With an over $2 trillion size, the current cryptocurrency bull market provides great opportunities for many investors and traders.
However, as with other asset classes, crypto is not a get-rich-quick scheme in which you put your money to see over 1,000% returns a day after (it can happen, but it’s highly unlikely).
Instead, you have to research assets to pick the right ones, gather knowledge about the market, as well as create and implement a viable crypto trading strategy to succeed.
That said, many newbies have failed to achieve the above, causing them severe losses after pouring money into digital assets.
For that reason, we have collected the top 5 mistakes of beginner crypto traders and some tips to avoid them in this article.
1. Trading Without the Necessary Knowledge
It’s tempting to jump right into day trading crypto without having the necessary trading or market knowledge.
While you may achieve good returns at first, it’s the result of pure luck in most cases. Even worse, when your luck goes away, you will likely face serious losses.
For you to succeed in day trading crypto, you need at least a basic knowledge of cryptocurrencies, market mechanisms, as well as trading assets in general.
If you have acquired that, you will know how to use fundamental analysis, technical analysis, or the combination of the two to spot crypto trading signals and pick the right ones to make decent returns on your trades.
Fortunately, the digital asset industry has tons of guides, tutorials, and even full-fledged courses that you can use to learn crypto trading.
The Digitex Blog is an excellent starting point to read beginner-friendly articles on crypto trading; we highly recommend checking it out!
2. Lack of Crypto Trading Strategies
Even those who have extensive market knowledge often fail to develop their crypto trading strategies before jumping into a trade.
The lack of a decent plan will lead to impulsive trading, which can be best compared to visiting the supermarket hungry without a grocery shopping list and buying all the food you find there.
While both cases lead to spending significantly more money than you would have planned, impulsive decisions in trading can cause severe financial losses.
For that reason, you need a good crypto trading strategy, which includes strict rules to enter and exit trades, tactics to manage your risks, as well as the tools and indicators to research assets and find decent opportunities to trade.
3. Panic Selling
When you are trading cryptocurrencies – or basically any other asset class –, it’s hard to keep your emotions in control.
Greed, fear, hope, and excitement are some of those emotions that prevent traders from making the right decisions.
If you can’t control your emotions, you will likely face the issue of panic selling, in which traders or investors sell a cryptocurrency as soon as it experiences significant losses.
While it makes sense to cut your losses sometimes, you should remember that you will only lose money on a long trade after selling the asset.
If your crypto trading strategy is a great one, you will know when to enter and exit trades, and you won’t experience the panic that would make you sell your digital asset holdings when prices hit bottom.
4. Revenge Trading
One of the most common mistakes of beginner crypto traders is revenge trading, in which one loses funds in a trade and enters into a new, riskier position in an attempt to recover his losses.
In such a case, the trader takes too much risks while his decision is driven by frustration and fear. For these reasons, it’s very likely to lead to further, more significant losses.
Being disciplined, keeping your emotions in control, and leveraging a decent crypto trading strategy is an excellent way to overcome revenge trading.
5. Paying High Exchange Fees
A common misconception among beginner crypto traders is that you have a 50-50% chance to win or lose a trade.
However, in practice, it’s (almost) never true.
Since crypto exchanges impose fees on your trades right after entering a position, you will start trading crypto with a loss.
And things will get worse when you margin trade crypto – a 0.10% fee becomes 10% in case of a 100x leverage – or pick a service provider that features higher costs than average.
The lower the fees, the higher your chances for winning trades; you should remember that.
At Digitex, our top priority is to offer the best crypto trading experience to our traders. For that reason, we have completely eliminated fees, allowing all our users to have access to free crypto trading.
As a result, you can limit their risks and maximize your chances for winning trades while keeping 100% of the profit you make on the platform.