Bitcoin Trading: How to Avoid 8 Common Mistakes
The cryptocurrency market is far from stable: some traders go bankrupt, while others, on the contrary, make substantial sums from buying and selling bitcoins. The fluctuations do not deter both beginners and professionals. But here's the crucial point: if at the initial stage you are already thinking about future losses in a favorable and stable market situation, you have already made one of the mistakes in cryptocurrency trading. Let's analyze what novice traders should not do on the trading platform. FlyPay has compiled a list of 8 typical mistakes in buying and selling bitcoins.
Buying and Selling Bitcoins - Mistakes:
Mistake 1. Deadly Sins
The root of the problem should always be sought within oneself. First and foremost, analyze your behavior on the trading platform and see how other traders behave. It's better to learn from others' mistakes than your own. The main qualities of a trader are humility and the ability to think rationally in any situation. They cannot fall for buying bitcoins at an inflated price at the peak of its growth. You might make a profit once but lose everything in a single day. Temptations are present on the exchange, and often, beginners succumb to them: Pride: Few like to admit their mistakes, but it's necessary! Understand the situation and continue forward, taking into account the experience gained. Greed: Low fees and loud promises from scammers will always exist. The main thing is to resist the temptation and not give money to someone in hopes of a larger profit. Anger: Negative emotions are not the best adviser – avoid buying and selling bitcoins based on emotions. Envy: Copying others' strategies is a path to nowhere. Develop your plan of action and follow it. Overindulgence: An experienced trader always knows when to stop. There's no need to invest the starting capital in a cryptocurrency that will deflate in the future. Laziness: Trading is a job. Regularly monitor market fluctuations and continuously improve your skills.
Mistake 2. Waiting for the Maximum Price
Any trader is pleased when the price curve rises, especially on an asset in which funds are already invested and was purchased at a minimum price. If such an asset is not in the portfolio, a feeling called the "fear of missing out" emerges on the trading exchange. The trader puts all the capital into the highest position. Does this lead to success and profit? It's 50-50: sometimes it pays off, and sometimes it doesn't. However, such a strategy is not considered successful, and this should be understood, even if it worked once.
Mistake 3. Participating in a «Pump and Dump» Scheme
«Rump and dump» - a lot is said about this scheme today! It translates to "pump and dump," and its essence is ordinary exchange fraud. A group of individuals promotes a specific asset - advertising, promotions, etc. At the peak of its value, scammers withdraw funds and disappear. Many traders think that participating in the "pump and dump" scheme with its initiators will bring income, but believe me, there will be no insider information! So, you can lose money in no time. It's crucial for a novice to learn to distinguish real information from fake. Today, many cryptocurrencies unexpectedly rise in price, often indicating fraudulent collusion and intentional inflation of value. It's necessary to understand why the cryptocurrency is rising in price to choose the right trading plan.
Mistake 4. Trading on an Illiquid Market
Demand creates supply! To raise the price of your cryptocurrency, there must be those willing to buy it. Focus on demand when choosing coins. Suppose a trader believes in the potential of a particular coin, but it is still cheap, and there is no demand for it. In that case, with a probability of 100%, they will be an outsider in the market. Less-known coins are suitable for long-term investments. If there is a desire to earn "here and now," it's better to prefer market leaders.
Mistake 5. Mistake in Value
Cryptocurrency traders often face this issue. They trade small portions of bitcoins – in thousands and millions. Making a mistake after the decimal point by not typing a digit is straightforward. When planning to buy a lot of bitcoins at a low price, double-check everything carefully.
Mistake 6. Selling Mistake
We think everyone knows the story of a user who sold 3 bitcoins at the price of litecoins. He posted about it online, and the operation happened by mistake. While this is one case, many beginners remain silent about losing money. It's a common mistake. Sending Bitcoin Cash to a Bitcoin wallet… Large trading platforms usually don't deal with such mistakes. Before the operation, the trader must check everything themselves – correcting the transaction's course is practically impossible.
Mistake 7. Excessive Activity
Expecting significant profit in a short period is not the best option. Let's provide an example. A trader bought cryptocurrency yesterday and sees that its value has risen by 15% today, immediately selling the asset. Such financial operations lead to a loss of funds. The trader pays a commission and additional costs associated with the transaction, ultimately receiving zero profit. Quick selling of a growing asset is not always justified. Usually, it's a missed opportunity to make more significant profits. After a week, the coin may rise in price by 50%.
Mistake 8. Lack of Strategy
We have emphasized multiple times that a trading strategy plays a vital role in the buying and selling of bitcoins. Trading based on intuition is challenging, and it is often what is observed on the exchange. A novice trader buys a coin, sees that its price has risen, buys another one – and again success – a similar situation. They acquire a third asset... and its price collapses. The trader ends up in a loss. Such behavior on the exchange indicates only one thing – the absence of a well-thought-out individual strategy. Create your systematic plan of action, and you will undoubtedly become a guru of the cryptocurrency exchange!
