When trading cryptocurrencies, the potential for profit is exciting and it’s probably what has drawn a lot of people into trading.
However, if you are new, it is easy to fall into crypto trading habits that might be detrimental to you in the long run.
Thus, we have compiled a list of some of these crypto trading habits to watch out for.
Taking Large and Risky Positions
Novice traders fall prey to the ‘go big or go home” idea, and so they end up plunging much of their finances on a single trade.
The logic behind this idea is completely flawed, dangerous and reckless. When starting out, it is important to note that every single unit of funding is crucial.
As such, we advise that you stick to strict money management rules in order to protect your capital. The most successful traders adhere to similar rules and restrictions on each trade.
Most novice traders are undisciplined and trade irresponsibly mostly because they are mostly influenced by their emotions which makes them continue a prevalent cycle of indiscipline, causing them to fail.
Similarly, trading and gambling compulsively are sure ways to lose in the long term.
When you are on a losing streak, you might be compelled to keep trading in order to overcome the tide, but that’s a wrong move because chances are you will keep making mistakes. In this situation, the best trade is no trade at all.
Another form of trading that is irresponsible is when traders have no idea or clear understanding of the product they trade. It is advisable to learn about the product before you trade and not go in blindly.
Over-leveraging occurs when a trader gets over-confident in the outcome of a trade and decides to stake more than necessary.
Applying a lot of leverage can provide substantial profits if the trade is successful, however, it is not advisable as it is a risky practice that can cost you a lot of money
To be a successful trader, you should never undertake trades leveraged beyond your means or even beyond your strategy.
As such, preserving capital and aiming for small but consistent wins should be the concern of novice traders.
Poor Risk Management
Trading responsibly would require a certain level of risk management. it is important to use stop-loss orders when trading on a major exchange in order to protect you from hemorrhaging.
‘Stop orders’ are very important because they remain active even when the traders aren’t to protect their funds as the crypto markets are.
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