7 Crypto Trading Tips and Common Mistakes
Bitcoin and alternative cryptocurrency (altcoins) have presented a tempting and rewarding opportunity for investors. The world of digital currency holds a wide range of opportunities, yet people who become active participants and are involved in buying and trading cryptocurrencies must exercise caution; if you’re not careful, you could lose everything. In order to stay on top of the market and improve your trading skills, watch out for these common mistakes, and take these tips to heart.
Forget Your Emotions
A general rule for trading, whether you’re dealing in cryptocurrency or not, is that you should never involve your emotions. This applies whether you’re trading either for the long term or the short term. Fear of loss or getting excited about certain prospects can disrupt your plans. Pick a plan of action—and stick to it despite your fears or excitement.
What Goes Down Might Not Come Up Again
A common mistake is to search for crashed coins and invest a lot in them in the hope that they’ll return to their glory prices, bringing you a high ROI. Keep in mind however that there are coins that are years away from their peak levels, and there are thousands of crypto coins out there, so once one goes under, it may never resurface.
Time is Money
A week in the crypto market is equivalent to three months in traditional capital stock exchange when it comes to events and occurrences. If you want to get into crypto trading, you have to follow it on an hourly basis, and not everyone can keep this commitment. You need to consider the amount of time that will be involved.
Place Commands Properly with the Order Book
The order book is a table that shows supply and demand commands for a crypto coin. A coin’s value is determined by the last executed transaction, and it’s all about volatility for crypto. To make profits, you need to know where to place commands. Do this by referring to the order book and finding the optimal levels at which you can place the commands.
Don’t Consider Only Coin Price
A common beginner’s mistake is to consider the coin’s price, rather than the market cap. You should calculate market cap performance by multiplying the number of shares by a single share’s price, just as you would for a real-world company. For altcoins, multiply the number of existing coins by the coin’s price. This will give you a great idea for whether it’s a good investment.
Don’t Buy A Lot of Altcoin Because Bitcoin Increases
Many people who missed the Bitcoin train look to cash in on other altcoins. However, this can be a common mistake. Examine the investment dollar-wise, as you’ll exchange fiat currency in order to buy crypto, instead of buying with Bitcoins, which can cost you more in the long run.
Don’t Put All of Your Eggs in One Basket
The bottom line is that crypto is very unpredictable. Sometimes people reap profits of hundreds of percent, but Bitcoin can also lose value against the US dollar. Even holding a part of altcoins such as Litecoin and Ethereum are not enough to keep your investments from being wiped out. As with all investments, put your money in several places, and be careful.