7 Costly Mistakes to Avoid When Trading Bitcoins

July 22nd, 2020

Trading in Bitcoins is not a walk in the park by any means; it requires a careful and accurate approach, an understanding of how the crypto market behaves, and the prudence to not let emotions dictate your decisions. Interestingly, when newcomers start to trade Bitcoins, they often fall prey to many first-timer mistakes which have been discussed below. Once you know what these costly mistakes are, you can prevent big losses in your portfolio.

Selling too late or too early: Most newcomers end up doing this. High market volatility and lack of data makes it possible to become a millionaire or pauper overnight. But, if you can do some research beforehand and spread out your investments into the Bitcoin and other successful altcoins, you can handle these ups and downs.

  1. Trading with emotions: This perhaps the commonest and the biggest mistake made by trading newcomers in the crypto world.  The fear of missing out on big trades may make you take wrong and impulsive decisions that usually fail to achieve the desired outcome, and you are left with big losses to cope with. The trick is to avoid investing more money that what you can afford to lose. If you let fear or FOMO take over you will find that you are constantly buying coins in the hope of winning lucrative profits and soon, you have nothing left to invest. You can evade this situation when you use bitcon era app which is an automated trading bot that carries out the trade autonomously for you.
  2. Buying high and selling low: Most newcomers try to buy coins when they are high in value and sell them when low. But this is a huge mistake as past data has shown. Experience traders know how to trade like robots, and instead of selling out when prices nose-dive, they start to buy more.
  3. All-or-nothing purchases: This is a common costly mistake made by traders where they try to purchase or sell off their coins all at one go, instead of doing this in small increments to see if their trading strategy is working or not. An experience trader, for instance, will sell 20% of his assets when he makes 50% profits and will wait to sell another 20% when he makes 100% profits and so on and so forth.
  4. Investing everything in one place: It is a huge blunder to pit all your eggs in one basket and that is exactly what inexperienced traders do. It is foolishness to invest all you have in any one crypto asset like the Bitcoin; having a diversified portfolio helps to mitigate risks.
  5. Heeding to crypto gossips: Another common mistake that Bitcoin traders often make is paying attention to market gossips. Market is volatile no doubt, and anyone can fall prey to “pump and dump” schemes where the big players manipulate the market prices to take advantage of naïve traders. However, there are some early warning signs that you should watch out for. You may use Twitter and Reddit threads for finding out what is really happening from other investors. So, check out any tip that you get from social media platforms and ensure that you verify the credibility of the company backing a certain coin.
  6. Security loopholes: Crypto coins are very susceptible to hacking and a rookie mistake is keeping all your coin in one location. You need to distribute your assets between cold and hot wallets. Cold wallets are not linked to the Internet and therefore, far more secure.