Investors have made massive profits trading cryptocurrencies like bitcoin on various platforms, such as Bitcoin Revolution Italy. However, some investors do not reap but instead lose so badly due to mistakes, most of which they could easily avoid. Some of these mistakes emanate from a lack of sufficient information on risk management and the trading technicalities. The nature of cryptocurrency –high volatility –also exposes the traders to some risks which, if they are not keen to mitigate, they could end up losing.
Below are a few mistakes that you need to steer away from when trading in cryptocurrency:
Using Untested Trading Plans
Often, a small number of traders fall for seemingly lucrative trading schemes, but which have not been well tested and which they are not sure of. Unfortunately, such plans have led the investors to heavy losses. Therefore, it would be good to get familiar with an idea before deciding to use it for trading.
Investing All In one Coin
One of the most costly mistakes that investors, especially the newbies in cryptocurrency make, is put all their investment at once in a certain coin. Expert recommend that if you identify a spot to buy a currency you consider to be promising or favorite, it would be best to use a percentage of the allocated budget. You should spend up to 50% of your money on a given coin and then hold it to see if it appreciates or dips.
If the coin you purchased dips, you will still have some amount to buy more. And if it is on an upward trend, you can place more orders while the market is an uptrend. That way, you will have secured your investment and safeguarded yourself from having all your savings in a position taking the opposite direction.
Lack of Knowledge on the Best Exit Time
Once you have bought a coin at a price you deem reasonable and have realized some gains after some time, the big question is, what action to take next? Unfortunately, many newbies have no proper plan or a defined point where they can sell off a portion of their investment for profits. Such investors will cling on to their coin as the market moves to favor them, only to lose all the gains achieved for a period.
They are then forced to stay on waiting till the market presents a break-even point for them.While long-term investors can hold on to their coins, if you are a trader, you must have a point at which you can dispose and get profits. You are better off selling in portions to get instant gains and will still enjoy in the future if the prices keep rising.