see crypto news daily on social media platforms like Twitter. From crypto communities talking among themselves to people preaching and sharing the gospel about crypto. Due to this, more people are ‘converted’ to the crypto scene, most of them without proper knowledge.
A famous saying goes, “nobody is above mistakes”, and it is correct, I must say. But let’s admit it, some mistakes can be avoided. I am here today to share these tips and tricks with you.
If you want to learn more about some popular mistakes crypto traders make and how to avoid them, keep reading.
What is Cryptocurrency Trading?
Crypto trading is the act of buying a cryptocurrency asset in hopes of it increasing in price value and then selling it to get a profit.
According to Wikipedia, a cryptocurrency, crypto-currency, or crypto is a digital currency designed to work as a medium of exchange through a computer network that is not reliant on any central authority, such as a government or bank, to uphold or maintain it.
Since the launch of the first-ever crypto coin, Bitcoin, in 2009, over 12,000 cryptos have come into existence and are being traded every day on crypto trading platforms.
There are over five hundred crypto exchange platforms in existence. These platforms have made it easier to buy and sell crypto from anywhere in the world.
With the adoption of crypto also on the rise in Africa, platforms like Breet have made it much easier for the average Nigerian and Ghanaian to seamlessly sell their Bitcoin, Ethereum, Litecoin, Bitcoin Cash, Dogecoin, and Tether for cash.
Although Breet is suitable for newbies and even the OG’s- because of its easy-to-navigate mobile app, we still need to acknowledge the common mistakes that most people make while trading crypto, whether buying, holding or selling.
5 Mistakes To Avoid While Trading Cryptocurrency
This popular crypto slang stands for Fear Of Missing Out, which means making an illogical decision to buy or sell a crypto coin(s) without carrying out proper analysis or research.
Most crypto traders are guilty of this without even realising it.
With more than 350 million crypto users out there, there are many opinions and advice on the internet, and a crypto newbie can easily fall for the wrong ones and get scammed most of the time. Unfortunately, this is not a rare occurrence.
In 2021, $770 million in losses were recorded social media-related crypto scams. These scams happen because people- mostly crypto beginners, always turn to social media to get information concerning the crypto scene. While this might be an entirely bad idea, it becomes one when you only act based on the information obtained from social media without doing further research.
My online advice; do more research outside social media.
2. Not Having A Trading Plan:
As the famous saying goes, if you fail to plan, you plan to fail. A trading plan is essential for a successful trading experience from start to finish. Lots of people on the internet make crypto trading out to be a get-rich-quick scheme without talking about the technical part of it, strategies and plans to put in place to actually succeed in trading cryptocurrencies.
Before starting any trade, you must have a plan in place, including your entry and exit plan, how much you want to profit (an estimate can work) and how much loss you can take until you pull out.
Having this in place will set you on a clear path to trading, and you will have a clear idea of when and how to begin and exit.
3. Owning and Trading Only One Cryptocurrency:
This is one of the most common mistakes crypto traders make; not diversifying their crypto. Cryptocurrencies are like the dad’s side of the family- they are usually unreliable.
The primary feature of cryptocurrency is its volatility, which means that the price of crypto usually fluctuates depending on the market. If you only own one crypto coin and suddenly, the universe (and the crypto market) decides that it is not your day and that particular crypto plunges in value, you could lose a lot of money. But diversifying your crypto portfolio by owning multiple crypto coins gives you leverage because you can fall back on other crypto investments.
Spreading your investments across various crypto assets is an excellent way to reduce risk and maximise profits.
4. Panic Selling:
You wake up one magical morning with the birds chirping, cock crowing and the sun shining. You then pick up your device to check your portfolio, but suddenly all you see is the red sea. Before you can even think of any other thing, the words of your naive neighbour creep into your head, “if you see the price of many cryptos going down, sell o”. Suddenly you are selling off all your crypto without exercising any patience and conducting the proper analysis. This is the case for most crypto traders.
Most of the time, panic selling never does anyone any good. Patience is something that needs to be exercised diligently while dealing with cryptocurrencies. Due to the volatility of crypto, price declines should be expected, but also price increases at some point.
This is why you should refrain from investing in a crypto asset just because. Instead, you should invest in crypto you have confidence in and fully understand.
5. Investing More Than You Can Afford To Lose:
That famous crypto bro on Twitter just tweeted again about how crypto is the future and will make you super rich. He even uses himself as a case study, saying that he made $10,000 in less than a week from crypto. You became intrigued and researched what cryptocurrency is and how to invest. The article you read said that all you need to do is buy Bitcoin, and in one week or less, it will increase massively, and you will make plenty of money. Due to that, you carried all your life savings and invested into Bitcoin, waiting for your 100% ROI at the end of the week. Hmm, it will most likely end in tears.
There is no investment where 100% ROI is guaranteed; it is essential to plan appropriately and know how much to invest in the first place.
One of the major tips in crypto trading is to only invest what you are comfortable losing at a time.
We have previously discussed the volatility of crypto and the unstable nature of the market.
Keep this in mind, and only invest what you can afford to lose. Do much invest your house rent, school fees or even your entire life savings o.
The crypto market, just like any other investment type, is tricky and requires much attention to detail and thorough research. Cryptocurrency has existed since 2009 and has amassed over 350 million users worldwide.
While this number increased daily with more people getting into the scene, lots of mistakes have been made along the way.
While crypto has made some millionaires, lots of people have also lost millions to mistakes they made in their trading journey.
But note that these mistakes also act as lessons which make the trading experience better in the long run.