Mistake 1: Impatience
This is one of the most difficult mistakes to avoid. The cryptocurrency market is highly volatile, and it's extremely difficult to predict the market's direction. Therefore, you shouldn't give in to your impulses and desire to trade. Trading is not a game. If you're not an experienced trader, it will be difficult to be patient. However, those who are patient are the ones who will be rewarded in the long run.
Impatience can lead to rash decisions, potentially sabotaging your strategy, but worst of all, it can make you fear missing out.
Mistake 2: Not Recognizing the Risks
Because cryptocurrencies are much more volatile than the stock market, the potential gains and losses are also greater. Therefore, you must practice sound risk management. When investing in this market, you should always keep in mind that you could lose all your money.
The cryptocurrency market is not yet regulated, and its values are purely speculative. Most reckless investors resort to bank loans of several thousand dollars to acquire more cryptocurrencies and expand their portfolios. Therefore, the risk here is very high, especially if these investors are inexperienced.
Mistake 3: Selling Low and Buying High
Because the crypto market is extremely volatile, as we mentioned at the beginning of the article, large price fluctuations are common. If you panic at the slightest drop, you will lose money. Deciding to sell in panic mode, or "FUD" (Fear, Uncertainty, and Doubt), while simple, is a common mistake. In this case, the mistake is entering the market without conducting the necessary research.
Then, faced with a sudden drop or bad news about the cryptocurrencies you want to invest in, you hastily sell your positions in an attempt to minimize losses.
The problem with this approach is that once you sell, you actually make your losses real. While minimizing capital losses makes sense in some cases (such as triggering a stop loss), this would be an unreasonable decision. The crypto market is known to be a long-term bull market, so acting and selling at the first dip is a mistake. The same thing can be said when the same people witness a price increase, repurchase at higher prices, and repeat the cycle.
Those who buy at the peaks experience a fear of missing out, or what's known as "FOMO." Once they buy, and a short period of time passes, the price begins to fall and fall, reaching its lowest price. Here, feelings of anxiety and fear shift, leading them to sell at the lows, resulting in a loss.
