If you’re new to crypto trading, or even if you’ve been in the game for a little while now, there are errors that you make over and over again. These errors can be costly mistakes in both time and money.
In this blog post, we’ll talk about errors in crypto trading that can negatively impact your portfolio.
Byte Federal will also provide some tips on how to avoid these errors so that your cryptocurrency trading strategy is more successful.
1. Trading Based on Emotions
Don’t let your emotions get the best of you. You should never trade based on impulse or emotion.
If you’re upset about something, step away from trading for a while. Try to get an objective perspective and see how it looks in terms of numbers only before making any decisions that may affect your portfolio negatively.
The same goes if someone is telling you they made money because of some advice they got.
That doesn’t mean that the information was correct so don’t blindly follow their lead just because they claimed success doing so.
2. Not Maintaining Balance
Many crypto traders don’t maintain the right balance of investments.
They might be too heavy in one area while neglecting another that could potentially produce better results if they were to focus more on it.
For example, you may want to increase your bitcoins holdings but what about other cryptocurrencies?
Are there any promising ones out there that should also get a fair share of your portfolio given their potential value in the future?
Answering these questions is key before making any decisions regarding which altcoins to hold or buy.
3. Constantly Making Losing Trades
It’s not unusual for traders to lose more than they win.
However, there is a point where it becomes unacceptable and you should stop trading if this keeps happening.
You may want to review your strategy because perhaps the current one isn’t working or that you’re placing trades at bad times when price movements are volatile and risky.
Also, keep in mind that sometimes losing trades can turn into long-term investments so don’t give up on an asset just because of a few losses.
Instead, learn from those errors and look forward towards future gains instead of dwelling on past mistakes forever.
4. Not Keeping a Trading Journal
Trading journals are great tools to have because they’re essentially detailed accounts of your trading activities during a specific period.
By having one, you can quickly see what was working or not and make the necessary adjustments for future crypto trades without any errors.
Some traders even use this journal as an aid in order to create their own personal strategy which is another way at looking at it if you don’t already have established rules on how to buy cryptocurrencies.
For example, maybe there were some indicators that didn’t work out now but could be used later for better results instead of disregarding them altogether.
This type of information may prove useful down the road once you’ve gained more experience with cryptocurrency markets by tweaking those strategies over time.
5. Risking More Than What They Can Afford to Lose
This is an important one because it comes down to not only knowing your limits but sticking with them.
If you can afford a loss, then that’s great as well depending on how much risk you’re willing to take in order to make those profits.
However, if you don’t have the money to spare and things go south for whatever reason, try not going into debt or liquidating other assets just so that you can recoup those losses from bad trades.
You should also look at this situation from another perspective: even if prices skyrocketed right now, what would happen if they fell by half?
Could you handle such a large decrease?
6. Not Having Enough Capital to Trade
Traders should always have enough capital to trade.
If you only want to invest a small amount and then stop trading, that’s fine too but it may not produce the best results possible if this is your plan of action.
Just like with any other type of money-making venture in life, the more you put into something, the more you get out so keep that in mind before taking on crypto trades as a full-time or part-time activity.
The good news here is that there are plenty of cryptocurrencies out there which means options for everyone regardless of how much cash they can dish out without going broke due to those investments gone bad from errors in judgment.
7. Failing to Use Leverage
Leverage is another great feature that you can use to your advantage as a trader.
This essentially allows traders to increase their buying power by borrowing capital from either market makers or other investors and then putting those funds towards crypto trading investments.
For example, let’s say you wanted to purchase $1000 worth of bitcoin but didn’t have the money on hand right now.
Using leverage could be an option in order to make this happen without having any collateral (other than what you would normally put down).
You should also look at margin trades as taking out loans against future earnings so keep that in mind when making such decisions.
This is because it may backfire if prices drop unexpectedly which means getting yourself into more debt for nothing in return.
8. Trading Based on Patters That You Don’t Understand
This is another common mistake when it comes to trading because there are so many different patterns out there that can either work for you or against you.
If the pattern isn’t right, then chances of errors in crypto trading will be high and this may lead towards losses instead of potential profits which could’ve been gained if these mistakes were avoided from the beginning.
Instead, learn about all types of patterns (like double tops and head and shoulders) to see what works best with your strategy before placing any trades down on paper like a good practice routine would dictate prior to putting money at risk.
Avoid These Errors in Crypto Trading
These errors in crypto trading should be avoided at all costs if you want to improve your portfolio. To learn more about this subject, continue reading our blog for more helpful articles.