Trading digital currencies can undoubtedly provide significant returns to investors and traders, but it is essential to understand that the process is not without its risks. When you are getting started, you will be able to find hundreds of guidelines online that will tell you all you need to do when you trade in the cryptocurrency market. They will give you instructions of the steps to take, strategies to use and other such information. But, what they don’t tell you is what you should not do. Indeed, there are some things that you should certainly not do during cryptocurrency trading because these can set you back when it comes to trading in this volatile market.
If you are wondering what you should learn to avoid, you can find out below:
- Don’t let yourself get swept up by the hype
It is very easy for traders to get caught up in the hype, but it is something they should fully avoid. The cryptocurrency market is mostly driven by the sentiment of its traders. But, traders need to remember that just because everyone is jumping on a bandwagon doesn’t mean that they also have to follow the trend. Even the 2017 trend that shot Bitcoin and other cryptocurrencies into the spotlight didn’t last and the prices eventually came down. Traders who had bought their investments early were able to profit, but others who had jumped the bandwagon suffered substantial losses.
- Don’t trade using risky brokers
One quick way that can cause traders to lose their investments is if they use a scam broker or the brokerage they use gets hacked. An easy way to minimize your risk is to find a legitimate and reliable broker, such as Fin-Toward, which can offer you a secure and optimal trading environment. Such brokers are regulated by outside parties and have strong security measures in place, which ensure that they don’t get compromised easily, or at all. You just need to do thorough research when you are looking for a broker and also check their reputation before you decide to sign up with them.
- Don’t allow yourself to be swayed by FUD
FUD is a common term used in the cryptocurrency industry and it refers to Fear, Uncertainty and Doubt. When you are trading in the cryptocurrency market, you will come across numerous people who try to create fear, uncertainty and doubt about one crypto or another. The purpose is to either drive people to dump a crypto so its price goes down or to get them to invest in another crypto so its price goes up. These are all scams and you should never pay heed to such fake news or rumors. Always do your research to know what is true.
- Don’t become a victim of FOMO
The cryptocurrency market is known for its volatility. The trading activity of individual cryptocurrencies can be quite low, which makes it easy for large players, who are called ‘whales’ to give rise to major fluctuation in prices. When the market goes up, it can often prompt crypto traders to just jump on the bandwagon and purchase a crypto to make a profit. Once a crypto has risen significantly, they think it will continue to rise and don’t want to miss out on the potential profits. This is referred to as FOMO or Fear of Missing Out. However, it is important to remember that what goes up comes down as well so you could lose it all in one go. Your decisions should be based on research rather than FOMO.
- Don’t make decisions based on emotions
Once you have entered a position, you should only exit it when your strategy suggests. You should never make your trading decisions based on emotions. As stated earlier, the crypto market is a volatile one and it is difficult for people trading in it to keep their emotions under control. Brokers like Fin-Toward offer their clients risk management tools like stop loss and take profit to help traders in avoiding making decisions based on emotions. They can help in controlling the risks in every trade and you should stick to them and your strategy instead of panicking and making decisions without thinking things through.