Below are the most common misconceptions in cryptocurrency trading. These misunderstandings not only affect trading results but may also put you at dual risk of emotions and funds:
❌ Top Ten Misconceptions in Cryptocurrency Trading
1. 'If the price of a coin drops significantly, it's cheap; I can pick it up at a bargain.'
📉 The mistake is ignoring trends and fundamentals; some projects may never return to their highs.
✅ Correct answer: Confirm whether there are reversal signals or key supports, and consider the quality of the asset.
2. 'This time is different; I'm going all in and it will definitely double.'
🎰 Common among beginners who have just entered the cryptocurrency space. The market risk is extremely high; if the entire position is wrong, it could lead to liquidation.
✅ Correct answer: Enter and exit in batches + strictly set stop-losses is the way to go for the long term.
3. 'As long as there is good news in the crypto space, prices will definitely rise.'
🗞️ The reality is: 'Good news fully priced in is bad news' is very common; the market usually reflects the news in advance.
✅ Correct answer: Observe the price dynamics before the news is released, and pay attention to the disparity between news reactions and market sentiment.
4. 'I see a bullish trend at a low level, and immediately open a position.'
📉 Lower timeframe candlesticks (like 1m, 5m) have too much noise and shouldn't solely determine trend direction.
✅ Correct answer: First confirm the overall trend from higher timeframes (1D, 4H), then look for entry and exit points on lower timeframes.
5. 'If I haven't sold, it doesn't count as a loss; holding longer will make it come back.'
🧊 Some coins have completely lost liquidity or have been eliminated from the market; holding them for too long can intensify losses.
✅ Correct answer: Set stop-losses and reassess asset quality; funds should be redirected toward opportunities with better potential.
6. 'A certain influencer bought it; if I follow them, I'm safe.'
👀 Blindly copying others can easily lead to being harvested; you cannot know the timing and intent of the influencer's entry.
✅ Correct answer: Make independent judgments, examine fundamentals and technicals, and don't blindly trust anyone.
7. 'If I buy it, it drops; if I sell it, it rises. Am I born to be a contrarian?'
🤯 This is due to emotional trading and lack of strategy, not 'bad luck.'
✅ Correct answer: Establish a disciplined trading system, such as entry and exit conditions, risk control ratios, and capital allocation.
8. 'I don't set stop-losses; I'll just wait for a rebound.'
💥 Many coins will continue to test the bottom once they break key support. The less one admits mistakes, the greater the losses.
✅ Correct answer: Learn to accept losses as part of trading; stop-loss is a tool to protect the principal.
9. 'This coin has increased by 100%, I missed it, so I FOMO in!'
🐂 Common during periods of high bullish sentiment, often buying at the peak.
✅ Correct answer: Better to miss out than to chase; wait for a pullback or look for new opportunities.
10. 'I don't look at risk control; I only care about rewards.'
🎯 The core of successful trading is actually: controlling risk, not chasing rewards.
✅ Correct answer: Always ask yourself, 'If this trade goes wrong, can I bear the loss?'
📌 Conclusion:
The cryptocurrency market is highly volatile, and having the right mindset is the first step to avoiding pitfalls. Trading is not gambling; it is a discipline and strategy practice.