Common Mistakes to Avoid When Trading Cryptocurrency

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Cryptocurrency trading

It doesn’t matter if you are a cryptocurrency expert or just trying your hand at investing – you need to learn a lot to successfully build your trading path through the cryptocurrency industry.
Unlike traditional markets, cryptocurrency trading is full of volatility, dishonest players and irrational price movements.

Perhaps the most common (and simplest) mistake people make when trading cryptocurrencies is to buy a coin after it has already shown dizzying growth.
Investors who bought Ripple (XRP) and Tron (TRX) at the peak in 2017 were definitely disappointed just a few weeks later, in early 2018.
You may instinctively want to throw money in the ring when you see that some kind of coin rises by 30-40%. Do not do this.

Extreme price increases are almost always accompanied by some pullback. By the time you hear about a hot coin, it is usually too late.

If you have not done research, do not believe in the fundamental values ​​of the coin and do not want to keep it for the long term (more than a year), wait for the correction to invest.

Pamps and dumps

Pamps and Dumps (PnD) is the kind of thing that is guaranteed to leave you without pants. If you suddenly see how an unknown coin suddenly flies up to heaven, be extremely careful.
This is most likely part of the PnD scheme. In general terms, certain people coordinate efforts to artificially increase the price of a coin (pump), then sell it to those who suffer from the syndrome of lost profit (dump).
When you come across such a coin, the first thing to check is the trading volume. CoinMarketCap is a great resource for this. If the 24-hour volume is less than $ 1 million, forget about this coin.

Mistake Two: Ignorance of the subject of your investment

No need to blindly follow the advice of any “guru” from Twitter or YouTube when making investment decisions. Often these prominent people receive rewards for promoting certain coins.

Even John McAfee, one of the industry’s most famous experts, admitted that he received money for promoting projects. Check the coins that you are offered to invest in.
At a minimum, you should spend half an hour studying any project you plan to invest in.
Consider what problems he is trying to solve, the composition of the team and the economic parameters of the coin.
Does the project have any significant partners? Are there any well-known names among the members of the advisory board? You should know all this.
Even a quick Google search allows you to find some information that will turn into garbage what could seem like gold.
Ideally, you should take another step and read the documentation for each project that you are investing in.

Joining an investment group or forming a new one can greatly help with this.
This forces you to conduct research in order to be able to reasonably explain your investment decisions to other participants.
It also creates an environment in which you can take a fresh look at your assumptions if others doubt your reasoning.

Third mistake: selling at the wrong time

Selling on emotions is the opposite of chasing pumps, but they are made from the same test. It is difficult, but you need to remain calm when trading – do not let emotions take over.
Everything is decided by time – coin prices can drop by tens of percent, and then take off, bringing up to 200-300% of the profit.
When the coin you own begins to fall in price, reevaluate your position before selling.

 If you invested because you believe in the fundamental principles of the coin, you can ask yourself a few questions

  • Have any of the fundamental principles changed?
  • Have there been any ads that could affect the price?
  • Have you stopped believing in a long-term coin strategy?

This is much easier if you follow the golden rule of cryptocurrency trading: do not invest more money than you can lose without any serious consequences.
On the other hand, the prospect of making a profit can also entice you to sell. While making a profit is a smart move, it’s best not to sell all your savings.
Under certain circumstances, a coin can rise even higher.
A popular trading strategy is to withdraw your initial investment after receiving a certain percentage, leaving all income invested in a coin.
This protects you from a possible depreciation, while leaving a chance to make a profit.

Mistake Four: Lack of Awareness

In a cryptocurrency market that is developing rapidly, you need to constantly be in the know about the latest industry news.
In the absence of weekly or even daily monitoring, investment flows can change, and you will not even know about it.

Twitter, Reddit, and Telegram project channels are also excellent resources from which you can draw information to stay up to date.
Teams often share the latest project news and important announcements on these platforms before they reach the mainstream media.
By joining these communities, you will get the opportunity to participate more actively in projects, and sometimes even influence their development.

Even with these tips, you will definitely make a number of mistakes. Do not despair – this happens to everyone. Part of the investment process is to learn from mistakes and not make them again.
Continuous improvement is what it’s called. And, if you follow this rule, you will become a wizard of trading in the shortest possible time.

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