5 common mistakes for a new crypto trader to avoid
Just like any other form of trading, crypto trading is also done based on sound principles and practices that all investors, especially the newbies, must follow.
“Trade the market for what it is, not what you trust it to be.” — Rasarab
Cryptocurrency is the rage right now — attracting attention from people who have money to spare and people who don’t. Because it has become a phenomenon and, more importantly, because it is so accessible, everyone wants to become a cryptocurrency trader. Just like any other form of trading, crypto trading is also done based on sound principles and practices that all investors, especially the newbies, must follow.
So, if you are new to buying or selling Bitcoins in India, here are 5 common mistakes that you must avoid:
1. Trading without a goal
Ask yourself, why do you want to trade in cryptocurrency? Is it because everybody else is doing it, or do you see it as a source of investment, or is it just a way to make a quick buck? While the correctness of the goal can be debated, it is absolutely important to have a goal in mind before entering into crypto trading. A goal-less trading strategy is like driving a car without GPS when you don’t know the destination.
2. Thinking short term
Bitcoin, or any crypto trading, is a highly volatile market for trading now, given that it is new and many things are still being tested out. The crypto market sometimes just explodes upwards for hours and then falls to an extreme low in minutes. It is, therefore, better to think long term while investing into cryptocurrency.
3. Jumping straight into trading
Given the volatility of cryptocurrency across the world, it is not advisable to start trading directly. Many trading simulators help you become better at crypto trading; this practice is commonly known as paper trading.
4. Not having a concrete trading plan
Before getting into any trade, most newbie traders do not have entry and exit points. This makes them trade based on belief, and they end up constantly chasing peak prices. It is almost necessary to have both entry and exit points before getting into the trade.
For example, if you want to buy Bitcoin now, you will first check its current trading price.
Let’s say 1 BTC = $36,000 (~₹26 lakh). You want to buy 0.1 coins at the current price — this makes it your entry point. Let’s say you want to make 20% on it, which means you will have to sell it when 1 BTC = $43,200 (~31.3 lakhs) — this is your exit point.
5. Not using a trustworthy cryptocurrency exchange
As the industry has expanded, many apps and platforms have come up. But the security and trust aspects often go unnoticed. Newbie traders need to ensure that they use a trustworthy, robust and secure exchange. ZebPay is one of the best cryptocurrency exchanges in India, where our emphasis is on creating a stress-free trading experience while keeping you ahead of the curve.
To sum it up, as long as you don’t fall in love with the hype around bitcoin and keep following these basic principles, crypto trading is going to lead you to your goals.