Trading can be like gambling, especially if you are just starting out.. A few profits in the beginning of your trading journey can give you an adrenaline rush which can lead you into investing more than what you are prepared for. And without a well defined trading strategy, many times investors end up losing hundreds of dollars within a few minutes! Eventually you will make losses and quit without ever knowing how Crypto trading could have been a golden opportunity for you.
For this reason, today we bring to your attention Six Trading Mistakes That Crypto Beginners Make and What You Can Do To Avoid Them.
1. Starting with real money at the beginning
Trading in whatever way is a skill, and honing a skill takes countless hours of practice. To learn a new skill there are a few rules which should be taken care of. The best way to get acquainted with trading rules is to have a demo with virtual money before investing in real money. In other words a mock of the actual trading you are planning to do which is risk free. With Backtesting you can first have your trading strategies tested on historical market data. This gives you time and scope to make mistakes and learn from them.With those learnings you can make modifications to your trading strategy.
Mudrex is the best platform to create trading systems and backtest its performance. The platform provides an exhaustive set of parameters with charts to help a trader understand performance and make appropriate enhancements. Check the below video to know more – https://youtu.be/pCZt9hCs4uY?t=525
2. Not examining the situation yourself
You invest your hard-earned money. If you do not understand the strategy-planning and the product’s worth your money may go down the drain in a few days. Simply relying on a few experts from different mediums who just inform when to buy and sell currency, may lead to a huge financial loss.These so-called experts take a high brokerage fee as well. This might take away a decent amount of your trading profit. Hence, the best way is to make your own strategy, test them on Mudrex platform, and then follow the same plan to trade in crypto currencies without paying the high brokerage fee.
3. Inevitable Losses
Trading is something in which losses are certain to happen and you can’t avoid them. The biggest mistake of a beginner in crypto trading is that they might not accept the loss. This would cause anger and frustration. Hence they would start trading just for taking revenge for the losses incurred. Often attempting a much more risky trade in order to cut down these losses might lead to more financial losses. This kind of trade is revenge trade and becomes highly virulent for the beginning of your crypto portfolio. Set risk limits for yourself and trade accordingly.
4. Margin Trading
There’s no doubt that Crypto trading is rewarding as well as very risky. Often beginners get into margin trading which is pretty much risky unless you are confident enough to invest money on crypto trading. Margin Trading is an act of borrowing additional money or crypto currency by leveraging the crypto currencies that you already own to buy additional ones. In such a type of trading, the margin can be rewarding as well as highly risky. Thus it is not recommended to margin trade until and unless you understand the risk completely.
5. Following the herd
In any kind of trading one individual should not follow the herd blindly as this could go in any direction and the individual might face convenient losses. Further following the herd could make you pay heavier amounts or you might get into FOMO i.e.Fear of Missing Out. To avoid this, before making a start with real money, make a set of rules which needs to be followed and have stop losses to limit the loss incurred on your trade.
6. Not Doing Fundamental Analysis
A mistake that is made by beginners is that they just start trading in one of the popular crypto currencies. This would enable them to make profits in the short term. However,there could be one fine day when that particular currency faces a huge drop. This would incur a single huge loss making their portfolio red. Hence analysis before investing is very crucial. Know your fundamental trading indicators. If you are investing in someone else’s bot like the bots in Mudrex Invest, make sure you study their trading strategy.
Be wary of these six mistakes and you would go a long way in the trading world. Happy Trading!
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