5 mistakes in options and cryptocurrency trading that traders allow

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5 common mistakes that cryptocurrency and binary options traders make

Cryptocurrency is one of the most popular markets nowadays. With high volatility, a wide range of assets and 24/7 availability, it’s a great place for all types of market participants, including speculators, traders, and investors.

In order to become a successful cryptocurrency trader, you will need to learn and practice hard. One of the fastest ways to gain real experience and to improve your trading skills is to learn directly from others’ mistakes. In this article, we will show you 5 common mistakes that beginner cryptocurrency traders often make, as well as methods to avoid them.

1. Using Too Many Technical Indicators

It is undeniable that technical indicators are useful tools for cryptocurrency traders. However, adding too many indicators on a chart not only doesn’t help you trade better, but also confuses your analysis.

As you already know, the technical indicators are separated into two categories: lagging and leading. The lagging indicators can help you determine assets’ trends, while the leading indicators can tell you when reversals may occur. Using just one indicator of each type, you have a complete trading system.

However, many traders think that the more indicators they use, the better they trade. This concept is wrong because most indicators in the same type provide the same signals in certain cases. Therefore, they don’t help you trade better at all but make your charts look cramped instead.

The key to better trading is not about how many indicators you use, but how adept you use your indicators. You can simply use a Moving Average and a Relative Strength Index (RSI) to analyze the market, as long as you know how to use these indicators well. It’s about quality, not quantity.

2. Trading Too Often

Cryptocurrency is a highly volatile market. This means, there are plenty of short-term trading opportunities available.

Sounds very potential, right? Be careful! You can be trapped!

As there are plenty of opportunities available, many cryptocurrency traders will try to trade as much as possible. They think that more trades equal more profits.

This is a serious misconception!

In fact, trading too often not only doesn’t help you earn more profits, but also makes you:

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All of these things are harmful to your long-term trading result.

As a digital currency trader, you should not trade too often. Consider using mid-term and long-term strategies with strict trading rules, and prioritize rest. A healthy mind can help you make more accurate decisions, meaning better trading results.

3. Trading Based on Emotions

There are many ways to lose money in the cryptocurrency market; however, the fastest way is trading based on emotions.

Have you ever heard of two terms FOMO and FUD? These terms are used to describe emotional traders.

● FOMO (Fear Of Missing Out) represents traders “afraid of missing opportunities”. For example, when Bitcoin price rose to $20,000, many traders who hadn’t owned Bitcoin or had sold Bitcoin before feared that it would increase further, so they rushed to open bullish orders. They did not know that they bought right at its peak!

● FUD (Fear, Uncertainty, and Doubt) refers to traders who lack knowledge and experience. They are often affected by rumors in the market.

FOMO or FUD traders can’t generate profits in the long term. They can make some profits in the short term, but those profits will soon be erased.

To avoid emotional trades, you will need to strictly follow a trading system with strict risk management rules. Find yourself a system and backtest it thoroughly, then test it on a demo account for at least 6 months. Set up your own trading rules and follow them with high discipline.

4. Constantly Buying When the Market Drops

If you ever traded stocks, you will see that they have many similarities with digital currencies. The uptrend often dominates, and an investor can implement a “buy and hold” strategy.

However, if you bought Bitcoin at its all-time high (ATH), you have become a stranded shark.

In 2020, when Bitcoin reached its ATH at $20,000, many traders predicted that the currency would rise to $50,000 or even $100,000 in the future. So, they constantly placed buy orders while Bitcoin was decreasing. Well, you know what happened then.

The cryptocurrency market has not been legalized yet, so basically, there are not many firm factors ensuring that digital currencies’ prices will increase in the future. In addition, there are more and more thefts occurring in the crypto world, threatening the safety and potential of these currencies. Therefore, do not constantly open buy orders when the market is decreasing if you don’t want to wipe out your fund.

5. Poor Risk Management

Risk management is an indispensable part of a successful cryptocurrency trader. But the sad truth is, a large number of cryptocurrency traders despise this. They arbitrarily risk 5%, 10%, or even 50% of their funds on each trade. Particularly, several traders even go all-or-nothing after a few unprofitable orders.

Remember, no matter how good your strategy is, if you don’t manage your capital well, you won’t be able to earn profits in the long run.

According to financial experts, you should not risk more than 2% of your capital on each order. In addition, during drawdown periods, you should consider lowering your trading volume to reduce losses. If your drawdown reaches 15% of your capital, you may need to stop trading to review your strategy’s efficiency.

The Bottom Line

So you’ve gone through 5 common mistakes of cryptocurrency traders. Let’s summarize them:

● Using Too Many Technical Indicators

● Trading Too Often

● Trading Based on Emotions

● Constantly Buying When the Market Drops

● Poor Risk Management

It is quite easy to avoid mistakes #1, #2, #4, and #5; however, in order to overcome emotions when trading, you will need to practice for a long time. We are all human beings, and we always have emotions. To say that you should avoid emotions while trading doesn’t mean you can do it right away, but you are still able to do it with consistent practice.

If you find it difficult to manage your trading psychology, contact Finmax’s specialists for advice.

These 5 mistakes are definitely not all mistakes that crypto traders often make; however, they are the most dangerous ones. If you can avoid them, you will have your chances of success increased significantly.

“General Risk Warning: Binary options and cryptocurrency trading carry a high level of risk and can result in the loss of all your funds.”

5 Advice for Common Mistakes Made by Cryptocurrency Traders

When you start trading in cryptocurrency, it is sure that you will face losses as well as gains during investment and while trying to make profits. But the important thing here is that you learn from your mistakes and make sure to avoid them in the future.

Here we are going to discuss some of the mistakes that most of the cryptocurrency traders make while dealing with cryptocurrency. The advice shared in this article will help you avoid them as you start your investments in the crypto market.

1.Wait for Price Consolidation

In the cryptocurrency industry, this fact is true that one should buy less and sell more. Now as the trader or investor does not know when the low is going to slide even lower, he must wait for the price consolidation. This means that when the price starts to become constant, or you see the chances of it going up, then attempt to buy. This lowers down the risk of losses.

2. Use of Trading Bots

Most of the cryptocurrency traders do not bother to use trading bots because they think that they can give enough time to their cryptocurrency business. But they neglect the fact that they are not only used as your alternative for work, but this is an efficient and speedy system. Therefore, use one reliable trading box for yourself. As there are several of them available in the market, try to read their reviews, such as Qprofit System Review, etc, to make sure their credibility.

3. Wise Response in Bad Situations

Psychologically, when a person is in stress, anxiety, and depression, he is unable to make rational discussions. In cryptocurrency business, you can come across extreme losses that can drive you crazy. At this point, it is very important that you keep yourself calm and relaxed. Such a wise response on and the situation will help you get out of that loss easily and in a short time. Otherwise, the chances are that you will make the situation even worse. So, in such situations, take your time and try to make responsible decisions.

4. Keep Control in Urgent Situations

Some people make a huge mistake of selling their position when they need money for some urgent thing. There is no harm in selling your position, but the mistake you make is when you do it quickly without thinking about it. Most of the times, such steps result in much more loss to the trader than it would have been otherwise.

5.Resist Temptation of Overtrade

Most of the traders in cryptocurrency business are every restless that they trade in everything when they have money in their pocket. This is a very wrong approach to deal with your money and your business. You must only invest when you have a great idea and conviction.

These are some of the common mistakes that cryptocurrency traders make when they are running their business in this industry. They forget to take small things into account and get themselves into trouble. By taking help from the advice mentioned above, you can avoid losses in your cryptocurrency business and improve the chances of profit.

12 Cryptocurrency Trading Mistakes Everyone Should Stop Making Now

The cryptocurrency market is a highly volatile environment that can experience savage, wild swings at a moment’s notice. It’s essential to stay on the top of your game at all times when playing the crypto game. With this in mind, in this article, we’ll be presenting 12 of the most common mistakes made by traders.

Even the most experienced crypto traders fall into these traps on a regular basis. It’s important to take some time to step aside from the screen and assess your strategies and habits, critiquing your trading process to ensure avoiding these common snares.

The 12 Cryptocurrency Trading Mistakes Everyone Should Stop Making Now

We’ll now proceed to break down the 12 most common mistakes that cryptocurrency traders of every skill level are prone to make without even being aware of them:

1. Persistence Despite Constant Repetitive Failure

While persistence in the form of adversity is a powerful technique that can help you overcome many obstacles in life, it’s very different from persistence in the face of failure. Addressing adversity involves learning, research, introspection, and self-assessment.

Booking consistent losses on a strategy, however, and failing to make any adjustments or assessments to correct a failing technique, is one of the most obvious mistakes a trader can make. It’s important to keep in mind that in many cases the approach itself is the problem. Always avoid attributing consistent losses to variance or “bad luck”.

2. Failing to Analyze Losing Trades

Many traders, when experiencing a loss, are content to sweep failure away under the rug without assessing the reasons why it occurred. It’s impossible to make a correction without understanding what needs to be corrected first- always dismantle your losses to determine as best you can where you went wrong.

3. Missing Critical Trades From Your Watch List Due to Inattention

This seems like a glaringly obvious mistake, but in the fast-paced cryptocurrency industry it can be extremely easy to lose focus. Always be sure to set an alert. If you’re intent on selling when a security reaches $30, and it’s currently hovering around the $25 mark, make sure you set an alert for $29.50. Using this method, you’ll never miss another breakout.

Don’t neglect your watch list- leaving a trade for dead because you noted it but didn’t set an alert is an extremely frustrating position- there’s nothing worse than finding a hastily scrawled note to yourself regarding a potential breakout several days after the rush is over.

4. Taking on Trades That Don’t Meet Your Strategy Criteria

If you’re focused on a specific strategy that works for you, stick to what you know. You’re not making fruit salad, you’re trading. Why trade apples and bananas if you’re geared towards oranges? Avoid unnecessary complexity or variance.

5. Flying Blind Without a Concrete Trading Strategy

This is another glaringly obvious mistake, but the extremely accessible nature of the cryptocurrency industry has led to many market players entering the fray with little to no oversight or plan. You may have picked a crypto that you like- it may even be performing well- but now what?

When do you sell? What is your target? Have you considered stop losses? Have you considered the fact that the trade may not even work out at all? It’s essential to consider these factors before even getting on board.

6. Buying in on Somebody Else’s Trade

You might find that surrounding yourself with like-minded crypto traders results in shared ideas and strategies. Avoid getting into a situation, however, where you are reliant on your peers to tell you whether you should stay in or get out. If you’re taking on a trade, it’s essential that you own it, regardless of where it came from.

7. Revenge Trading

The market doesn’t care if you win or lose. Many traders make the mistake of chasing a poorly performing trade just because the crypto they’re trading has caused them to lose money before and it “owes them”. This superstitious thinking is all too common in the crypto ecosystem.

8. Playing Favorites

This mistake is closely related to mistake #7. If a crypto ended up generating you a tidy profit, it’s likely that you may come back to it even though you most likely should avoid it.

This mistake is far more common and harder to shake than number 7, as getting rid of the good vibes can be harder than the bad. Always play the crypto market with a detached mindset free from emotional.

9. Ignoring Stops Altogether

Ignoring your stops is one of the worst mistakes you can make. Regardless of how effective your technique is, if you’re ignoring your stops then your trades are becoming investments- and, in most cases, they generally turn out to be bad investments.

10. Over Trading

The extremely fast paced nature of the cryptocurrency market makes over trading one of the worst mistakes a trader can make. Over trading leaves traders maxed out, stressed, and trying to achieve too much in a single day.

You may have never intended to become a crypto day trader, but you’ve found yourself getting in and out several times on a daily basis. In these scenarios, it’s best to sit out a few rounds in the penalty box while you collect your wits- in most cases, however, traders chase losses trying to grind it out. Avoid this at all costs. Over trading also brings us to our next mistake, which is…

11. Under Trading

Experiencing a string of losses has the propensity to freeze your trading. Riding the pine and ignoring quality signals are some of the most common signals of under trading. If you’re feeling the burn, it can be best to take a short break and assess why everything went pear-shaped, then get your act together, but be sure to act before too long. “Taking a break” can often be the same as hiding in fear.

12. Time Frame Commitment Refusal

It’s important to position yourself firmly in either the daily, short term, or long term cycle. While having a couple of different portfolios, it’s important to ensure that you possess a concrete time frame in which you plan to achieve ROI. In most cases, scattershot approaches are the least efficient.

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