If you have not read our first part of this article, you can read it here .
4. No Knowledge of Technical Analysis
Whether you are a beginner or a seasoned investor, you should have a basic understanding of technical analysis. In this case, the Internet can be your friend. There’s a plethora of resources at the tip of your fingers. Make use of them, read through, study them.
Having said that, technical analysis is not a recipe to hit jackpot in the market. But having a basic knowledge of it will certainly give you an added advantage.
5. Falling Prey to Online Trends
Inexperienced traders depend too much on Bitcoin price and online trading trends while trading Alts. As a result, when the trend changes, they won’t be able to make proper decisions.
One should understand that Bitcoin is the main cryptocurrency and it will not shake for a long time to come. In fact, it has the potential to drive the market cycle. New traders, however, don’t take Bitcoin’s price and trends into account while trading altcoins.
Bitcoin is sure to gain dollar value in an uptrend and since altcoins are largely dependent on Bitcoin, their dollar value will go up as well. However, this doesn’t mean their Satoshi value will also increase. Most of the time, when there is a Bitcoin bull run in the market (like the one in November/December 2017), altcoins will lose value in Satoshi (Google Satoshi if you don’t know what it is). In other words, traders and investors would have made better profits if they had kept their investments in Bitcoin rather than in altcoins.
A similar thing is bound to happen in a downtrend like the current market. When the price of Bitcoin goes down, the price of altcoin will also go down. New traders misjudge this and exit their positions from altcoins to prevent further losses. This, in turn, causes a drop in the price of altcoins.
6. Overtrading
Another major mistake of a newbie trader in the cryptocurrency market is overtrading. In simple terms, overtrading is nothing but Internet gossip plus fear of missing out plus lack of risk management. Needless to say, fear and greed also lead to overtrading.
Most new traders are overly excited and jump in and out of their positions too soon too quickly, suffer losses, and fail to keep track of their moves — all in an effort to make quick money. To state the obvious, overtrading drains all your assets very soon. Should you ever find yourself in such a scenario, take a step back, take a breath, take a break and analyse the situation to the best of your capability.
Don’t trade randomly, else you will end up overtrading. Remember the above-mentioned strategies and reset your goals.
Read Part 3
