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5 Most Common Mistakes in Trading Cryptocurrencies

If you decided to try your hand at trading cryptocurrency, it’s worth remembering that there are rules here that you do not know which, you will lose money, like most newbies. In order not to lose money and not to be disappointed in trading on the exchange act as an experienced trader, and do not allow the main mistakes that most beginners allow.

Let’s talk about 5 most common mistakes in trading cryptocurrencies:

1. Buying High

People in the cryptocurrency market are driven by two main feelings: greed and fear. If the cryptocurrency has already managed to soar up and significantly rise in price, there is often a sense of lost opportunity, greed and the desire to have time to get at least part of the profits force inexperienced players to buy a cryptocurrency, at a time when experienced players are already thinking about selling it.

To avoid getting into this situation, follow these rules:

  • If there is no objective reason, do not buy a cryptocurrency when the chart tends up and there were already a few long green candles.
  • Pay attention to the resistance levels, and do not buy the cryptocurrency at a time when its price is approaching these levels, if there is a desire to buy, wait until the resistance breaks through.
  • Look at the volume of purchases and sales.

2. Selling coins when they lost their market value

A typical mistake that no fewer beginners face. Only now the trader is moved by the fear of losing his money. The panic on the forums, and the negative news background only aggravate the situation. Unable to withstand psychological pressure, an experienced player sells crypto-accumulation to save at least part of his money, but after a while discovers that the price has stabilized and lack of patience has caused significant financial losses.

To avoid getting into this situation, follow these rules:

  • Fix the loss. Immediately after the purchase, set STOP LOSS, the operation for sale. In case you did not correctly anticipate the price movement, you will lose only a small part of your money (for example, 10%).
  • If there are no objective reasons for the complete collapse of the cryptocurrency, do not sell it, especially if you have already lost significantly, wait for the moment when the price reaches a critical minimum and a market reversal happens.
  • Remember that many experienced players are waiting for you to sell yourself at a loss so that they can buy your cryptocurrencies cheaply and make money on it.

3. Exiting the position by seeing a small drawdown

The market is cyclical, it can not grow forever, there will always be people willing to sell the cryptocurrency. If you see a small drawdown or a lateral move, it does not always mean that the trend will unfold and everyone will start selling sharply. Before buying a cryptocurrency, you should have an understanding of this investment’s long-term, or short-term, if you have conducted a thorough analysis and have chosen a reliable coin for a long-term investment, the price correction should not embarrass you.

In order not to lose funds in this situation, follow these rules:

  • Watch for news related to the cryptocurrency that you bought, and keep your hand on the pulse
  • Set the order for sale just below the support levels
  • Close the deal in parts

4. Buying a cryptocurrency with no real value

This mistake arises due to greed. Not experienced players can not distinguish between pumps, thereby buying cryptocurrency, which was overvalued artificially, and does not really represent value that would affect investors’ desire to invest again.

To avoid this situation, follow these rules:

  • Carefully analyze the project, see its real benefits, team, capitalization, trading volumes, news
  • Do not invest in pumped currencies
  • Do not buy unknown coins that are not listed on such authoritative resources as CoinMarketCap
  • Buy coins that are awarded on CoinMarketCap, with a daily trading volume of at least 1 million dollars, and a total capitalization of more than 10 million dollars.
  • Buy cryptocurrencies that are traded on leading exchanges

5. Lack of strategy

Many newcomers do not follow a certain trading strategy. They do not diversify risks and sometimes invest all their money in scam projects.

To avoid this situation, follow these rules:

  • Invest as much as you are ready to lose
  • Do not put all the money in one cryptocurrency, buy several cryptocurrencies
  • Do not invest in ICO promising a big profit for their depositors

Each situation should be considered individually, before making a decision, consider all the factors that may affect the price of the cryptocurrency in the future.

This analysis can be:

  • Technical
  • Fundamental
  • News
  • Representatives of cryptocurrency
  • Changes in the composition of developers
  • Trading volume and general situation on exchanges
  • Opinion of the public and investors (Forums, Social Network, Github)

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