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The most common crypto-trading errors and how to avoid them

Crypto-trading involves trading in cryptocurrency. Just like you trade in the stock market, you can also trade in bitcoins and other cryptocurrencie

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Crypto-trading involves trading in cryptocurrency. Just like you trade in the stock market, you can also trade in bitcoins and other cryptocurrencies. This involves speculation about the prices of cryptocurrencies.

The increase in the value of cryptocurrency has led to many traders making a lot of money. It has generated interest in crypto-commerce with more and more people embarking on this activity.

Crypto trading
Photo credit: Ivan Babydov / Pexels

There are some common mistakes that crypto traders make. These mistakes can be very costly leading to huge losses. It is helpful to know about these errors so that you can avoid them.

Common Crypto Trading Errors

1. Not a goal

Why do you want to start crypto trading? Is it because you want to make money fast? Do you want to accumulate wealth over the long term? Do you enter it because it’s the trend? The answers to these questions will help you determine your goal. It is unlikely that you will give good results to trade without a goal.

Decide your goal and then plan your trade so you can achieve the goal.

2. Trading for the short term

You should know that the crypto trading market can be very volatile. The market can fluctuate quickly. If you are planning to trade for the short term, you need to be prepared for a roller coaster ride. You can end up making a lot of money or losing everything.

Unless you are an experienced trader, you should avoid short-term trading in crypto. Stick to trading for the long term as it helps reduce risk.

3. To trade without a plan

You need a proper trading plan. Jumping into trading without planning can be suicidal. Crypto trading is not like stock market trading. You must first understand the crypto market and review how it works. Without this knowledge you would be blinded.

You then need to have a concrete plan in place. The plan should tell you which crypto-currency to trade, when to enter the trade, when to exit, when to discuss profits. With such a plan, you can trade with confidence.

4. Trading on an insecure platform

Unlike the stock market, there are no fixed exchanges to trade in crypto. There are several crypto exchanges where you can trade and some of them can be questionable. It is important that you review the platform before trading on it.

Check out reviews of the platform to know the experiences of other users before entering.

Crypto trading online
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5. Trade too often

One of the mistakes that new traders make is to trade too much. Their logic seems to be that many trades equate to more profits. Too many trades can increase the number of losses. To compensate for these losses, you will eventually enter more transactions leading to accumulated losses.

Avoid trading often. Stick to your trading plan and avoid risks as the market is volatile.

6. Go against the trend

One of the techniques used by successful traders is to go against the trend. When everyone buys, they sell. They do this because they have a system that tells them when to buy and when to sell. They do not deliberately go against the trend. Novice traders do not know this and eventually believe that it is a good technique to go against the trend. It can cause serious losses, so avoid this mistake.

7. Avoid Stop Losses Now

In the crypto market, you need to be flexible while using the stop loss. The stop loss is the price at which you exit the trade. If you keep this value too close to your entry price, it can be activated quickly. This is due to the volatile nature of the market. Understand support and resistance and then correct the stop loss.

Remember, tight stop losses can lead to multiple losses.

8. Do a dry run

Instead of trading directly, do a dry run first. Adopt paper trading, where you trade on paper rather than actually trading. Then observe the market movement and try to predict it based on reading charts. Then see how the trade develops and whether you make a profit or make a loss.

Do this for some time so that you gain the confidence before you start trading real.

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