by Rohit 

September 14, 2020

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When you are in trading as a business, stop losses getting hit is part of trading strategy. There is no trading strategy that is profitable, every single time.

Every trade you take, always has 50% chance of being in profit.

So, your trade being in loss is ok. This will be recovered in next trade or next to that.

But there are are certain trading mistakes that are totally in your control and you should avoid them. These trading mistakes cost dearly because they cost dearly and they don’t come with any strategy or stop loss.

So, without wasting anymore time –

Trading mistakes to avoid

These trading mistakes are applicable to all kind of trading but they are particularly true in case of crypto trading, for the following two reasons:

  • Crypto markets are highly volatile. Such moves are not there in other trading markets.
  • Cryptocurrency exchanges are not regulated by any central authority. Hence your safety is in your own hands. Being careful is very important.

These trading mistakes are all equally important and thus not in sequence.

Not testing your strategy before starting with real money

When you first learn about cryptocurrency and then reasons that you should be trading cryptocurrencies, you want to give it a try. That’s good so far.

Then you head over to the cryptocurrency exchange and you start the process to open your account. The process is so smooth and the possibility seems so good, that you want to start right away. Take a pause.

If you are planning to invest and hodl in Bitcoin – please go right ahead. That is good.

But if you plan to trade, then please head over to the paper trading section and test out your strategy.

You see, even if you trading strategy was good in other markets like forex or stock market, you still need to test that it works in crypto trading market. The reason is the volatility in crypto markets is quite big as compared to other markets.

Just paper trade, make the adjustments in your trading strategy and you are good to go. But before that, please read the remaining mistakes too.

Entering into margin trading too soon

This is not exactly a beginner to crypto trading problem, but quite close to it.

You see if you think about probable benefits you will make from margin trading because you made a profit in your last 3 trades, then it is too soon to jump into trading crypto on margin.

You should wait for at least 30-50 trades to decide if your strategy can benefit from using margin trading.

Trading without understanding Risk Management

This is an ongoing process. But as beginner in crypto trading, it is very important to understand risk management.

In trading, Risk management is the only safety you have for your capital.

Even if you have to delay your trading for some time, please do spend time in understanding and implementing risk management in your trading strategy.

Trading without researching about the coin – stay with established coins

Here is the quick tip – When you are new, stay with established coins only. Like Bitcoin, Ethereum, Litecoin etc.

Keep your funds in form of stable coin if you are not in any crypto position.

It is highly recommended to invest/trade in coins which you understand. The first step is to read the whitepaper of the coin.

Then you can visit popular crypto forums to read more about the coin.

Only then, after you are convinced about the background of the coin, you shall invest or trade in the coin. Don’t let FOMO drive your trading decisions.

Trading based on others recommendations

When you are researching about the coins or trading opportunities, it’s quite common that you will see ads about some super successful trading recommendation group or channel.

The problem with such recommendations is that you don’t have any control. And, no learning. On top of that, if you make a loss, you can’t hold them responsible – whatever claim was there in the advertisement.

The path of learning yourself might be slow, but that is the only way to make big money.

Trading on too many strategies or pair simultaneously

When crypto market is in bull run, every coin or trading pair is rising. In such scenario, today one pair is rising faster and tomorrow other one will.

This leads to buying of too many trading pairs, so as not to miss the bus. This is a solid trading mistake.

When you are trading too many pairs, it is very hard to keep track of wrong trades and thus your exit from such trades will be impacted.

Same goes for trading using too many strategies. For example, buying 2 coins for HODL, 2 pairs trading with scalping, trading a pair on swing and then running few trading bots on the side.

It is nearly always better to concentrate your efforts and make the best use of limited set of opportunities.

I have traded only 2 sets of trading pairs for the last 5 months and they have rewarded me heavily. And I backtested it on 4 pairs, the results were slightly more, but then efforts required were significantly more.

Start with single trading pair and then once you are comfortable, you can try to apply it on one more and then increase, till you find your sweet spot.

Final thoughts

In trading, your funds are your bloodline. If you make loss, that is real loss of trading capital.

You should take every precaution to safeguard your funds. Risk management takes care of business side of trading.

Apart from that, every other risk is avoidable if you make sure to avoid the trading mistakes listed above.

Please share your thoughts on trading mistakes, you would recommend others to avoid while trading in cryptocurrencies, in the comment section below

About the author 


A trader and investor with over 11 years in traditional stock markets. Got introduced to cryptocurrencies in 2018 and got hooked.
Now spend half of the day in trading cryptocurrencies and another half in researching/reading about the whole ecosystem and cryptocurrencies in specific.

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