What are the Most Common Bitcoin Trading Mistakes People Make?
Updated on April 5, 2022 | by Olivia Reeve
Bitcoin trading is a relatively new and complex business, and it can be easy to make mistakes, such as buying too high or selling too low. You might also be making mistakes in the way that you trade. Below are the most common bitcoin trading mistakes that people make, so make sure to avoid them if you want to be as successful as possible!
Trading Too High a Percentage of Your Portfolio:
People often underestimate how quickly Bitcoin’s price can go up and can also sometime unsee the market risks related to it. They end up selling first and then regretting it when they could have profited more. You should never trade more than 1% of your portfolio in Bitcoin. Even if you are sure that the price will go up a lot, you should invest only an amount that you can afford to lose without affecting your life in any way.
Using Leverage to Buy or Sell:
Leverage is great when you want to keep your investment simple and small, but if you try to use leverage when trading Bitcoin, this can quickly lead to heavy losses. For instance, if the price of Bitcoin drops in half, then you will lose all of the money that you have invested. It is better to invest without leverage than it is to keep your investment small but generate heavy losses.
Not Paying Attention to Bitcoin News:
When it comes to trading, you must pay attention to the latest Bitcoin news and make sure that you know what is going on in the world of cryptocurrency. This is because when you are trading, you are speculating on what will happen in the future. If the news is changing all of the time, then it can be difficult to predict how Bitcoin will perform in the coming days or weeks. However, this does not mean that you should avoid following Bitcoin news at all times; take just a few minutes each day to see what is going on and make sure that you know what is going on with Bitcoin.
Not Having a Trading Plan:
When you are trading Bitcoin, you must have a clear plan in place. You should make sure that your plan is realistic and also make sure that you stick to it. For instance, let’s say that you have decided to invest in Bitcoin because you believe that the price will rise by 50% over the next few months. As soon as this happens, you will want to sell so that you can generate profits. However, if the price of Bitcoin does not go up at all over the next month, you will have lost money, and your trading plan will have failed. This is why it’s important to always follow a defined trading plan when you are trading Bitcoin.
Trading in Bitcoin on Margin:
When you are trading in Bitcoin on margin, then you are making up for your losses by borrowing money from a broker or bank. The great thing about this line of work is that when the price goes up, your losses decrease and vice versa. However, this can lead to severe problems if Bitcoin’s price drops and your losses are much higher than your deposits. These are all the reasons why it’s important to never trade using margin. Bitcoin trading software can be a great investment if you know what to look for. By researching different software programs and their features, you can find the best one for your needs. Remember to always consult with an expert before making any decisions about your finances. With the right tools in place, bitcoin trading can be a lucrative endeavor.
Not Taking Profits:
When you are trading Bitcoin, you must take profits and move onto other markets. This is because when you hold a position on a specific market for too long, then the price of the asset might go up, and you will lose money in the process. For instance, when you buy Bitcoin, you should set a target sell price and then sell it regardless of how the price is moving at the moment.
Not Using Risk Management:
Risk management is extremely important when it comes to trading in cryptocurrency, which means that you need to be very careful about how you manage risks. For instance, if the price of Bitcoin drops by 10%, then you probably shouldn’t continue holding onto your position for very long because you might lose money in the process. Instead, you should use stop losses and try to sell your Bitcoin no matter what the price is doing.
Not Having a Good Trading Platform:
When you are trading Bitcoin, you must have a good trading platform because it can make the whole process much easier. For instance, a good platform will automatically optimize your charts and also keep track of all of your positions so that you can see how they are doing. Furthermore, such an application can give you trade alerts and help you to take profits when your price is moving in the right direction.
So, did you learn something from this article? If you want to become a professional bitcoin trader, then it’s important that you can avoid the mistakes that are mentioned above. Remember that if you want to make money from trading, then you need to spend a lot of time researching the topic and also find new ways to do things. Always remember that there is no easy way to trade in Bitcoin, and you will need to spend a lot of time finding new strategies and unique ways to profit.