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18 Feb 2020
2 min read

Most Popular Mistakes When Trading Crypto

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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.

 

High levels of volatility surround the Cryptocurrency sphere every day. However, new aspiring traders join the Crypto community hoping that it will be the answer to their financial concerns. It’s logical to think that an industry that allows traders to make money with just a decent internet connection and low capital, would be getting the attention of young investors. But does it really take just a decent internet connection and some money to start earning profits?

Here are some of the most popular mistakes novice traders make when beginning their Crypto trading journey:

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1) Not practicing their trades before moving on to the real thing.

One very important detail to avoid when starting to trade Cryptocurrencies, is placing a trade before being ready. Every trader that wants to become an expert, should first develop the knowledge and experience required to engage the market. OspreyFX offers all traders the option to first trade with a demo account before trading with real money. A very effective tool for those who want to learn before risking their capital.

2) Trading with emotions instead of reason.

The human mind can be quite an obstacle sometimes. For traders, keeping emotions controlled comes as one of their main responsibilities. It is normal for everyone to see the value of a coin rising abruptly, and then wanting to place a trade just for the fear of missing out (FOMO). But every trader must always keep in mind that prices can go up in a matter of minutes but also suffer a massive drop in the same timeframe. Therefore, it is important to keep emotions balanced, every position opened needs to have reason and a proper analysis behind it. To get a deeper understanding of how emotions can affect trades, click here.

The role emotions play when trading cryptocurrencies are not limited to FOMO only. Every new trader must know that it is normal to experience more losses than profits, which means they shouldn’t get too emotional when suffering a loss. And that takes us to the next common mistake.

3) Averaging down and adding to losing trades.

No trader should add additional value to losing positions. Every trader has beliefs about the price some coins may reach in the future basing their thoughts on events happening around the industry. But every trader, and especially new ones, should always base their decisions on evidence and analysis rather than intuition. This will help them protect their capital.

4) Not setting up a stop-loss order.

One of the main issues, when traders trade emotionally, is denying losses. Every new trader must make peace with the idea of accepting losses and move on to the next trade. A stop-loss order helps traders control their open positions when they’re not online, as many big movements in the market happen during late-night hours. When traders set a stop-loss order they reduce the chances of ruining their account.

There are certainly many mistakes new traders can make when starting to trade cryptocurrencies. The important part is for them to be able to identify where they acted wrong and avoid making the same mistake in the future. With these simple mistakes taken into consideration, every trader can make the beginning of their journey a less turbulent one.

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