Newbie trader mistakes, what to avoid?

Crypto is a dangerous game

Newbie trader mistakes are the first cause of capital loss in the cryptocurrency markets. As the earliest form of digital currency, Bitcoin is a very volatile asset. It lost half its value in a matter of months in 2021 and has since soared 100 percent. Its volatility makes it unsuitable for investors who want to make a quick buck. But you don’t have to avoid cryptocurrency altogether; you can weight your portfolio according to risk and time. Here are some tips to make the most of it.

Avoid influencers 

The best way to avoid being taken advantage of by influencers is to do your own research and don’t trust what they say. There’s no one who can accurately predict the future of crypto, and publishers and influencers have an uncanny ability to manipulate the market. Always verify your findings from multiple sources and never invest more money than you can afford to lose. When in doubt, seek out professional advice from a crypto expert. Not avoiding influencer can cause a whole array of newbie trader mistakes.

Influencers can boost brand awareness and help promote a cryptocurrency. Influencers have huge followings and have a high impact on their followers. These people also have experience in creating promotional content and have worked with some of the biggest names in the industry. However, beware of crypto influencers, and always seek out professional advice. They can help you avoid the pitfalls of crypto trading and make the experience more pleasant.

Regulators in Spain recently announced new guidelines around cryptocurrencies, limiting the use of influencers in promoting cryptocurrencies. The new rules state that influencers must notify the CNMV before airing ads on crypto. In addition, the ads must clearly mention the risks associated with cryptocurrency. As long as these rules are enforced, the public can feel confident in investing in crypto. A crypto investment is still not suitable for retail investors.

While crypto twitter influencers can be effective, you should still be cautious about their recommendations. If a cryptocurrency exchange or currency company has paid a well-known influencer to endorse their product, the content may not be as reliable as it seems. It’s better to avoid such influencers than to invest with a low-quality crypto exchange. This way, you can ensure that your money is safe.

Scale into a trade rather than plunking down large sums of money

There are two common strategies for reducing risk and maximizing profits when trading crypto: scaling in and scaling out. Scalping in is the process of entering and exiting a trade in increasing portions of the initial amount. For example, if you decide to buy 100 shares of Company A, you might expect the Aktienpreis to fall by $5 over the course of the trading day. However, you have no idea if the price will fall that far. Therefore, you may scale into your position by buying twenty percent every time the price drops by $1. Newbie trader mistakes No.3 – going all in

In addition, scaling in can also help you avoid a massive loss if the trade goes your way. Rather than entering the market with a large position, start with a small sum, such as $200, and then gradually add more if the price of bitcoin rises. Do this until you have fully funded your position. Scaling in is best used with sound money management and risk management techniques.

Avoid margin and leveraged trading when starting

While many traders are drawn to the high potential of cryptocurrency, there are some important risks that you must avoid when using margin trading. These include the possibility that the price of the crypto will fall below the liquidation price, which means that you will have to pay extra to cover the loss. However, most people do not have good risk management strategies when they first start trading on margin. Here are some general tips to help you minimize losses and maximize profits:

Using margin is not a good idea for those who are new to cryptocurrency. This strategy is not recommended for all investors, as it can lead to substantial losses. You should only use margin when absolutely necessary, for example, if you are using it for hedging or diversification. However, it is a great way to learn trading discipline. The downside of using margin is the higher risk and volatility. Therefore, only seasoned investors should try this method.

Another important tip is to learn how to manage your risk. The biggest mistake new traders make is going all-in at once. You can reduce your risk by building a ladder of prices and using this as a take-profit level. Make sure you understand liquidation prices and fees before you borrow money. It is best to invest smaller amounts of money at a time. When the price of crypto falls to a certain level, it is possible to lose all of your money.

Another important tip is to understand the difference between short-term and long-term trades. As a general rule, the more leverage you use, the greater the risk. Unless you are an expert trader, you should not be using leverage in cryptocurrency trading. As a general rule, it is riskier to invest money that you cannot afford to lose. Therefore, if you are new to cryptocurrency trading, avoid margin trading and always trade within your comfort zone. Newbie trader mistakes No.4 – using high leverage

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