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18 Mar 2020
3 min read

Most Popular Mistakes When Trading Crypto Pt. 2

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Written by OspreyFX News Team

*OspreyFX would like to state that traders should research extensively before following any information given hereby. Please read our Risk Disclosure for more information.

Most Popular Crypto Mistakes Pt. 2

  • Every mistake traders should avoid when trading recent events.

The world still suffers from the Coronavirus or Covid-19 outbreak that started in China in 2019. Which caused the global stock markets to plunge thus affecting cryptocurrency exchanges as well.

In the first part, we highlighted some of the common mistakes new traders make when beginning their crypto journey. Given the high levels of volatility the market is experiencing due to Covid-19, the focus of this part will go to some of the mistakes many traders make when volatility strikes.

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1) Not following news or recent events that affect the market.

The cryptocurrency market is highly speculative and swings to both positive and negative directions. Having knowledge in technical analysis is not enough to become a good trader. It is important to follow the news that surround the industry and events that may suggest a move is coming by staying updated with recent developments.

Every experienced trader first does a research about a coin before investing on it. Furthermore, if there are news or events affecting the Stock Market and fiat currencies, it’s highly probable that cryptos will make a big move.

Which takes us to the next point.

2) Not doing proper research.

A common mistake new traders make is choosing the direction of their investments based on what they read online. Many Social Media influencers promote coins and explain why those will increase in value based only on what they post. This results in new traders seeing their decisions influenced by someone who’s trying to profit from their investment.

Doing proper research becomes vital for every trader’s wallet. As it can detail the development stage of the coin, its price movements and its use cases. Giving the data required to do a proper investment, instead of buying a coin as a result of price movement.

3) Investing everything on a coin.

Even though Bitcoin is considered the “father of all crypto”, it still suffered some dips in price like any other coin. Raising awareness towards the fact that no coin is 100% guaranteed to survive in the long term.

Cryptocurrencies are unpredictable and traders shouldn’t invest all their funds in a single coin. Investing in multiple cryptocurrencies and finding the right entries can help increase profits, but every trader should keep at least some back up funds to be safe regardless of the outcome.

4) Panic selling.

Usually happens after a trader invested in a coin without doing proper research and after facing a huge drop in price.

Some traders forget the levels of volatility the market can face in just minutes, which makes them lose interest in a coin as they think the price will continue falling. Resulting in losing money after placing a sell order.

It is true that cutting losses early minimize risks but selling orders should be placed based on a previous analysis and research, that suggested the price wouldn’t bounce back. The most common crypto mistakes happen when a trader doesn’t plan ahead.

 

*OspreyFX would like to state that traders should research extensively before following any information given hereby. Please read our Risk Disclosure for more information.