Common Mistakes of Crypto Trading
Cryptocurrencies trading has sparked many interests. The publicity about people who have become millionaires overnight from trading bitcoin contributed to this. Crypto trading works in similar ways to stock exchange and forex trading. While traditional exchanges trade in fiat, crypto exchanges deal in digital currencies via trading platforms.
Fiat trading platforms are centralized. For this reason, they are vullnerable to manipulation. Central banks have repeatedly breached the trust that backs fiat. Crypto assets were developed to correct this. Since Satoshi created the first digital asset in 2008, crypto has come a long way.
At first, it was viewed more as a payment system than as a replacement for fiat. Today, many merchants accept crypto in place of fiat. In fact, in countries that are moving towards cashless economies, cryptos have become popular. Some countries have even begun paying civil servants with digital assets instead of fiat.
No doubt, it is only a matter of time before crypto totally replaces fiat. In the same way, crypto trading now competes with forex trading. This is a much welcome change from digital currency. Crypto trading exchanges are transparent and decentralized. Unlike forex trading, it is gradually pushing the world towards a decentralized global economy.
Tech giant Facebook’s Libra project had a ripple effect on the crypto community. This development sparked interest in crypto trading again.
Common Mistakes of Crypto Trading
Crypto trading is a way to potentially attain financial freedom. As an investor, it is possible to strike gold overnight by trading crypto. It is also possible to be sunk in the twinkle of an eye. To prepare you against that, we have identified some common mistakes of crypto trading.
1. Bottom trading
Most people who are new to crypto trading fall for this. It is when you monitor the downturn of a crypto asset. Bottom traders aim to buy at the absolutely lowest prices possible. Suffice to say, you could lose all of your investments in this way.
2. HODLing
No, we did not make a mistake. It describes keeping rather than actively trading a digital asset. Just like bottom trading, hodling too long may break your heart.
3. Gut Feeling
Do not do it. If the history of crypto has revealed anything. It is that the price of crypto is very volatile. Trusting your gut is great. You might have made a sack of cash from this feeling before. That is great but it is not reality. A trade can collapse and result in a huge loss quite suddenly. Master the technique of suppressing your emotions like fiat brokers. There is always an alternative.
4. Trading worthless crypto
Until 2016, Bitcoin was the only crypto in town. Today, there are about 3,000 cryptocurrencies. Some of them are very promising. Many of these altcoins, however, are worthless. Be careful so that you do not fall victim to the pump and dump common to these altcoins.
5. No security
If you have been looking for the best advice, here it is. Do not ever let your crypto remain on an exchange when you are not actively trading. Most exchanges are not immune to hacks. In fact, over 1.5 billion have been lost to hacks. This has left many traders stranded.
The best way to avoid these mistakes of crypto trading
With all these mistakes, crypto trade may seem like a scary ordeal. Most traders avoid the pitfalls of crypto trading via trading software. They are algorithms that analyze the market to find the right trading opportunities. Then a trade is done such that you profit from the spread. You do not even have to be there! In addition, these algorithms are devoid of human emotions or meddling that influence trading. Bitcoin Profit is one of many available options.
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