We all make mistakes. It’s evolutions greatest tool. We are shaped by our mistakes but that doesn’t mean that we are allowed to make the same mistake twice. And if you can learn how to avoid some mistakes, that is an opportunity, specially for trading Cryptocurrencies.

Here is a list of key mistakes to avoid when trading Cryptocurrencies:

  1. Trading without an investment and trading plan
  2. Over trading (ignoring fee costs)
  3. FOMO / Panic selling (also called emotional trading)
  4. Trading on bad crypto exchanges
  5. Scams / “Get rich quick” scheme
  6. Trading on margin / leverage
  7. Performing all or nothing trades.
  8. Selling all your winning trades and holding on to the losing trades.

Trading without an investment and trading plan

We spoke about this in our article Best Practices for trading Cryptocurrencies 2022, it the biggest mistake that 90% of new traders make, and if you are a new trader in any market, start from here first before you make any trade:

  • Set two baskets of funds, investments and trading
  • Don’t trade your investments
  • Leave some funds aside to “buy the dip”
  • Always, always, always use Stop Loss ( SL )
  • Take the profits, don’t be greedy
  • Don’t put all eggs in one basket
  • Don’t deviate from your trading plan, no matter what.
  • Follow your instinct. Trust your gut

Over trading (ignoring fee costs)

You don’t need to make 100 trades per day. The average trader does not make more than 5 trades per day and ideally is to stop at 3 trades. If you have a winning streak of 3 trades in one day, most likely the 4th one will be a loss and halve your earnings.

FOMO / Panic selling (also called emotional trading)

You must let those trades mature. It’s like a good whiskey. Often when you think the market is going down, and you’re long on a trade, that’s when market shifts. You only loose when you sell. You can accept impermanent loss.

Trading on bad crypto exchanges

There are hundreds if not thousands of crypto exchanges, both centralised and decentralised, each with their own different rules. Some allow withdrawals, some don’t. Some are simply shady, and you should stay away. Do your own research before joining an exchange. Here is a list of trusted exchanges:

  • Binance
  • Coinbase
  • Crypto.com
  • Gemini
  • Phemex
  • Bitfinex
  • Bybit

Scams / “Get rich quick” scheme

Remember what happened to Wonderland? that’s just one example. Stay away, it’s only smoke. Rome was not built in a day. Trust your investments and let them mature.

Trading on margin / leverage

This is violates risk / reward principles. Remember, a good investment will reward you so do not rush it. Doing Margin Trading, Futures or any other type of high risk high reward trading is set for a later stage. If you are a beginner, start with paper trading before entering with real cash, and when you’re entering real trades with real money, start with Spot, at least for the first 3 months. Make those important and necessary mistakes with minimal losses.

Performing all or nothing trades

A single trade should never be more than 10% of your crypto portfolio. That’s what a lot of other traders will say and the truth is, simply don’t put everything on black. Split your trades and don’t trade your entire portfolio. As your portfolio increases, the percentage used for each trade should decrease. Take the profits, put them aside.

Selling all your winning trades and holding on to the losing trades.

Focus on your trades, understand the asset you are trading. If a trade is going bad, better to take a loss and recover instead of holding on to increase losses while selling your winning trades for small profits. For some reason this is a common mistake.