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5 Crypto Trading Mistakes and How To Avoid Them

  • Post published:September 28, 2022

Cryptocurrency is an exciting investment opportunity that offers a lot of potential returns but also comes with its fair share of risks. It’s important to understand what those risks are before jumping in head first. Here are some common mistakes people make when starting out with crypto trading and how to avoid them.

1) Not understanding what drives price movement in cryptocurrencies.

Three factors affect the price of a cryptocurrency: news (which affects its adoption), technical analysis (which looks at patterns in price movements to predict where it will go next), and fundamentals (Token Metrics, Supply, and Demand).

2) Over-leveraging yourself when trading on margin.

When you trade on margin, which means using borrowed money from the exchange to increase the size of your trades, then you’re also increasing your risk because if the price moves against you then you’ll have to pay back ALONG with interest.

3) Not paying attention to tax laws when trading cryptocurrencies in different countries.

Each country has different tax laws about how profits from cryptocurrency trading are treated so make sure that you understand what applies in your situation before proceeding with any transactions! You could try using resources like Koinly or TaxBit for your crypto taxes!

4) Following Market Fads like #BuyTheDip and #HODL!

Social Media has popularized #HODL(Hold On To Dear Life) and #BTD(Buy The Dip). These social media fads are for ones who are ignorant to research and study. There are tons of great resources out there that can teach you everything you need to know before making any decisions, so don’t be afraid to ask questions or read multiple sources before deciding whether this is right for you!

5) Not Understanding Your Trading Style.

While some trades are risk-tolerant, many are risk-averse. You need to understand what suits your mind the most. It is important to keep profit-target aside and figure out your trading style. While profits are important, you must be in the game and avoid losing out to market crashes.

Happy Trading!