Guy Galboiz Lists Top Trading Mistakes That Cryptocurrency Traders Should Avoid
Brought To You By By Guy Galboiz
Cryptocurrencies are considered to be a new trading instrument in the market, even though Bitcoin was launched in 2009. But, it actually stepped into the limelight last year when it reached massive highs. As a matter of fact, 2017 turned out to be the best year for cryptocurrencies as others including Ethereum, Litecoin and Ripple reached new peaks. The climb of these digital currencies last year changed the fortunes of numerous traders and brought about excitement in new ones as well. People begun to realize that there is a lot of money to be made in trading cryptocurrencies and they expressed their interest in this market.
Therefore, a large number of cryptocurrency exchanges started cropping up to provide traders the opportunity of buying and selling different cryptocurrencies. Furthermore, a wide array of new cryptocurrencies was also launched as the interest continued to grow. Last year alone, the crypto market grew close to $1 trillion. However, one important thing to bear in mind is that not all traders are making money when they trade in the crypto market. Those who are investing in them for the long-term should know that holding is the safest strategy, but in the short term, even casual trading or day trading can prove to be profitable. It can enable you to increase your stack quite quickly.
Nevertheless, this can only happen when you are able to avoid some of the common mistakes that are often made by cryptocurrency traders. What are they? Guy Galboiz, an aspiring Crypto Entrepreneur, has listed some of the top trading mistakes, knowing which can be extremely helpful for you. Let’s take a look at these:
Mistake 1: Not doing your own research
Almost everyone who is part of the crypto market follows Twitter traders for signals and joins Telegram groups and there is absolutely nothing wrong in doing so, as long as you remember to do your own research. Nearly all social mediums have incorporated the practice of shilling, which means promotion of market moves and cryptocurrencies for personal gain. This means that you will find a number of traders claiming that a particular cryptocurrency is going to move favorably soon or experience a rise in value.
If you end up listening to these people and make your decisions based on this information, you are going to lose a large sum of money. Majority of these shills are paid promoters, fake accounts or part of pump and dump groups that are trying to create hype for promoting fear of missing out (FOMO). In this way, they manage to convince people to buy what they are selling.
Guy Galboiz says that it is essential to remember that the most important step to take before entering a market is doing your own research. You need to know what a cryptocurrency does, how price movements occur, what is the stage of development and lots more. Conducting trades blindly just because you have seem a pump can lead to disastrous results for your investment.
Mistake 2: Not being familiar with basic charting fundamentals
There are a lot of crypto traders out there who think that technical analysis or charting is either too complicated or simply over-rated. Arguments can be made for both viewpoints, but it cannot be denied that crypto prices and market movements have patterns that can be identified and can later be used for boosting the chances of successful trades. Like every other thing in life, there are no guarantees that can be made in the crypto market. Technical analysis and charting does and will fall apart at some point or another because trading cryptocurrencies is speculative and emotions are often in control.
With that being said, those who are serious about trading in the cryptocurrency market should be familiar with the basics such as trend lines, candlesticks and support and resistance zones. Beginners should know that resistance zones refer to price ranges that a cryptocurrency has failed to break through whereas support zones are those where the price tends to bounce back. When you identify these zones, it will be easy to assess where the current price is and whether it has room for dropping further or going higher.
Trend lines are also quite straightforward as the price that makes ‘higher lows’ indicates an upward trend whereas ‘lower lows’ reflect a downward trend.
Mistake 3: Selling at a lower price and buying at a higher one
The cryptocurrency market is renowned for its volatility, which means that price swings are considered perfectly normal. But, you will lose money if you are someone who tends to spook quickly and easily.
One of the most common mistakes that beginners are known to make is panic selling and this is where they enter a market without doing proper research and then decide to cut their losses by selling when there is a sharp drop in price.
Even though selling might be a good decision in some situations, it also means that you are going to lose money when you sell. Moreover, sometimes it doesn’t make sense at all because cryptocurrencies will often bounce back within a few hours or days. According to Guy Galboiz, when there is a surge in price, you will buy it again, but that means you pay more and get less. Lots of traders continue this cycle and it is a given that you will end up broke if you buy high and sell low.
Mistake 4: Not having any exit plans
You entered the market at a good position and there has been an increase in price. What do you do now? Do you exit and make a profit? Do you continue to hold your cryptocurrency? If yes, then why?
Most beginner traders don’t really have any exit plans and they simply decide to make decisions as they go along. This is one of the top reasons why they either lose their profits, go into losses or then have to hold onto their cryptocurrencies until they are able to break-even. If you are investing for keeping the coins in the long term, it is holding, but if you are trading regularly, it is essential to have an exit plan in place where you can book your profits and prevent losses.
Sure, there will be cases where the prices will rise after you have already booked your profit, but this is part of trading and something you need to accept. An effective strategy is not to sell all your cryptocurrencies altogether and instead sell in stages. In this way, you will not get a percentage of immediate profits, but have a chance to make more when the coins surge higher.
Mistake 5: Looking for the next big cryptocurrency
As mentioned above, Bitcoin, Ethereum and Litecoin all experienced massive gains in 2017 alone, but it is essential to understand that not every cryptocurrency can go down the same route. Some cryptocurrencies are relegated to certain price ranges, either due to their large supply or a variety of other factors. As a trader, you should be aware that it is not a sound plan to invest in cryptocurrencies with the hopes of making 2000% gains or more. You need to familiarize yourself with the specifics of every cryptocurrency, including its history as well as reasonable future predictions related to price so trades can be planned accordingly.
Mistake 6: Becoming emotionally attached to a cryptocurrency
There is no cryptocurrency that will go up forever. Even the pioneer, Bitcoin, has its good days and bad days. The crypto industry is evolving and changing regularly and new opportunities are introduced on a daily basis. If you believe in a cryptocurrency, it is a good approach to hold onto it for getting returns in the long term, but if you wish to make money through cryptocurrency trading, having an emotional attachment to a particular one is definitely not a sound idea.
For instance, if Bitcoin is dropping from a value of $20,000 to $10,000, it is definitely not smart to keep holding onto it. Likewise, if a cryptocurrency is surging due to some news, it is better to double or even triple your investment rather than holding onto your own cryptocurrency for a small gain.
Mistake 7: Investing all your money in one go
Another of the common mistakes that are made by beginners in cryptocurrency trading is investment of all your money in one move. As per Guy Galboiz, if you believe you have found a feasible entry, it is better to invest a percentage of your funds and hold onto the rest to see how your entry turns out. In this way, even if there is a drop in the cryptocurrency of your choice, you can profit by choosing to buy more at a reduced price. Similarly, if a currency is experiencing an upward trend, you can always purchase more. This move might reduce your profit margins, but it can help in securing your position and save you from losses if it all goes south.
Mistake 8: Investing everything in a single coin
Even the most hyped up and popular coins are known to suffer from crashes and dips every now and then. This is why the cryptocurrency market is known for its volatility. The market as a whole may experience an increase, but a particular coin might experience a drop. As cryptocurrencies are constantly evolving and unpredictable, there is no single cryptocurrency that can be guaranteed to succeed in the long run, not even Bitcoin itself.
Whether you are trading or holding, it is simply not a good idea for you to invest all your capital into a single cryptocurrency. The key to a reliable and sound portfolio is risk management and diversification and your chances of reaping profits will rise if you are able to find good entries in several cryptocurrencies instead of focusing on only one.
Mistake 9: It is always better to think cheap
One more common mistake that beginners make in cryptocurrency trading is judging a cryptocurrency on its price. You need to remember that just because a coin is cheap is no guarantee that it will give you higher profits in the future. Yes, it is true that a cheaper coin might experience quick increase in prices as compared to an expensive one, but it can also go down in the same way, which means your returns might be wiped out.
The important thing to remember is that price is not an indicator of profitability. Therefore, you need to do your research and understand why a particular cryptocurrency is available at a lower price and if there are any upcoming developments that can help in increasing it.
Mistake 10: Not keeping up with the news
Charting, price movements and market analysis are undoubtedly very helpful for traders when they are part of the cryptocurrency market. These can be incredibly useful when you have to make decisions, but these are not the only tools in your arsenal. A successful trader should also be aware of the importance and usefulness of following any cryptocurrency news. It is crucial for you to stay up to date on all upcoming as well as current and recent developments.
As the cryptocurrency market is based on speculation, it can have a strong response to both positive and negative news and it can be immensely valuable for a trader to be in-the-know. These days, there are a ton of websites that are aimed at helping traders in staying updated about everything pertaining to cryptocurrencies and you can subscribe to them in order to get important alerts. Decisions should never be made without knowing the market conditions and reading the news as this can save you from huge losses.
These are major mistakes that you need to avoid if you want your crypto trades to be successful and you don’t want to lose your investment. It can be very tempting to follow the trend and simply invest, but doing it without research and proper knowledge can only lead to problems in the future. Don’t fall for endorsements and learn how to make your own decisions after taking all necessary factors into account. As long as you do so, you will be able to garner success in the crypto industry