Crypto trading looks very, very tempting for those who are chasing quick success. We all have heard stories of students who bought a few coins and then, unexpectedly even for themselves, became millionaires. That sounds like a perfect plan — invest a little, get a lot and don’t work ever again. But if this were that simple — you would be enjoying a cocktail with colourful straws somewhere in Ibiza instead of reading this article.
Crypto trading is a job. The same as any other job. You must obtain certain knowledge and have necessary skills. You must be able to analyze the current state of market and predict what will happen next. You must see perspectives where others can’t and anticipate a decline where others don’t see any danger.
The point is we don’t hear stories of those who lost their money in crypto trading. It is typical example of survivorship bias. If you want to win — ask those who have lost. Then you will know exactly what you shouldn’t do. That’s why today we want to point out 5 typical for crypto trading mistakes so you can avoid them in future.
So, traders who are doomed to fail, usually:
1. Believe everything they hear
They panic when there is a rumour that crypto they own will fall. They start to worry when they hear that some businessman that was born before World War II and thinks that the Internet is a pure evil, calls Bitcoin a bubble. They cry themselves to sleep when someone says that never, never will cryptocurrency become a legal payment method.
Don’t believe everything you hear. Actually — don’t even believe everything you think. Subconscious fear of failure may lead your thoughts in the wrong direction and project scenarios that are unlike to happen. Successful traders have their personal opinion based on the reliable information (and they know sources of reliable information), ability to understand market tendencies and learn from their own experience, so no news or rumours that are spread with the simple purpose of disrupting market, won’t affect their opinion and belief in the future of coins they buy or sell.
2. Invest more than they can afford to lose
They mortgage their houses, cars and even wives. Put everything on the line. Because they are sure they can’t fail.
Well, they can. All of us can. You have to always keep it in mind. The marvelous thing about crypto is that you may profit by investing even a little sum of money, but investing properly and wisely. So there is no need to desperately spend all your money on buying crypto — it doesn’t increase your chance of success.
3. Don’t have any strategy, they just trade as their heart says!
They are just trading, so they can proudly call themselves “traders” or “investors”. They haven’t heard about different trading strategies — they don’t bother making little research, believing that their intuition and watching “The Wolf of Wall Street” movie twice a week guarantees success on the market.
If you want to become a successful trader, you should know that there are different trading strategies, every of which has its own features aimed at outperforming the market and getting profit. Having no strategy may end up in spontaneous buying and selling, that won’t bring any profit, if you are lucky, or will lead to losses, if you are not.
4. Think they will get steady profit
If you have followed Bitcoin rate for at least few days, you certainly have understood that “steady” is a word inapplicable to the crypto world. But still there are people that hope for steady monthly profit by entering cryptomarket. Experienced traders evaluate their income on a yearly basis, because monthly profit is not indicative. If you want regular salary, you should find a nine-to-five job in the office.
5. Give up after the first failure
Losing money is a part of the process. There is no trader in the world that has never lost a dollar. As legendary American investor Paul Tudor Jones formulates one of his trading rules — mistakes made three seconds ago don’t matter, but what you are going to do from the next moment on — does. Confidence is not assurance that you will profit, it is assurance that you will be alright even if you don’t.
Professional traders see the big picture. They are not chasing major cryptocurrencies, that may suddenly fall, but pay attention to tokens with smaller market capitalization that are backed up by committed community and shows all signs of rising up. It is a typical example of FOMO, by the way — when some coin is pumped up enormously, it seems that you just can’t miss to own it. But those who invested in Bitcoin at the peak of its glory in December, have lost money instead of gaining because they were affected by the global rush for digital gold. While traders who were attentive to less “popular” coins, reimbursed expenses (read more about altcoins, that have extremely quickly conquered their niche in the market, in our guide for cryptocurrencies).
Remember that trading crypto is also a job. It is not magical machine in which you put one dollar and receive hundred. But with proper attitude, some research and true interest in trading you can achieve success that you have never dreamt about.
Disclaimer: Not financial advice, provided for educational purposes only.
