Whenever you start something new, whether it be a job or a brand new hobby, there’s always a period of adjustment. You know what the goal is and the results you hope for, but you’re making a lot of mistakes getting there.
Often you feel a bit lost and don’t know how to reach the end. It’s the same for beginner cryptotraders.
Most beginners will give up fairly quickly because their mistakes are having a big impact on their results. They think trading is “just not for me” or not an avenue worth exploring. So they quit.
But here’s the thing about mistakes: you learn from them. You can avoid making these mistakes, simply by being aware of them.
Here are the 5 mistakes every beginner cryptotrader makes:
- Unrealistic expectations.
- Getting too caught up in emotions.
- No broker research.
- Too focused on winning.
- No education.
This is a big mistake beginners make. Ever since bitcoin reached an all time high of almost $20,000 USD back in December, people see bitcoin and cryptos as a way to make a lot of money.
They forget that cryptos have been around a while. Things normally don’t move that fast! And in recent days, the market has evened out again.
It’s still a volatile market with lots of movement. It’s still tradeable! But to think that you will be able to go from $100 to $100,000 in a month is not realistic.
That simply won’t happen. The people who made a lot of money from the all-time high were investors – not traders.
Most of the bitcoin millionaires were already heavily involved in the crypto world – they were the early adopters. Sure, it might happen again. You might get lucky and cryptos might go up to a new all time high.
But you should not come anywhere close to relying on that. Instead, set realistic trading goals. Realise that being profitable with trading is going to take you a while.
You need to put in time and practice to get there. You need to be prepared to spend about a year to learn the ins and outs of trading.
This might sound a bit daunting at first, but as with anything, you need to learn the basics. If your expectations are set too high you will only end up disappointed.
Getting Too Caught up in Emotions
You see it all the time. People are convinced that X crypto is the best crypto out there. All the rest are going to fail and are not worth looking at.
So, they put all their money in a long trade.
They don’t look at market conditions, they don’t do any research, they just follow their gut.
Again, they might get lucky. But most of the time, trading this way isn’t going to end up profitable in the long run.
Market conditions are very important. You need to analyse them, look at your charts, and make an educated decision.
There are too many factors involved with price movement. Don’t let your emotions control the rational part of your brain.
Of course, if you do strongly believe in a cryptocurrency, you can always invest some money into it. But investing isn’t the same as trading.
You can still go short on a crypto that you think will succeed. Going short doesn’t mean you think it’s going to fail!
Due to the volatility in the cryptomarket, you are very likely to experience a big loss at some point. This can be avoided with proper risk management.
Nobody likes losing and beginners like it even less.
People get angry and emotional when experiencing a loss. It’s important that you don’t let that influence your trading. Some people will attempt to take revenge trades whilst others will increase the amount of trades they take.
Both of these are a big mistake! They both usually result in even more losses. People will start to ignore their trading plan and skip over important steps of their analysis.
To be a successful cryptotrader, you have to learn to lose. Take a step back, relax, and take a break!
Too Focused on Winning
Beginners think that they need to win the majority of their trades. That’s not true at all, not even close. The important thing with trading is that you are profitable. We cannot stress this enough.
You can lose 60% of your trades and still be profitable. Think about it logically. Are you right 100% of the time? No.
Does it make sense statistically to win every single trade you take? No. Then why would you need to be right every time you take a trade?
Sure, it feels good when all the trades you take are winning trades. But it’s not a big deal if they aren’t.
It’s not easy to remember this when you’ve just lost 6 times in a row. Try remembering it when you’ve lost 13 times in a row!
But even then, you can still be profitable. Remind yourself of this in times like these. Keep a trading journal. Look at your stats.
Assess, plan accordingly, and keep trying! We’re aware that this is a concept that is pretty hard to grasp for beginners. It’s a psychological barrier that many struggle to overcome.
Not Doing Any Broker Research
We see a lot of beginners who simply google “best crypto broker” and pick the first one. With forex trading you might be able to get away with it, but in crypto trading this is a big no-no.
The cryptomarket is unregulated. This means there is a huge opportunity for dodgy brokers to take advantage of beginners. You need to do research on the brokers and see what other people have said about them.
When you’re putting your money in the hands of a broker you need to make sure that broker is in fact trustworthy.
The broker you end up using should also fit your trading style. If it requires a minimum deposit of $5,000 but you can’t afford to lose that money, then you shouldn’t use that broker!
We know there’s many, many brokers out there. It can be hard to do all the research yourself. That’s why we’ve reviewed some cryptobrokers for you which you can take a look at here.
We are continuously working on getting more reviews out there. If a broker you are thinking of using isn’t on our review page then let us know!
Crypto trading is a new and booming industry. Chances are you don’t know much about cryptocurrencies to begin with. Entering the cryptomarket without any education can be tough.
On top of that, beginners don’t know much about trading in general. Trading doesn’t get taught in schools.
Most people end up jumping in without any real understanding of how it works. They think that once they know what the charts mean, they can figure it out for themselves.
Other people did it, so “why can’t I do this?”. Why would you go through two to three years of horrible trading experience, making mistakes and not being profitable?
Because people have done this for you. They are sharing their knowledge and experience so you don’t have to make all the mistakes they did when they were beginners.
Save yourself precious time and get educated. Find a strategy that suits your needs and stick to it. Don’t make the same mistakes so many other beginners do!
It’s frustrating enough to learn something new, don’t make it worse by trying to figure it all out yourself.
So why not get started today? We have a free beginner’s course all about the cryptocurrency market. Give yourself a great start by cutting out one of the 5 biggest mistakes beginners make! Even if you’ve already started learning, going through our course will give you more insights to the cryptomarket!