Cryptocurrency trading can be profitable, but it requires caution. Know the most common mistakes and strategies to mitigate them:

1. Emotional Decisions (FOMO and Fear)

What happens:

Investors act on impulse, selling during sharp drops (fear) or buying during sudden spikes (FOMO – Fear of Missing Out). This is common even in established assets, like Bitcoin, but is even more dangerous in volatile coins.

Why it's bad:

Emotional reactions ignore technical and fundamental analyses, leading to losses. Example: selling Bitcoin after a 10% drop can mean missing out on a later recovery.

2. Excessive Financial Leverage

The risk:

Using loans or leveraged contracts multiplies gains, but also losses. A 5% swing against your position can liquidate your investment.

Solution:

Reserve leverage for specific operations and with a margin of safety (e.g., 2x leverage instead of 10x).

3. Neglecting Hidden Fees

Impact:

Withdrawal, conversion, and spread fees (the difference between buying and selling price) erode profits, especially in frequent trades or large volumes.

How to avoid:

Compare platforms and prefer brokers with transparent fees. E.g., Binance, Coinbase or Mercado Bitcoin.

4. Lack of Analysis (Technical and Fundamental)

Consequence:

Investing in projects without understanding their technology, team, or real utility is like "playing in the dark".

Tip:

For altcoins (alternative coins), study the whitepaper, market adoption, and developer activity.

5. Trading Without a Defined Strategy

Problem:

Entering trades without setting profit targets, stop loss, or time horizon increases exposure to risks.

Practical example:

If you buy Ethereum, define: "Sell 50% if it rises 20% or exit completely if it drops 10%".

6. Neglecting Security

Risks:

Wallets on exchanges are vulnerable to hacks. In 2022, the collapse of FTX showed that even large platforms can fail.

Good practices:

- For long-term investments: use hardware wallets (Ledger, Trezor).

- For daily trades: enable two-factor authentication (2FA) and regular profit withdrawals.

7. Following Hypes and Influencers

Trap:

Buying meme coins (like Shiba Inu) or projects promoted by celebrities at the peak of appreciation almost always ends in losses.

How to identify a bubble:

- Abnormally high trading volume.

- Unrealistic return promises ("1000x in a week!").

✅ Strategic Tips for Trading Safely

1. Trading Plan:

- Define entry, exit, % risk per trade (e.g., do not risk more than 2% of capital).

- Use tools like Trailing Stop to protect profits.

2. Smart Diversification:

- Combine cryptocurrencies from different categories: large caps (Bitcoin, Ethereum), DeFi (Aave), and Web3 (Polkadot).

3. Continuous Education:

- Keep track of macroeconomic news (interest rates, inflation) and specific events (*Bitcoin halving*, network updates).

4. Investor Psychology:

- Tools like trading journals help identify repetitive emotional patterns.

5. Test Before Investing:

- Use demo accounts or simulations to validate strategies without risk.

Remember: The cryptocurrency market is volatile, but discipline and technical knowledge separate successful investors from gamblers. Prioritize capital preservation and avoid the temptation to "get rich quick".