9 Beginner Bitcoin Trading Mistakes and How to Avoid Them

9 Beginner Bitcoin Trading Mistakes and How to Avoid Them

As of 2021, around 1 billion people across the globe use cryptocurrencies.

Bitcoin was invented in 2009, and since then, cryptocurrencies have exploded in popularity. There are now more than 20,000 different cryptos available, and the value of many of them has increased dramatically over the years. Among these, Bitcoin has always remained the most popular.

If you want to get started with trading crypto, Bitcoin is an excellent place to begin. Before you get ahead of yourself, however, you need to understand some things to avoid some major mistakes.

Keep reading for 10 of the biggest beginner Bitcoin trading mistakes and how to avoid them.

  1. Not Understanding What You’re Trading

This is one of the biggest mistakes people make when they first start. After looking into Bitcoin and other cryptocurrencies, it’s easy to get excited. You’ll see stories of people making millions from successful trades, which can be very enticing.

This often causes people to want to rush things and get involved as soon as possible. You may have missed opportunities and don’t want to risk missing them anymore. Doing this, however, will often lead to problems.

Trading with cryptocurrencies is complicated, and there’s a lot to understand. You should always take the time to research the various aspects of cryptocurrencies, trading platforms, trading strategies, and more so that you correctly understand what you’re doing.

This goes for Bitcoin and any other cryptocurrencies you might be interested in trading. They all work differently and have different pros/cons. You should never invest in anything unless you know what you’re paying for.

As the most popular crypto in the world, Bitcoin has been adopted by more organizations than any other. It can be used with many retailers, and you can even withdraw cash from a Bitcoin ATM in various locations.

If you go in without a complete understanding of Bitcoin and the other elements of trading, it will likely lead to various other mistakes and bad decisions. Don’t worry about missing an opportunity to make profits; there will always be more down the road.

  1. Investing Money You Can’t Afford to Lose

This is another mistake that’s very common among beginners. It also often happens because people are worried about missing out on specific opportunities.

You might look at Bitcoin and proceed with the mentality that the more you invest, the more you stand to gain. While this is true, this also means you have more to lose.

Like any type of investment, there is a degree of risk, and it’s worth noting that cryptocurrencies are considered among the riskiest investments available. The idea of making huge profits can be very exciting, but you need to remember that there’s always a chance that you could lose a lot of what you invest, or possibly even everything.

You may come across stories of people who have sold everything they own to invest it into crypto and made millions. But for every one of these stories, plenty of others have suffered devastating losses.

You should put yourself in a position where you’ll still be financially stable if any money you invest is lost. You could lose big on a single trade, and if you’ve invested the money you need, you could end up in a terrible position.

Take the time to determine how much you can afford to invest (and potentially lose), and never invest more. It can be a good idea to pick a set amount you can invest per week or month and stick with that.

  1. Not Having a Plan

Once you’ve learned about Bitcoin itself and how it works, there are still other things to know. You need to make sure you understand what different exchanges there are, how to use them, and how to store your crypto. Even once you know all this, one major thing separates successful traders from unsuccessful ones – a strategy.

Planning things out will ensure you know what you’re going to do and when. This will help minimize mistakes and keep you on track. A good Bitcoin trading strategy will involve set targets and help you avoid making losses when the market is volatile.

One issue that’s quite common is that people often trade based on emotions. This can be very tempting, but it’s well-known that sticking to a firm strategy is almost always more successful.

There are different types of strategies that experienced traders use, many of which are effective for various kinds of investments, not just crypto. Look into the different strategies available and weigh them against your situation to determine the one that’s suitable for you.

You should try to stick to your strategy as best you can, but if things aren’t working out, you can always adjust your strategy. Just make sure you do so based on logic and research, not emotion.

  1. Starting With Real Money

This can apply to trading Bitcoin, as well as various other assets. When first getting started, even if you’ve done plenty of research, things can always go a little differently in practice. You may encounter certain things you weren’t expecting, and if you’re putting real money on the line, you could quickly lose it.

You should start with paper trading. This is an excellent way to get some experience without risking losing any real money. Admittedly, many people find this boring, but if you want to minimize losses, this is one of the best things you can do.

It will help you develop a strategy and understand how the market works early on. It can take a bit of time and effort, but it’s often worth ensuring that when you start using real money, you’re less likely to make mistakes.

  1. Not Using Risk Management

All investments involve risk, and with crypto being highly volatile, the risk level is high. If you don’t manage your risk appropriately, the chances of you losing money will go up significantly.

Around 95% of traders don’t succeed, with many quitting within the first two years. This is often because they go in unprepared, take significant risks, and end up losing. Having a risk management strategy in place will help you to avoid being one of these individuals.

Proper risk management will make your trading journey more secure, dependable, and predictable. Trades don’t always go how you want them to, and having stop losses in lace will keep losses to a minimum. This is where you decide on a value, and if Bitcoin drops to that value, you sell it rather than wait for it to fall lower.

Many crypto exchanges allow you to set up automatic stop losses so that you can sell your Bitcoin automatically if it drops to the value you’ve set. Even if you’re confident about a trade, having stop losses makes things much safer.

  1. Trading Based on Pump and Dump Calls

Many people try this, and many people fail. Platforms like Discord and Telegram are popular amongst crypto traders. They’re ideal places to learn about projects and discuss crypto with other investors.

There are plenty of pump-and-dump groups on these platforms that provide signals indicating when to buy and sell specific cryptocurrencies. Some people have been known to make profits this way, but it’s a tiny minority, and most people end up losing money.

Some of these groups are paid and can contain less than 20 people. Others may have thousands. Either way, it’s usually only a fraction of these who end up making successful trades. Most people in these groups (especially the beginners) lose out by trying to follow other traders and tend to make some very quick, very sizable losses.

  1. Not Keeping a Trading Journal

Keeping track of everything can be difficult, especially when you’re new to Bitcoin trading. You should take notes on your actions and the results you get.

You can then look back and analyze how things have worked out. From this, you may see why specific trades have worked, and others haven’t. This will allow you to make adjustments to your strategy so that you have more success in the future.

  1. Trying to Time the Market

It seems pretty straightforwardbuying when Bitcoin is cheap and selling when it’s expensive is the best way to make money. The problem is that it’s impossible to be sure about where the value of an asset will go.

There are various indicators that experienced traders use, which can often indicate if an asset will increase or decrease in value. While some of these are more reliable than others, none of them are perfect, and things can always play out differently.

Trying to predict when Bitcoin is at its lowest or highest is tricky, and people who trade this way often end up losing. It’s best to accept that you may end up buying and selling at times that aren’t perfect, but if you have a solid strategy in place, you’re still more likely to be able to turn a profit.

Dollar-cost averaging is a widespread technique known to be very reliable. It involves buying a set amount of an asset at regular intervals.

For example, you might buy $50 of Bitcoin every week. This ensures that across a given period, such as a year, you will have paid the average price for your Bitcoin that year.

The idea is that over several years, the value will go up. As you continue to invest, this will help maximize your Bitcoin trading profits. Note that several other strategies can prove successful, but few involve trying to time the market.

  1. Using Shady Trading Systems

There are plenty of websites these days that will allow you to open a Bitcoin trading account. With so many available, deciding which one to use can be challenging. You should research to find one that’s right for you, but always ensure you’re using one that’s reliable and secure.

There are a lot of scams that happen in the world of crypto, and you don’t want to fall victim to any. If you come across a Bitcoin trading platform with offers that sound too good to be true, they probably are.

Some platforms use specific algorithms that can help make trades more profitable, so these can be beneficial. You should also consider the fees that different platforms charge, as they may affect your choice. Some have hidden costs, and you don’t want to end up being charged more than you were expecting.

  1. Not Paying Attention to Internet Safety

Most people know that security is essential online, but it can be even more so when dealing with crypto. When you’re first getting started with crypto trading, you might not be aware of what kinds of things to look out for in terms of scams, making it easier to fall victim to them.

Doing some research into the types of scams can be a good idea. You should never use websites or follow any links unless you’re confident they’re safe.

Another thing to look out for is scam coins. If anything appears in your crypto wallet and you don’t know where it came from, don’t interact with it. It could be a scam coin, and clicking on it may drain your entire wallet.

Make sure you don’t give out personal data or provide it to sites that might not be secure. If anything comes up and it looks suspicious, be cautious and do some research before proceeding.

Avoiding These Beginner Bitcoin Trading Mistakes

There are plenty of beginner Bitcoin trading mistakes, and you’re likely to make some of them. The best thing to do is educate yourself and do plenty of research. The more you understand Bitcoin and the market, the more success you’ll have.

Make sure you always know what you’re investing in and what risks are involved. Most people don’t succeed, so if you want to be one of the few who do, you need to have a good understanding of everything you’re doing.

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