I admit that I do have my fair share of trading mistakes. A lot in fact. But honestly speaking anyone who claimed that they are trading gods are probably lying to their teeth. There is no such person in the world. And if there is indeed such a person, then what is the point of trading. He or she would be a trillionaire in no time right? I am pretty sure even the “best” traders have their own share of mistakes and missteps in the trading world. A lot of these traders only present to the world their success but never their failures. Hence it kind of look like they are owning the trading game with all those successes. But we are not looking at their trading mishaps and losses. There are quite a lot on Youtube showing off their “massive” gains and profits.
Anyway this is some experience I got from investing and trading these few months. As as cryptomarket is one of the most volatile in the world, such experiences are important and very useful to acquire for trading. Kindly continue reading.
Don’t trade on a whim. Stick to the plan. One of the worst trading strategy is to trade based on a whim. If you are a long term trader, don’t because of some sudden surge in price in an unknown smallcap altcoin, you ditch your dollar cost averaging strategy and throw your money into such coins. Or because some Youtuber claim that a certain altcoin will moon within a short period of time and you have to get into the action or risk losing the chance. These rarely ever happens and you are putting yourself into great risk. Always stick to your plan, especially if it has been working well for you.
Understand what is market capitalization. Don’t just look only at the price of a coin or token. “Marketcap” is rather important piece of information as it will dictate whether such a coin will raise significantly or not in the long term. Marketcap is the total dollar market value of the cryptocurrency in question. If you look at ADA and BNB you will see that their prices are pretty far apart. And ADA is actually priced lower than BNB. However if you look at the market capitalization, you will notice that ADA’s marketcap is actually higher than BNB’s. In general a coin with higher market capitalization will be more stable but is less likely to raise significantly, especially if you compare to its peers. So if you see a token priced at USD 0.30, it does not mean that it has a higher chance of rising compared to one priced at USD 10.
Do some research. Yes don’t just buy any coin without understanding the concept behind the project. Especially those small cap altcoins out there. These have higher chances of a rugpull and you won’t want your funds to be lost when they do that right? So always read through their white paper or at least know what they are doing with the project. I know that sometimes white paper or websites can be full of beautiful graphics and big words but at least they did put some effort. My simple way is to ensure that the developers’ or creators’ names are all public information and the idea behind the project is sound. And always check out who is backing the project. Most alt coins out there need some sort of backing for their project to even get off the ground. And please try to avoid the hype! And avoid meme coins with nothing much behind the project.
FUD/FOMO. This is pretty obvious. Eventually we will all fall for this FUD or FOMO trap. Small time investors like us is bound to be victims as whales or financial institutions start cranking up their FUD or FOMO machine in order to manipulate the market. If you are bound to such traps, I would suggest keeping your cryptocurrencies in lending platforms or locked in staking pools where it is more difficult to withdraw. And always take a deep breathe before you attempt a trade. If everything looks doom and gloom, think of what happened in the beginning of 2021. If everything looks like it is going to the moon, think of what happened in May 2021. Oh and if you are the kind of trader who likes to lowball tokens when you have spare stablecoins, the FOMO can be very strong making you buy in at the wrong time.
Don’t be afraid of taking profits. In other words, don’t be too greedy. I know the feeling – when everything goes up and it looks like it will continue to be on its way to the moon, it can be kind of difficult to fathom selling your crypto. But how do you know where the ceiling will be? If you don’t take your profits now, then when will you take it? Greed is not always bad but extreme greed is certainly bad. So if you feel that making 20% gain is not enough, well…..all you have to do is to look at the trading charts.
If you would like to see what other lessons I learned from crypto trading, check out my other post here.