Basic crypto coin trader errorsBasic crypto coin trader errorsDwain Ross 18 / January / 20 Visitors: 42
Basic crypto coin trader errors
You can make good money in the cryptovolta market. But when you want to make regular profits, you should remember about common mistakes of cryptovite traders and not make them. Price fluctuations in the cryptovoltaic market attract new participants, as a result of which the capitalization increases steadily. But not everybody is able to earn money, because newcomers make a lot of mistakes, which lead to the loss of the trading deposit.
If your plans include long-term investment in cryptov currencies, the most appropriate strategy is to "buy and hold". Day trading and short term trading are also able to provide an acceptable return and allow you to raise your capital relatively quickly. Let's analyze ten major mistakes, which are worth knowing about for beginners in the cryptovoltaic market.
Lack of personal analysis of the market situation
Often, newcomers join traders' companies in social networks and track what is posted there. There is nothing wrong with this, but for effective trading you need to perform personal market analysis. It should be understood that there are a lot of people in social networks who promote some coins in the interest of their enrichment, telling that their price will soon rise in the tens or hundreds of times. Buying coins only based on what these people say, you are likely to lose money. Most of them are either fake accounts, or paid advertising agents campaigning to "inflate" the coins. They make an artificial fuss, working on the fears of novice traders to miss a successful trade and attract buyers to the crypt currency, which they themselves are going to let go.
It is important to make a personal study before entering the market. You need to understand what the coin is aimed at, at what stage of development it is at, how its value moves. Undue entry into a transaction based on pumping leads to disaster.
Decrease in the value of technical analysis
Often, traders believe that the ability to read charts, or technical analysis, is either a very complex or optional skill. Such inferences are erroneous. Price movements on any market have certain regularities. Their understanding and identification significantly increases the chances of successful trading.
As in all aspects of life, in the cryptographic industry you will get absolutely no guarantees. Understanding the highly speculative and emotional mood of this market, technical analysis will sometimes fail. So, when you have serious intentions about trading, you need to understand such basic things as candlestick analysis, support and resistance levels, trend lines and so on.
First of all, you should understand that the resistance zone is a price interval, which the coin rate has tried several times, but failed to break through. Similarly, the support level is an area from which the price repeatedly bounces up. The definition of such zones makes it possible to assess where the price is at the moment, and whether it has space to move up or down.
Trend lines are also a fairly simple concept. If the price is in an upward trend, it forms an ascending Low. When descending Lows occur, it means that the trend is moving down.
Sell at the bottom of the chart; buy at the top.
The cryptovoltaic segment is very volatile. This suggests that the price is changing all the time. Whoever is afraid of it will be left without money all the time. Panic selling is a typical mistake of inexperienced traders. They first enter the position without making the necessary research, and then, having noticed a sudden price drop, they sell their own coins, so to speak, "cutting off losses".
The problem with this approach is that at the end of such a sale you practically lose money (when you have not sold, you have not lost anything yet). In some situations, limiting the loss actually makes sense, but in most coins, mainly the price bounces back to the top after a few days, and maybe even hours. Having noticed the new movement, the same traders, who have just sold their own assets, buy coins again, only at more serious prices, and the cycle goes in a circle. Buying at the top and selling at the bottom is the right way to ruin.
Lack of an exit plan
You picked a good entrance, and the price went up. What's next? Take profit and go out? Or continue to hold the deal? If so, why? Most young traders have not developed an exit plan and work quite chaotically. Most often this causes the loss of probable profit or the return of deals to a loss, as a result of which it is the limit of all desires to remain at one's discretion.
As it has already been said, when you buy a long-term crypt-currency deal, it is not trading. But when you decide to take up trading with virtual coins, you need to take a course to learn how to trade in the cryptovoltaic world.
When you start trading according to your own profit taking plan, sometimes the price will rise above the levels you have set, but the trader must always be prepared to do so. One of the effective exit strategies is to close the trade in parts. This allows you to immediately take part of the profit and get the opportunity to catch the future direction up.
Choosing a new bitcoin
Over the past year, Bitcoin has risen from $1,000 to $20,000, which is in fact a huge rise. Ethereum and Litecoin also gave good profits, but not all coins can boast the same.
Certain coins, as a result of large emission volumes or other factors, remain in some price range (let's say, Ripple). It is a naive plan to expect the investment of 2000% or 4000% of them.
The trader should know the features of each coin, which is trading, among which the historical behavior of the value and future prospects, and plan their own transactions in the right way.