Popular beginner mistakes in trading
Let’s analyze the most common mistakes that beginners make in crypto trading.
FOMO and FUD vulnerability
The main and most common beginner mistake. The cryptocurrency market is speculative, and experienced traders skillfully manipulate the market, making money on it. Novice traders tend to rashly follow the market, buying high for fear of missing the profit, and selling the asset after a rapid fall in price, going on about FUD.
Blind following of strategies
The truth is that no strategy works 100% of the time. In some cases, a strategy may be effective, but in others it may not. For example, they can average a purchase during a downtrend without realizing how long it will last. It is necessary to study strategies carefully and learn to understand in what cases they work.
Utilizations of large orders
Novice traders often buy an asset for the most of the deposit, leaving no room for maneuver. It is recommended to allocate no more than 5–10% of the total amount to any trade, depending on the risks. Accordingly, the higher the risks is, the smaller is the amount you need to trade. Risk diversification is the Golden rule for both trading and investing.
Trade with leverage and do not use stop losses
Profit is the result, not the goal. Novice traders try to increase profits by using leverage on Bitmex, which leads to a rapid drain of the deposit. Leverage is designed for professionals.
Do not use the full potential of the market
There are auxiliary tools that are not provided by crypto exchanges. It will be useful to familiarize yourself with the trade-mate.io service, which allows you to trade in a single terminal through the API on Binance, Bitmex and Poloniex exchanges.