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Top 6 Common Cryptocurrency Trading Mistakes Made by New Traders

Cryptocurrency Trading Mistakes

The crypto markets can be an attractive place for novice investors. When you first begin trading, it may feel similar to legalized gambling, where people make and lose their fortunes. However, the correct approach starts with an in-depth understanding of the financial market. Even with a firm grasp of cryptocurrency market fundamentals, a first-time investor is susceptible to making errors. This is the reason many experienced as well as full-time investors trust Crypto Genisus, a market-leading cryptocurrency trading software that is designed to carry out extensive technical analysis. By producing lucrative and accurate trading signals, it takes the guesswork out of trading and ensures the investors never lose their money.

Let’s look at a few common cryptocurrency trading mistakes made by all new traders/investors when they are starting out.

  1. Ignoring the Basics of the Crypto Market

While you are learning to trade online for the first time, you cannot afford to overlook the cryptocurrency market’s fundamentals. This includes comprehending concepts such as ‘Going Long’ (buying first, and then selling), ‘Going Short’ (selling first, then buying), bid price, ask price, bid quantity, offer quantity, and crypto price changes. Additionally, you must understand how the following metrics are calculated before investing in any cryptocurrency:

  • Book value
  • Return on equity
  • Earnings yield
  • Gross profit margin
  • Debt to equity ratio
  • Interest cover ratio
  • Market capitalization
  • Dividend yield
  • Price-earnings ratio

 

  1. Not Having a Proper Investment Plan

While seasoned investors typically have a well-defined investment strategy, first-time investors frequently become disoriented by unplanned investments. If this is your first time trading crypto online, you should have a personal investment plan that includes the following:

  • Your overall objective and goals, whether long-term, mid-term or short-term
  • The capital you are prepared to invest
  • Your risk tolerance: determining the maximum amount you are willing to lose
  • Capital to be invested in various forms of equity, such as stocks, futures, and derivatives
  1. Investing based on Speculation or Guesswork

If this is your first time trading online, you should avoid investing based on rumors or market speculation. You must conduct market research; compile information about current trends and patterns, and then support them. Numerous crypto brokers provide extensive technical analysis by monitoring the stock markets on a minute-by-minute basis. You must thoroughly study the updates and charts and make educated choices.

  1. Wrong Risk Assessment

The crypto markets are highly volatile. Therefore, when trading online for the first time, you should always strive to balance excessive risk-taking and prudent risk-taking. Additionally, many first-time investors are unaware of the margins they are willing to sacrifice while taking risks. Thus, it is critical to understand your risk tolerance.

Market experts advise investors to purchase popular cryptocurrencies that have a bigger market cap. While these virtual currencies, too, are subject to market risks, you can be confident they will eventually rise or will not fall below a specific price. Additionally, you can be assured of receiving dividend payments when investing in reputable cryptocurrencies.

  1. Not Diversifying the Investment Portfolio

Investors trading online for the first time frequently overlook the importance of diversification. Here, it’s critical to remember that investing in a single cryptocurrency is never a good idea. If you do not diversify your portfolio, a market crash or a single negative market movement can result in a massive financial loss. Ideally, your portfolio should include a wide variety of cryptos.

  1. Failing to Choose the Right Brokering Platform

Numerous crypto brokers offer comparable services. Investors who are new to online trading frequently choose a brokerage platform that does not offer an all-in-one account in addition to cutting-edge stock and scheme recommendations.