5 mistakes in options and cryptocurrency trading that traders allow

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5 common mistakes that cryptocurrency and binary options traders make

Cryptocurrency is one of the most popular markets nowadays. With high volatility, a wide range of assets and 24/7 availability, it’s a great place for all types of market participants, including speculators, traders, and investors.

In order to become a successful cryptocurrency trader, you will need to learn and practice hard. One of the fastest ways to gain real experience and to improve your trading skills is to learn directly from others’ mistakes. In this article, we will show you 5 common mistakes that beginner cryptocurrency traders often make, as well as methods to avoid them.

1. Using Too Many Technical Indicators

It is undeniable that technical indicators are useful tools for cryptocurrency traders. However, adding too many indicators on a chart not only doesn’t help you trade better, but also confuses your analysis.

As you already know, the technical indicators are separated into two categories: lagging and leading. The lagging indicators can help you determine assets’ trends, while the leading indicators can tell you when reversals may occur. Using just one indicator of each type, you have a complete trading system.

However, many traders think that the more indicators they use, the better they trade. This concept is wrong because most indicators in the same type provide the same signals in certain cases. Therefore, they don’t help you trade better at all but make your charts look cramped instead.

The key to better trading is not about how many indicators you use, but how adept you use your indicators. You can simply use a Moving Average and a Relative Strength Index (RSI) to analyze the market, as long as you know how to use these indicators well. It’s about quality, not quantity.

2. Trading Too Often

Cryptocurrency is a highly volatile market. This means, there are plenty of short-term trading opportunities available.

Sounds very potential, right? Be careful! You can be trapped!

As there are plenty of opportunities available, many cryptocurrency traders will try to trade as much as possible. They think that more trades equal more profits.

This is a serious misconception!

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In fact, trading too often not only doesn’t help you earn more profits, but also makes you:

All of these things are harmful to your long-term trading result.

As a digital currency trader, you should not trade too often. Consider using mid-term and long-term strategies with strict trading rules, and prioritize rest. A healthy mind can help you make more accurate decisions, meaning better trading results.

3. Trading Based on Emotions

There are many ways to lose money in the cryptocurrency market; however, the fastest way is trading based on emotions.

Have you ever heard of two terms FOMO and FUD? These terms are used to describe emotional traders.

● FOMO (Fear Of Missing Out) represents traders “afraid of missing opportunities”. For example, when Bitcoin price rose to $20,000, many traders who hadn’t owned Bitcoin or had sold Bitcoin before feared that it would increase further, so they rushed to open bullish orders. They did not know that they bought right at its peak!

● FUD (Fear, Uncertainty, and Doubt) refers to traders who lack knowledge and experience. They are often affected by rumors in the market.

FOMO or FUD traders can’t generate profits in the long term. They can make some profits in the short term, but those profits will soon be erased.

To avoid emotional trades, you will need to strictly follow a trading system with strict risk management rules. Find yourself a system and backtest it thoroughly, then test it on a demo account for at least 6 months. Set up your own trading rules and follow them with high discipline.

4. Constantly Buying When the Market Drops

If you ever traded stocks, you will see that they have many similarities with digital currencies. The uptrend often dominates, and an investor can implement a “buy and hold” strategy.

However, if you bought Bitcoin at its all-time high (ATH), you have become a stranded shark.

In 2020, when Bitcoin reached its ATH at $20,000, many traders predicted that the currency would rise to $50,000 or even $100,000 in the future. So, they constantly placed buy orders while Bitcoin was decreasing. Well, you know what happened then.

The cryptocurrency market has not been legalized yet, so basically, there are not many firm factors ensuring that digital currencies’ prices will increase in the future. In addition, there are more and more thefts occurring in the crypto world, threatening the safety and potential of these currencies. Therefore, do not constantly open buy orders when the market is decreasing if you don’t want to wipe out your fund.

5. Poor Risk Management

Risk management is an indispensable part of a successful cryptocurrency trader. But the sad truth is, a large number of cryptocurrency traders despise this. They arbitrarily risk 5%, 10%, or even 50% of their funds on each trade. Particularly, several traders even go all-or-nothing after a few unprofitable orders.

Remember, no matter how good your strategy is, if you don’t manage your capital well, you won’t be able to earn profits in the long run.

According to financial experts, you should not risk more than 2% of your capital on each order. In addition, during drawdown periods, you should consider lowering your trading volume to reduce losses. If your drawdown reaches 15% of your capital, you may need to stop trading to review your strategy’s efficiency.

The Bottom Line

So you’ve gone through 5 common mistakes of cryptocurrency traders. Let’s summarize them:

● Using Too Many Technical Indicators

● Trading Too Often

● Trading Based on Emotions

● Constantly Buying When the Market Drops

● Poor Risk Management

It is quite easy to avoid mistakes #1, #2, #4, and #5; however, in order to overcome emotions when trading, you will need to practice for a long time. We are all human beings, and we always have emotions. To say that you should avoid emotions while trading doesn’t mean you can do it right away, but you are still able to do it with consistent practice.

If you find it difficult to manage your trading psychology, contact Finmax’s specialists for advice.

These 5 mistakes are definitely not all mistakes that crypto traders often make; however, they are the most dangerous ones. If you can avoid them, you will have your chances of success increased significantly.

“General Risk Warning: Binary options and cryptocurrency trading carry a high level of risk and can result in the loss of all your funds.”

10 Trading Mistakes Crypto Traders Needs To Avoid

Lots of money can be made trading cryptocurrencies. Investors have moved into cryptocurrencies as a result of massive gains cryptocurrency trading offers. This can be seen as the crypto market has grown close to $1 Trillion last year. Unfortunately, not everyone is making money as a result of simple mistakes that could easily be avoided.

Long-term traders are best holding their investments; day traders can also be profitable in the short term, allowing them to increase their investment much faster. If you are a newbie to cryptocurrency trading or just exploring your way in the exciting new market, here are ten mistakes you should avoid entirely.

1. Selling at the bottom, buying back at the top

The cryptocurrency market is liable to change and the cryptocurrencies can be easily manipulated. As a result, price swings are regular, and investors get caught up in this often which makes them lose money. Panic selling is common among newbies in cryptocurrency trading especially when they first get their hands on trading without prior research and when faced with sharp drops.

The problem with this technique of trading is once you placed a sell order, you will lose money. Though selling to cut losses is a wise decision in some cases, most coins will spike again in days, if not hours and then such people seeing a spike in price will buy back at a higher rate; repeating the cycle over and over again. This is a common case in which beginner traders lose their funds.

2. Getting attached to a particular coin

No coin will continue rising forever, not even Bitcoin. You are bound to see good days, or even months and also experience some terrible days as well. The crypto space is evolving with opportunities presenting themselves daily. If you believe in a coin, holding for long-term gains would be considered the best approach, if you are looking to make quick money trading though, you cannot have any emotional attachment for any coin.

Seeing a drop in Bitcoin price from its all-time highs of $20,000 to below $10,000, the best approach would be to hold long term. However, there are many traders which sold it between $10,000 and $20,000 and bought back lower – between $6500 and $10,000 – guaranteeing themselves some extra profit in BTC.

Also, f the price of a particular coin sees a spike as a result of a significant announcement, it’s easy to double or triple your investment this way. Though you need to check the price and evolution, to make sure the spike in price didn’t already happened. Otherwise, you may lose money and feed the ‘whales‘ .

3. The cheaper, the better

A coin below $1 doesn’t mean it is the best time to invest in such currency. Though it’s true that a coin at 5 cents could easily hit 20cents in a short period likened to a coin at $100 hitting $500. A $0.05 coin could drop to a cent, making you lose a chunk of your investment.

The major thing is not to buy coins because they are cheap, that doesn’t guarantee profitability. It’s important to find out why a coin is cheap and what developments are ahead that promises a boost in price shortly.

4. Looking for the next big coin to hit the cryptocurrency market

Last year, we saw bitcoin go from $1k to $20k which is quite impressive. Also, Ethereum and Litecoin have also seen massive gains. It’s important to note not all coins will record such profits.

Due to abundant supply and some other factors, some coins are regulated to specific prices, an example of such coin is Ripple. Investing in such coins and hoping to make over 2000% gain is not a good idea.

As a trader, it’s essential to get a deep understanding of every coin you trade; this includes price history and future projections. This will give you a better insight into planning your trades properly.

5. No need to follow current events in the crypto market

Technical analysis is never enough if you want to be successful with cryptocurrency trading, you need to follow cryptocurrency news and stay up-to-date with current events/developments. The crypto market is highly speculative and swings to both negative and positive events. Getting informed is highly required to be a successful trader.

At UseTheBitcoin.com, we cover every detail in the cryptocurrency world and present our readers with latest updates as they happen. To get these updates instantly, please subscribe to our mailing list.

6. Investing all you have all at once

This is another expensive mistake newbies make, investing all they have on a particular coin. If you find a right spot to buy on your favourite coin, it’s necessary you purchase with a percentage of your money, up to 50%, then hold the rest to see if such coin drops following your purchase. If that happens, you will have more to buy the dip. On the other hand, if there is a continuous surge in price after your purchase, you can always place more buy orders as the market continues on its uptrend. This secures your trades and prevents you from going all-in on a position that goes the opposite direction.

7. Falling for every coin endorsement and not doing proper research

Every newbie joins a telegram group or follows a top crypto trader on social media for signals. Though there’s nothing wrong with that, it’s also important you do your research. There are tons of people promoting coins and market moves across different social platforms for their gains.

If you listen to these people and invest your money in those coins, you are likely to lose out on your investment. Most of these guys are paid promoters who create unnecessary hypes to get lots of people to buy what they are selling.

Proper research is vital before investing in the cryptocurrency market. You need to understand a coin’s use case, price movements, and development stage of such coin. Investing in a coin as a result of price movement is very disastrous.

8. Investing all you have on a coin

Even the best coins have been seen to experience significant dips while other coins stay green. Cryptocurrencies are unpredictable which means no coin; not even Bitcoin is guaranteed to survive long term.

If you are a long-term investor or just a day trader, you can’t afford to put all your funds on one coin. Investing in multiple cryptocurrencies is the key to successful trading and finding good entries in divers coins will increase your profit.

9. Not knowing when to exit

After buying a coin at a reasonable price and you’ve seen a considerable profit, the question now would be “what next?” Most newbies don’t have points at which they take profits from the market. They hold as the market go along, ending up losing all the gains they’ve made with time and will have to stay till they break-even.

This plan may be beautiful if you are a long-term investor, but if you are trading, you need to have a point at which you’ll sell off for some profits. Though you may see price continuously going higher, that’s expected. A good strategy, however, is to sell off in stages and not all at once. This way, you make some profits instantly and still benefit if the price goes higher.

10. Not having basic knowledge of technical analysis

Many traders think technical analysis/understanding price actions are complicated. There’s no doubt that market movements and coin prices have patterns that when identified can be taking advantage of to increase chances of successful trades.

Though there are no guarantees in the crypto market and given the highly speculated and emotion-driven market, charts fail sometimes.

Nevertheless, it’s crucial for anyone who’s serious about trading in the cryptocurrency market to understand the very basics of charts such as candle formations to determine support and resistance levels.

As an essential requirement, you should understand resistance levels and price ranges which a coin has struggled at or failed to break through. Support zones, on the other hand, are areas where prices have been spotted to bounce back. Identifying these spots on the chart will significantly improve your trading.

Trendlines are also quite simple, it’s indicated by price making higher lows and higher highs, and a downtrend is indicated by price making lower lows and lower highs.

If you have any trading tip or feedback to share, feel free to use the comment box below.

The 7 Costliest Mistakes People Make When Day Trading Cryptocurrency

Day trading cryptocurrencies may lead to outsized profits — but, if you don’t know what you’re doing, it can lead to outsized losses instead.

On April 12th, 2020, Bitcoin’s (BTC) price jumped over 10% in a single minute. If you’d been properly positioned with a good strategy, you could have made a single trade and increased your position’s value by 10% almost instantly. On the other hand, if you were shooting in the dark and didn’t have a strategy, you could have taken a big hit in 60 seconds.

We’ve rounded up the 7 costliest day trading mistakes to try to avoid. Steer clear of these, and you could be on your way to becoming a more responsible day trader—and, if you’re ready to try trading for yourself, sign up for SFOX to access the best price execution on all major crypto assets with our proprietary smart-routing order types.

Mistake #1: Trading on FOMO and FUD

When you trade based on your emotions rather than analysis, chances are good that you’ll lose your money before long. And if you’re not careful, news cycles and forums will cloud out everything except your emotions.

Maybe you remember when, thanks to The Wall Street Journal , everyone thought the SEC was going to meet on May 7th to decide whether or not Ethereum (ETH) was a security. If you had taken up a large position in ETH prior to the 7th, you would have been disappointed when the price fell from

$743 USD amidst news that there actually was no meeting after all.

And then you’d have been more disappointed when you realized that ETH’s price still has yet to recover to the price at which you initially bought it.

You could try this instead: Develop your own day trading strategy with indicators and rules that you understand and hold yourself to. Then read the news, but read it with a grain of salt — and try not to make trading decisions based on rumors that might be debunked the very next day. You shouldn’t buy just because you see the price rise and fear missing out.

Think about evaluating your rules over time: look at your performance and gather data on which rules are making money and which are losing money. Don’t be afraid to revise the rules that are losing you money. Updating your rules in a results-driven way may help keep you disciplined and resistant to FOMO and FUD.

Mistake #2: Using the wrong tools

Not all cryptocurrency products were built with day trading in mind, and some can end up limiting one’s ability to day trade effectively.

Wallets are a good example of this. Many cryptocurrency storage solutions — for example, hardware wallets like the Trezor and Ledger — are designed with maximum security in mind (with good reason!). But these aren’t meant to be used with day trading: the amount of time it takes to sign and confirm transactions from wallets can delay trades that you’re trying to perfectly time.

You could try this instead: Keep the cryptocurrency that you use for day-trading on the exchange where you’re doing the day trading. Look for security tools that are appropriate for day trading — tools like whitelisting and U2F support.

Mistake #3: Entering a position you can’t exit

Sometimes, it can be easier to enter a position than it is to exit that position. Certain exchanges are fairly illiquid: they don’t have enough buy orders to support easily selling off your cryptocurrency at a good price at any given moment. At other times, exchanges that usually have healthy liquidity might have really low trading volume — for instance, if you’re trading on a holiday or weekend.

If you’re stuck in an illiquid position, you might end up missing a great opportunity for profit-taking, forcing you to stay in a position for longer than you want.

You could try this instead: You could try to avoid times where you know there’ll be relatively less liquidity in crypto — like nights and weekends — by closing out all of your positions every night and over the weekend. You might also consider maximizing the liquidity to which you have access by trading on a platform that allows you to access many different exchanges at once, rather than trading on only one or two specific exchanges.

Mistake #4: Overemphasizing technical analysis

We started this article off by saying that you should consider developing a technical strategy for day trading, rather than trading based on your emotions. While that’s true, it can also be risky to focus too much on technical indicators and ignore what’s actually happening in the market.

For instance, you might have a day trading strategy that exploits differentials in tightly correlated cryptocurrencies: BTC and ETH, for example. If you think that BTC and ETH are tightly correlated and you see that ETH is disproportionately low, you might buy ETH with the expectation that ETH will rise up again to restore its typical relationship with BTC. However, this might be a case of contagion: the whole market is going down. In this case, your technical analysis could be your downfall: you’ve just bought into a position that’s still going down.

You could try this instead: Be sure to keep reading crypto news and price analyses — not just staring at charts. Even though you shouldn’t give in to the FOMO and FUD generated by many crypto articles, you still need the news in order to stay apprised of market conditions. Also consider setting stop-loss orders to ensure that your losses will be mitigated in the event of something like contagion.

Keep a critical perspective on the data that exchanges are providing you: technical analysis is only as good as the data it’s analyzing. When looking at volume numbers, for example, ask yourself: What’s the source of this information? Has it been validated? Could other factors be skewing the number? Beyond just looking at the numbers, it’s important to understand the meaning of those numbers: what they imply, and what biases could be influencing them.

Mistake #5: Not looking at the right spread for the trade you’re trying to make

It’s easy to look to the top of the book for the spread without thinking about it and assume that that represents the price you’d get for your trade.

The top of the order book will show you the lowest price at which someone is willing to sell a cryptocurrency, and the highest price at which someone is willing to buy it — but that doesn’t mean you can buy or sell the amount you want at that price. In fact, the amounts of a cryptocurrency that people are offering to buy or sell at the top of the order book are often quite small, which means that, if you’re trying to buy or sell a larger amount, you’ll have to go deeper into the order book: finding a counterparty who’s offering a price that isn’t as good as the “market price.”

It might be tempting to watch a line graph like the one above and try to day trade off of it, but that won’t give you any information on the depth of an exchange’s order book. That means you probably won’t be able to tell what you’ll actually be paying for your trade.

You could try this instead: Be sure to watch an exchange’s order book to better understand the actual prices you can get for the amount of cryptocurrency you’re trading. Consider breaking your order into smaller pieces to get a better price, or use a trading algorithm that lets you execute your larger order as a stealth order at the top of the order book.

Mistake #6: Not using proper hedging strategies

Risk management is potentially the most important and most often neglected aspect of day trading. If you don’t know how to calculate your value at risk or use multiple exchanges to hedge your trades, you’re exposing yourself to risk.

Suppose you’re watching BTC’s chart and notice multiple Doji candlesticks, a classic indicator of indecision in the market. You have a feeling from a few other indicators that the price is about to rise, so you buy more Bitcoin — but alas, the indecision swings the other way, and you’ve lost money (but hopefully not that much, since you’re placing stop-loss orders!).

You could try this instead: Buy and sell on multiple exchanges; then, when you see those moments of indecision in the market, buy more of the cryptocurrency on the exchange with the lowest price, while simultaneously selling some on the exchange with the highest price. That way, your risk is mitigated: if the price rises, you’ve made money, and if it drops, you can buy back in at the lower price.

Mistake #7: Day trading at all?

We’re not kidding here! As the previous six mistakes suggest, day trading effectively takes a lot of time and effort — and it can make you myopic to the long-term trends of the market.

For instance, suppose you’re day trading Bitcoin and have a rule that you’ll close your position if its price hits 10% over the price for which you bought it. Bitcoin hits that marker so, like a good day trader, you follow your rule strictly and sell. But then, unexpectedly the price just keeps going up as the market continues to recognize Bitcoin’s value. By focusing on day trading, you missed out on greater potential profits.

You could try this instead: If you believe in the mission, technology, and value proposition of a particular cryptocurrency, you may want to consider buying and holding on to it for the longer term. That has the potential to be less stressful and more profitable than day trading.

Patience is rewarding

The term “day trading” suggests manically executing on trades every few minutes. But, as many of these mistakes show, day trading success doesn’t necessarily come for finding a new potential trade every second: you might find more success simply by taking your time, finding opportunities you’re fairly confident in, and executing a couple of trades every day or two.

If you’re interested in getting started in day trading, be sure to check out our beginner’s how-to guide. The more information you’re armed with before you get started, the better equipped you’ll be when you dive into the market.

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Common Mistakes of Crypto Trading

Cryptocurrencies trading has sparked many interests. The publicity about people who have become millionaires overnight from trading bitcoin contributed to this. Crypto trading works in similar ways to stock exchange and forex trading. While traditional exchanges trade in fiat, crypto exchanges deal in digital currencies via trading platforms.

Fiat trading platforms are centralized. For this reason, they are vullnerable to manipulation. Central banks have repeatedly breached the trust that backs fiat. Crypto assets were developed to correct this. Since Satoshi created the first digital asset in 2008, crypto has come a long way.

At first, it was viewed more as a payment system than as a replacement for fiat. Today, many merchants accept crypto in place of fiat. In fact, in countries that are moving towards cashless economies, cryptos have become popular. Some countries have even begun paying civil servants with digital assets instead of fiat.

No doubt, it is only a matter of time before crypto totally replaces fiat. In the same way, crypto trading now competes with forex trading. This is a much welcome change from digital currency. Crypto trading exchanges are transparent and decentralized. Unlike forex trading, it is gradually pushing the world towards a decentralized global economy.

Tech giant Facebook’s Libra project had a ripple effect on the crypto community. This development sparked interest in crypto trading again.

Common Mistakes of Crypto Trading

Crypto trading is a way to potentially attain financial freedom. As an investor, it is possible to strike gold overnight by trading crypto. It is also possible to be sunk in the twinkle of an eye. To prepare you against that, we have identified some common mistakes of crypto trading.

1. Bottom trading

Most people who are new to crypto trading fall for this. It is when you monitor the downturn of a crypto asset. Bottom traders aim to buy at the absolutely lowest prices possible. Suffice to say, you could lose all of your investments in this way.

2. HODLing

No, we did not make a mistake. It describes keeping rather than actively trading a digital asset. Just like bottom trading, hodling too long may break your heart.

3. Gut Feeling

Do not do it. If the history of crypto has revealed anything. It is that the price of crypto is very volatile. Trusting your gut is great. You might have made a sack of cash from this feeling before. That is great but it is not reality. A trade can collapse and result in a huge loss quite suddenly. Master the technique of suppressing your emotions like fiat brokers. There is always an alternative.

4. Trading worthless crypto

Until 2020, Bitcoin was the only crypto in town. Today, there are about 3,000 cryptocurrencies. Some of them are very promising. Many of these altcoins, however, are worthless. Be careful so that you do not fall victim to the pump and dump common to these altcoins.

5. No security

If you have been looking for the best advice, here it is. Do not ever let your crypto remain on an exchange when you are not actively trading. Most exchanges are not immune to hacks. In fact, over 1.5 billion have been lost to hacks. This has left many traders stranded.

The best way to avoid these mistakes of crypto trading

With all these mistakes, crypto trade may seem like a scary ordeal. Most traders avoid the pitfalls of crypto trading via trading software. They are algorithms that analyze the market to find the right trading opportunities. Then a trade is done such that you profit from the spread. You do not even have to be there! In addition, these algorithms are devoid of human emotions or meddling that influence trading. Bitcoin Profit is one of many available options.

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