Crypto Trading Tips and Common Mistakes - Light Bulb and stop Sign

Cryptocurrency Trading Tips and Common Mistakes

Take advantage of some cryptocurrency trading tips and avoid some of the most common mistakes to get profitable.

  • Don’t take too much risk (Make small bets)
  • Keep a slow advancement in the beginning
  • Keep learning all the time

Crypto Trading Tips – Summary

See a full explanation further down in the article.

1. Only Invest What You Can Afford To Lose

One big saving portfolio and a small trading portfolio

One extensive saving portfolio and a small trading portfolio.

Bankroll Management: Make sure you only use the capital you don’t need for necessities in your everyday life. Trading capital should be money you can afford to lose. 

Start with a small investment and deposit more if you have more money left. Don´t invest all your savings at once into a trading account. This is also important for crypto trading risk management.

Stay away from leverage and start with limited leverage once you are ready.

2. Diversify: Never Put All Your Eggs In One Basket

Bitcoin in an egg basket

Bitcoin in an egg basket.

This can be hard if you only believe in one cryptocurrency. However, it would help if you tried to diversify your portfolio anyway. You can invest 80% in the coin you strongly believe in and 20% in another currency. 

Try not only to diversify coins but also the underlying technology of each coin. For example, if you invest in Bitcoin, you might want to look for another cryptocurrency that doesn’t use Proof-of-work.  

You might also want to diversify the number of crypto trading exchanges you hold your trading balance in since a crypto trading exchange can go bankrupt, get hacked, or lose your funds in other ways.

3. Don’t Try To Make Profit In Every Trade

A good bitcoin trader both make profitable trades and take losses

A good bitcoin trader both make profitable trades and take losses.

Don’t try to make a profit in every trade. Take losses. For example, you buy something for $100, set a stop loss at $98, and make a profit of $107. You can be wrong in 75% of your trades and only need to be 25% correct in your transactions. Of 4 transactions, you will lose $2*3 and win $7*1.

You will lose $2*3=6

You will win $7*1=7

Your net win is = $1

4. Don’t Be Too Greedy

A greedy trader spreading cash

This one is hard. If you have taken a significant risk, you need a hefty profit. However, you need to make a profit at some point. A good way to interpret this is to sell portions of your trade. Instead of selling 100% of your holdings, you can sell off 20% and wait a few days.

5. Don’t Have Fear Of Missing Out (FOMO)

FOMO – fear of missing out when a cryptocurrency rushes extremely fast. Don’t invest when a coin has surged 30% in a few hours because you fear missing out on the next 30% for the next few hours. Most of the time, you will invest right at the peak and sell when you’re afraid of losing your investment.

Feelings overall it’s hard to overcome. One way to cut emotions from you trading is to use a crypto trading bot.

6. Maximize Your Winning Trades

Don’t sell as soon you’re breaking even or have a small win. If you took a crypto trading risk with a trade, make sure your winnings exceed the trouble you took for the trade. Otherwise, your losses will exceed your winnings. 

However, it would help if you balanced this against greed.

7. Always Learn From Your Trading Mistakes

Some CryptoCurrency trading Tips and Safety rules for beginner investors. No one is perfect, and no one makes a profit on every trade. 

However, always try to get better results and ask yourself if you could have done anything to improve the outcome. Don’t make changes to your strategy all the time, but if you see that the same mistake frequently comes up, then you need to make a change. Read more about this in our post about how to become a profitable crypto trader.

8. Minimize Your Losses And Set Stop Losses

For active trading, you need to minimize losses to a minimal amount. This is extremely important if you’re a high-frequency trader since you always need your capital for new trades. 

This isn’t so important for long-term trading since you must handle downtrends and upward trends for the long-term uptrend. However, if you’re a long-term trader, you can buy small amounts at peaks and more at dips. There are many different trading strategies and some strategies with a stop-loss are easier to develop by using a crypto trading bot.

9. Reduce Emotions And Stay With Your Strategy

Don’t change your strategy because not everything went as expected in every trade. Set a process and follow it. Re-evaluate your approach if you see too many mistakes. Don’t panic, sell, don’t FOMO, and don’t be greedy. 

If you only invest what you can afford to lose and you diversify, there’s no reason for such behavior as panic sell-offs and similar. By using a crypto trading bot from Coinrule or Bitsgap, you will eliminate your emotions and have time to develop a crypto trading strategy and back-test it.

10. Sell The News And Buy The Rumors

This is a common and old expression related to trading other markets like stocks. It has been seen that the market often overreacts when real news is released and underestimates rumors and speculations.

Common Crypto Trading Mistakes

Most Common Crypto Trading Mistakes

Conclusion On How To Avoid Cryptocurrency Trading Mistakes

In this article, we went through 10 common mistakes done by losing traders. Of course, there are more than 10 mistakes you can do when you’re trading. Cryptocurrenices in particular is hard to trade because it’s such a new asset with less developed tools, strategies and high volatility. 

However, these factors also make it interesting since you can experience huge gains at the same time. Learn to handle the risk and avoid the most common trading mistakes when you’re trading cryptocurrencies. Remember to always learn from your mistakes and optimize your strategy.

Now you are probably ready to sign up with a top Bitcoin trading site and start trading. Also, don´t forget to check out all crypto signup bonuses and offers.

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