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10 Crypto Trading Mistakes That Will Make You Go to the Wall (Not Street)


It is extremely easy to enter the crypto market — you need a) Internet connection; b) a PC or a smartphone; c) some starting capital. And voila — you are a trader! But the truth appears to be cruel, as most of those beginners face heavy losses due to their own mistakes and even go completely broke. So Tozex team put together the 10 most common crypto trading mistakes made by the newcomers that you should stay away no matter what.

1. Starting with real money, not with paper trading

If you are a newcomer, there’s obviously no reason for you to risk your real money when the Internet is full of resources and platforms for paper trading. Let’s take the famous Tradingview, for example. To master your skills and become a professional trader, you should first work out a system based on a simple set of guidelines for entries, exits, and risk management. And please, don’t do this with actual money. Paper trade until you are ready to lose your mind, then take a deep breath and go paper trade again!

2. Having no stop loss

Emotions and trade cannot come together in any way, but beginning traders often combine these two things. Still, this results in nothing but heavy losses, as trading newbies are unable to put up with a loss and continue to add to a losing trade. Keep calm! A good trader should accept a loss and move on to the next trade. Those who cannot do this are more likely to end up on a trip to the wall. Set yourself a stop loss, and don’t move it when the trade goes against you, otherwise… Read above.

3. Adding to a losing trade

This mistake goes from the previously listed one. Investing is not the same as trading! Investors average down positions in fundamentally sound assets with a long timeline. Traders have defined levels of risk and invalidation for their trades. When the stop loss is reached, the trade becomes invalid and the trader should move on to another asset. Period. Traders don’t average down. Never.

4. Risking more than you have

Real life is not a movie, where a protagonist makes some unbelievable amounts of money by just being in the right place at the right time. Stay cool-hearted and don’t go all-in on crypto, risking everything you have on a kind of lottery ticket.

5. Failing to keep balance

Good traders maintain a balanced portfolio. For example, a trader has 10% of the wealth in crypto. If we look at that crypto portfolio, 70% may be long-term holds, 15% may be cash and 15% is left for trading. Trade with that 15% of the portfolio, which in general is only 10% of the net worth. Don’t put all the wealth under the same risk (see mistake 4).

6. Failing to keep a trading journal

Trading is not a process where improvisation is allowed. Oh, let’s say “successful trading”. Any good trader should have a clear plan. Having a trading plan means being aware of your own actions and market behavior. To do this, record all the details of your trade. Repetition is NOT the mother of learning when it comes to trading mistakes, so this journal will help you learn. Keep a journal and refer back to it any time you feel something is not going the way you’d like it to. Record your thoughts, emotions and trade results. It is really helpful.

7. Being undercapitalized

There’s a good saying: it takes money to make money. Many trading noobs believe that they can easily make tremendous mountains of cash (like Scrooge McDuck) without leaving their comfort zone. This has nothing in common with reality, unless, of course, you are already as rich as Scrooge McDuck.

scrooge McDuck

Any trader who is eager to become a professional has his/her entire life backed by trading — that means the profit must cover all the living expenses without eating into the trading capital. To make it clear in numbers, you’ll need at least $50,000 — $100,000 to trade with and a stable 10% profit every month. Yes, that’s not easy, and yes, that’s stressful.

8. Using leverage

Obviously, that’s a bad idea. No, let’s say it like this: the Worst Idea Ever!!! As a well-known investment cliché states, leverage is a double-edged sword because it can boost returns for profitable trades and exacerbate losses on losing trades. Leverage is a feature for extremely experienced traders who proved to be consistently profitable for many years. Otherwise, it will be the best way to go bust.

9. Applying trading patterns without proper understanding

Early traders are terrible technical analysts — that’s a fact, not an attempt to offend anyone. They just lack experience and practical knowledge. They identify patterns on a chart that are not actually there or make mistakes based on context and chart placement. The best idea is to start with simple support and resistance approach, or some simple indicators like exponential moving averages. Come back to those “difficult” ones when you acquire enough knowledge!

10. Following the herd

The herd is a sheep thing. Are you a sheep? No. You’re a (dragon) trader. Be a trader. Lady Olenna Tyrell knew what to say! Blindly following the herd, especially when you only make your first steps into this game of trade, may lead either to overpaying or to FOMOing into a hot coin. Experienced traders are used to exiting trades when they get overcrowded. Alas, newcomers may miss the moment and stay in a trade long after the best money has moved out of it. They may also lack the confidence to choose the opposite direction when needed.

So what?

Nobody said that trading is an easy thing. But if you have proper starting capital, the ability to think critically and a desire to learn, you definitely have all the chances to succeed and make a good trading name. Be patient, stick to a properly created plan, and don’t jump into the difficult things with both feet!



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