It is possible to make copious amounts of money by trading cryptocurrencies. A number of people have moved into cryptocurrencies due to the massive gains it has to offer to traders and investors. While the market does allow traders to make solid returns, it shouldn’t be forgotten that not all of them are accomplishing this goal. In fact, a large number of people end up losing their funds because of some common trading pitfalls that they are unable to avoid. When you are new to the world of cryptocurrency trading, you are probably not aware of these pitfalls. It is best to learn what they are in order to steer clear of them successfully.
Outlined below are the trading pitfalls that crypto traders should avoid to make profits:
- Selling at the bottom and buying at the top
The cryptocurrency market is a volatile one and cryptocurrencies can be manipulated relatively easily. Therefore, prices are constantly fluctuating and traders who get caught up in it often lose their money. Panic selling is a common practice in new traders because they don’t have any prior knowledge and don’t know what to do when they face sharp drops. While selling is a good decision in some cases for cutting your losses, the cryptocurrency might spike again in a couple of days and then such traders buy it back again at a higher price. Thus, you should avoid selling at the bottom and buying at the top.
- Getting attached to a cryptocurrency
It is imperative for traders to understand that no coin will continue rising forever, not even cryptocurrency. You will experience some good days and some bad ones. The cryptocurrency market continues to evolve and there are new opportunities every day. If you believe in a cryptocurrency, you can hold it for long-term profits, but if you want to make quick returns, getting attached to a crypto is a definite no-no. You can find a reliable broker, such as Primecapitec, and they will give you the chance to trade multiple cryptocurrencies simultaneously to earn profits rather than investing in just a single one.
- The cheaper the better
Lots of crypto traders believe that just because a coin is cheap, it is a good time to invest in that cryptocurrency. The important thing to remember here is that you shouldn’t purchase a cryptocurrency just because it is cheap; a low price is not a guarantee of profitability. You should check why a crypto is cheap and if there are any developments ahead that can boost its price, making it a sound investment.
- Investing everything at once
Another expensive mistake that crypto traders tend to make is investing all their capital in a single cryptocurrency. If you find the right price for trading a cryptocurrency, you should only invest a percentage of your capital like 50% and hold onto the rest to see how your investment fares. If the crypto drops after your purchase, you will not be completely empty-handed and will have some funds to continue your trading activity.
- Not following current events in the crypto market
If you want to achieve true success through cryptocurrency trading, then you need to know that technical analysis is not enough to do so. It is also necessary for a crypto trader to follow crypto news on a daily basis and stay up-to-date with current developments and news. The crypto market is a very speculative one and can swing to both negative and positive events. You need to be well-informed in order to achieve the kind of success you want. Luckily, some authentic brokers like Primecapitec provide their clients with access to the latest market news right on their trading platform to help them in making well-informed decisions.