Top 5 Mistakes of Amateur Traders and How to Avoid Them

Before traders become professionals, they go a long way filled with mistakes. They find shortcomings in their methods and improve their strategies. So, they optimize trades and improve their profits. The market is dynamic as playing in casinos. As gamblers should always pay attention to 22Bet odds, traders have to look at the stock market each day.

All traders make mistakes. Yet, some of them need to be eliminated from the beginning. They are the headache of amateurs and the reason for the insomnia of professionals. Here are the most frequent ones.

1. Trading With All Your Money

Money management is the basis of trading. According to how you divide your budget and when you plan to buy, you need to calculate the amounts allocated for investment and trading.

Beginners often use all available money at once to buy cryptocurrency. This is a gross mistake as you leave no room for deviations. For example, if you want to average a position after a price rollback or to buy other promising cryptocurrencies.

2. No Risks Diversification

The second common mistake of inexperienced traders is to invest only in one asset. This step significantly increases the risk.

Diversification is one of the fundamental rules of crypto trading. If you distribute the money among several cryptocurrencies, a loss from a fall in the price of one asset may override the profit from the growth of other coins. In the cryptocurrency market, it often happens that the prices of tokens move in different directions. For example, during the growth of Bitcoin, the altcoins became even cheaper.

Thus, by trading only one asset, you can, firstly, increase losses, and secondly, lose potential profit on an upward trend. Choose at least three assets, and you will avoid such problems and get a long-time profit, even from a small sum. And it’s better to select them according to the market situation, not your preferences.

3. Trading Without a Schedule 

Chaotic trading is more like a casino game than a trade. Of course, the result will also be chaotic and based solely on chance. The element of luck is present in any case, but you can’t rely only on it.

Exchange games involve a cold calculation and a systematic approach to transactions. Each position must be meaningful and conducted with the developed strategy. There may be deviations. Yet,  they must also meet the criteria of reasonable trading.

4. Emotional Trading

Fear of missing out well-known as FOMO and fear, uncertainty and doubt (FUD) chase the trader for life. Beginners easily succumb to greed and fear. So, they regularly make mistakes in trading.

An experienced trader does not buy or sell everything at once. He leaves the part of the amount in case of correction or growth to fix profits and cut losses.

For example, during a growing market, a professional closes positions partially, while taking profits. This gives him flexibility in trading and allows him to increase profits in case of growth or to increase his position by buying the cryptocurrencies cheaper in case of rollback.

Beginners do not follow the basic rules and trade emotionally, without understanding the market mechanisms. 

5. Averaging to Cover Losses

Those who came across gambling are familiar with such a situation when you want to quickly get back, and as a consequence, there is an increase in the rate. It is clear what it can lead to.

Often inexperienced traders get on this hook. Beginners can average positions indefinitely until they run out of funds on the deposit, instead of accepting losses and fixing them so as not to lose more. Even professional players can’t always trade well in a falling market.

Summary 

To learn how to make a stable profit, you should get rid of the main mistakes and find working trading strategies. Of course, it will be impossible to completely avoid mistakes. To reduce them, it is better to find an experienced tutor and learn to trade with him.

A professional will teach you how to trade cryptocurrencies. Also, he’ll help you get rid of most of the mistakes that even experienced traders make. This way you will save time and money instead of going through this path alone. Otherwise, it is possible to continue making mistakes without realizing it.

Featured image: investing.vn