10 mistakes that make you fail in cryptocurrency investing

1. Starting with real money instead of paper trading

There's no reason for a new trader to begin using real money when there are abundant resources and platforms available for paper trading, including TradingView. Anyone interested in becoming a professional trader should first develop a system based on simple instructions for various items, exits, as well as risk management. This should not be done with actual money.

2. Trading without a stop-loss

Another common mistake is that novice traders tend to trade emotionally, which manifests in quickly refusing to accept losses. The most essential skill a trader must possess is the ability to accept losses and move on to the next trade. Failing to do so is a primary reason why traders lose money.

3. Not maintaining balance

Successful traders maintain a well-balanced investment portfolio. Personally, I allocate only 10% of my assets to cryptocurrencies. Within my cryptocurrency investment portfolio, 70% is held long-term (heavily weighted towards Bitcoin), with 15% in cash and 15% for trading. I only trade with 15% of my investment portfolio, and my entire cryptocurrency portfolio constitutes only 10% of my net worth.

Rebalancing is the process of returning the investment portfolio to the target asset allocation as outlined in the plan. Rebalancing can be challenging because it may involve selling well-performing assets to buy more poorly performing ones. Many new investors in cryptocurrency are baffled by this conflicting action.

4. Adding to a losing trade

Investing and trading are two different things! Investors should spend little capital exploring assets over a long period of time. While traders have identified risk and inaction for their trades. They letting helped

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5. Not keeping transaction logs

Successful traders always work with specific plans. Planning for a part of a transaction is a way of taking responsibility for their actions. The only way to do this is to record the details of a transaction. This is the best way to learn and avoid repeating transaction mistakes. Keep a transaction log and refer to it. Document the thought process, emotional state, and transaction results; it will greatly benefit you.

6. More risk when they can afford to lose

In cryptocurrencies, people are drawn to the idea of making life-changing money by investing in the right place at the right time. As a result, when they engage in cryptocurrencies, they are betting heavily on a lottery ticket.

7. Capital deficiency

As mentioned, making money requires spending money. Many initial traders are blinded by promises of making a pile of cash. This reality is truly mistaken unless they have significant capital to trade with.

A trader aiming to become an expert needs to be able to support their entire life through trading—meaning their profits must cover living expenses, without eating into trading capital. In most places worldwide, this requires at least $50,000 - $100,000 to trade, with stable profits of 10% per month.

In reality, achieving this is very difficult. As a result, many traders begin to feel significant stress when their expected trading profits do not match the actual results they achieve.

8. Using leverage

According to a hollow foundation, leverage is a double-edged sword because it can increase profits for profitable trades and exacerbate losses for losing trades. Leverage should only be used by advanced traders who have had stable profits for many years. There's no quicker way to lose money than using leverage to quickly compound your losses.

9. Lack of understanding of trading models and indicators

Novice traders often feel overwhelmed by technical analysis. They often identify patterns on charts inaccurately or without understanding the full context and chart positions. Novice traders should develop a simple trading system, avoiding decisions based on patterns or indicators they don't fully comprehend. Start with simple support and resistance, or clear indicators that move multiplicatively.

10. Following trends

Another common mistake among new traders is blindly following trends; as a result, they end up paying too much or FOMOing into a hot coin. Experienced traders are accustomed to exiting trades when they become overcrowded. However, new traders may stay in a trade long after smart money has moved out. New traders entering the cryptocurrency space may also lack the confidence to be the contrarian when needed.

As discussed earlier, most cryptocurrency traders are blindly following the calls of strangers on Twitter. There's no quicker path to financial ruin than investing hard-earned money into assets manipulated by those who stand to profit."

11. Key takeaway

Trading has never been easy. However, with proper capital allocation and executing essential steps to learn trading and manage risks, success and profitability are certainly achievable. The crucial thing is to have a plan and to stick to that plan no matter what happens.