Trading cryptocurrencies can be very difficult and stressful at times. As the market is very volatile you could either make huge gains in a small amount of time or lose a huge sum of money at the same time. Making mistakes in this market can be costly. Big opportunities may be missed completely because of mistakes. I would like to start out with a few common mistakes that we make.
PANIC SELLING (Selling at a loss)
- When I first started trading cryptocurrencies, I did not know how to read charts or predict the true actual of a coin which led me to have so much fear and panic selling. I started investing in Litecoin during the Segwit Activation period and during that time I would panic everytime the prices started to fall. For example when I bought litecoin at 17 dollars and it fell to 15 dollars I would panic and take my losses. Even though I was still earning, those earnings always becomes lesser and panic selling has also led me to make losses after that. I continued trading and still I was panic selling . After a hard lesson, I realised that actually if you invest in something that is worthwhile, even if it goes down you should wait because litecoin hit a high of 25 dollars a few days later and a new high of 98 dollars a few months later. We can't fully predict the market but we need to have an accurate valuation of a cryptocurrency. In fact , I was so noob that I would have been better off just keeping my litecoins for a few months which could lead to a 6 x return.
SELLING TOO FAST OR TOO LATE
I realized when I first started trading, I would often settle for small gains whether it was a few percent and I would then miss a huge uptrend. This was because of my inability to read the charts properly. I would buy and sell many times and I eventually buy low sell low and later on I ended up buying on the highs which increased my risks. I did not know what were risk to rewards ratios or what to expect from trading cryptocurrencies. After lots of learning, I would settle for a 30-50% on short trades and for my long term I would now set a specific price which is reasonable. I would then wait and be patient till it happens. This way, I would not be affected too much looking at the movements of the market.
INSUFFICIENT RESEARCH
Reading updates on current projects or development are definitely very important to determine whether the prices could soar in the near future and would also allow you to take profits at the right time. Good news can significantly drive prices up and bad news will have the complete opposite effect. We need to be aware of new events that are happening in the market. We also need to research good projects where we can make the huge gains in the long run by getting our long position locked in early before the project goes big.
This is just my story about trading cryptocurrencies. It is not an advice. I do hope you share your stories too. We could exchange our knowledge and I would definitely like to hear your stories.
Reminder: You only lose money when you sell at a loss.