Most people fail when trading cryptocurrencies because they jump in without any guidance at all. Many people just come in following the herd and buzz that they can make money in trading cryptos.
However, being a first time trader does not mean that you necessarily have to lose money for a while before starting to make a profit, although losses will sometime come in any business.
Below is a list of common mistakes made by first time and experienced crypto traders:
Not taking time to learn, gain some skills...and plan
While you do not have to get your hands into physical labor to earn something, there really isn't free money at all. Take time to learn trading terminology, then how markets work, market trends, coin options, pumps and dumps, whale tactics, then tips on how you can make your trading better.
Speaking of learning, you need some skills for risk management, technical, sentiment, and fundamental analysis because these skills will make your trading better by day. Do you know what a hash function does,? for example. Can you understand the technical aspects of an ICO and how the system works when explained in a whitepaper?
There are many resources out there to help: YouTube videos, many cryptocurrency forums out there such as Bitcoin Talk and even Cryptomorrow here. Check an article on what to know before trading cryptocurrencies.
Besides, take 10 to 15 minutes to do some research about a coin that someone has said you should buy. Do not forget the basic things to check such as whether the dev is still active on the forum, how long the coin has been out, whether the coin has real market ideas if the dev has any history of delivering on crypto projects, and what the community says about the coin.
Make sure you go in with a personal plan: which cryptos to trade,? when to buy and sell,? when to cut losses,? and when to review that plan.
Giving out your money too easily for nothing
Many ICOs out there is simply ridiculous. For an investor, any developer asking for money upfront should have something to show for it. Many people throw away their money with unworthy ICOs because of mistake number one above. Make sure to check an article about ICO scams and another one on the characteristics of an ICO scam.
For starters, a project or idea should at least have some market demand even at launch. In addition, if possible, make sure the devs have a clean history of successful projects and a community. Read another article about pump and dump in cryptocurrency trading and your trading should be much better after that.
One important tip for cryptocurrency traders is that they should know when their trade is out and when to call it a day and move on to something more profitable. Unfortunately, many traders keep on defending the coin even when their trade is clearly not performing well for a long time.
For instance, if the price is going down and stays that way for a long time, do not take your chances hoping for a rebound. Learn to know when to stop fighting a losing battle and leave the energy for the next step. You can always go back and buy a coin when it's worthwhile.
Although it is okay for every trader to experience streaks of bad luck, these must never wipe out all the investment capital. Make sure to engage small amount of money in trading a coin so that losses won't wipe out your money at once -- this also allows you to easily recover later.
Storing all coins in a single place without security
Storing the coins in various places lowers the risk of getting hacked or facing fraud.
Frequently changing from one currency to another
Sometimes, rushing from one coin to another only increases your chance of meeting a fraudster, although you shouldn't stick to a coin for the sake of it especially when losing.
Being in rash or compulsive trading
In crypto trading, a week is like a year and your patience will be tested for sure. Of course, trading in brand new coins requires that you be on a quick trigger in order to not lose much. However, not being patient will, in most cases, cost you money.
If the coin price dips, for instance, just remember to use FUD to your advantage when entering new coin markets.
Also, when the price of a coin starts going up, you are 99.99 percent sure that someone will go to the crypto forum and throw around a scam word so people will panic and dump. Don't be on the wrong side of the divide. People who start the scam word at the forums buy at this time and not after the FUD hoping that after the FUD, people will start panic buying and this is when the price goes up and they sell at a higher price.
Another tip is that instead of trading too many times, a novice trader should instead try watching and understanding the market and the trends.
Making panic-based decisions
Markets are super volatile in Altcoin trading scene and you might actually end up panicking very many times in a day or week. While it is O.K. to trust your gut feeling and act, panicking and fear will make you lose further because it gets you to a point of not acting right in view of the facts. For instance, the price could go down slightly as a result of FUD and you might end up selling the coins at a loss if you panicked. Sometimes, staying calm will help you notice tactics of whales, act on FUD, and decide what rightfully helps you in the end.
If you are buying established coins, then take some time to learn the trends and analysis that come into play. You can learn good market trends at CptCrypto.com and YouTube.
It is normal, for instance, to see price range changes of 100$ a day for Bitcoins, so you should not panic at all. Make sure to know the trends for the coin in question.
Using the wrong exchange market
There are many crypto exchange markets out there but different markets are more suitable for different coins. Make sure to research which market is most suitable for your coin, otherwise, your withdrawals might not get honored or the markets could become inaccessible at the wrong time.
Using Twitter the wrong way
95 percent of everything you see on Twitter is hyped and a "good buy" simply because someone bought the coin before you and now wants to sell (to you, hopefully). Never make a buying or selling move based on just a Tweet: instead, make a research move if the Tweet appears to say something valuable. Cryptogab has put together a list of Twitter accounts that you could subscribe to and get real advise on trading.
Trying to or forcing trade
When volume is low, no one is trading (buying or selling) and never try to force trade just because you are bored, because you will lose finally if guys start trading. Instead, brush up your trading tactics and take a course on trading during this time.
Relying on sheer hope
While hope will help you get up at times of huge losses, do not use emotions in trading altcoins, because they can easily break your plans. Stick to your plan and stay as rational as possible.