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First Steps in Crypto Trading Mistakes
When I first stepped into the crypto space, I felt both excitement and disappointment about making crypto trading mistakes. On one hand, it was a thrilling new frontier. On the other, it seemed like one wrong move could spell disaster. Over time, I realized that many of the common mistakes I made—and those I’ve seen others make—could be avoided with just a bit of preparation, reading a beginner guide, and a clear-headed approach. In this article, I’ll walk you through these common pitfalls and share what I’ve learned so that you can navigate the market more effectively and confidently.
1. The High Cost of Picking the Wrong Exchange
When I first started trading, I didn’t think much about exchange fees. I figured they were just part of the process. But as I gained experience, I noticed how quickly these costs added up. High fees and hidden charges can silently chip away at your profits. Worse, choosing an unreliable exchange can mean downtime just when you need to make a move.
My Tip: Spend time researching the best exchanges before you commit. Look for platforms with reasonable fees, good customer reviews, and a proven track record. If you can, have a secondary exchange account ready in case your main one goes down.
2. Knowing When to Take Profits
I’ll be the first to admit it: I’ve let greed get the better of me. Watching a coin’s value rise is exhilarating, and I often held on too long, hoping for even more gains. Unfortunately, those gains can vanish as quickly as they appear.
What I’ve learned: Set realistic targets for taking profits and stick to them. Even small, incremental profits can add up over time. More importantly, having a clear exit plan helps you avoid emotional decision-making and protects the gains you’ve already made.
3. The Temptation of FOMO and Whale Manipulation
We’ve all been there: a coin starts skyrocketing, and the fear of missing out drives you to jump in. I’ve fallen into this trap more than once, only to watch the price plummet after I bought it. Often, these surges are driven by big players or whales manipulating the market. Retail investors like you and me can get caught up in the frenzy and pay the price.
What I now do: Focus on the fundamentals of a project, not the hype. If a coin is suddenly pumping, step back and ask why. If there’s no solid reason behind the rise, it’s probably not worth the risk.
4. Overtrading: A Costly Mistake
In the early days, I believed the more I traded, the more I’d earn. What I didn’t realize was that constant trading often meant constant fees—and constant stress. Overtrading not only drained my wallet but also took a toll on my mental health.
My approach now: A good friend and mentor often said no emotional trading. You plan and execute your plan, that is it. I’ve found that having a clear trading plan makes a world of difference. I’ve learned to be more patient, holding onto promising assets until they hit my targets. This way, I trade less, save on fees, and keep my emotions in check.
5. The Perils of High Leverage Without Safeguards
I’ll admit, the allure of leverage was strong. Early on, I thought leveraging my positions would catapult me to success, but instead, I lost. However, I quickly learned that leverage can lead to devastating losses without proper risk management. A single bad trade wiped out weeks of gains in seconds.
What I now recommend: Use leverage on the low end if you use it and always set a stop-loss. You could, just like me now, avoid leverage entirely or use it on the low end responsibly. Small, calculated leverage can enhance your returns, but only if you protect yourself from sudden market swings.
6. Safeguarding Your Crypto: The Case for Self-Custody
At first, I kept most of my funds on exchanges. It seemed simpler. But then I started hearing horror stories of hacks and frozen accounts. The idea of losing my hard-earned crypto because of someone else’s security lapse was terrifying.
My current practice: I now store the majority of my holdings in a hardware wallet. The added peace of mind is well worth the initial setup effort. While it’s not as convenient as leaving everything on an exchange, it’s a small price to pay for greater security.
7. The Importance of Doing Your Own Research: Don’t Just Follow Influencers
In my early days, I relied too heavily on influencers. Some turned out to be genuinely insightful, but others clearly had hidden agendas. Over time, I realized that blindly following someone else’s advice left me vulnerable to bad decisions and unnecessary losses.
My personal policy is to take everything with a grain of salt and use trusted sources like Fat Pig Signals. I now cross-check multiple opinions, read whitepapers, and analyze projects myself. Doing my own research makes me feel more confident in my investments and less swayed by external noise.
8. Striking the Right Balance: Diversification
I once made the mistake of putting nearly all my funds into one project. When it failed to meet expectations, my portfolio took a heavy hit. On the flip side, spreading myself too thin across dozens of coins made it impossible to keep up with the market.
What works for me now: I keep a focused yet diversified portfolio. I reduce risk by allocating my funds across a few strong projects in different niches, like the top 10 or next-gen coins, while maintaining the potential for solid returns. Adjusting my holdings periodically also helps me stay aligned with market trends.
9. Avoiding Emotional Attachment to Assets
It’s easy to fall in love with a coin, especially one you’ve held for a long time. I’ve held onto assets that were clearly underperforming simply because I was emotionally attached to them. This “marrying your bags” mindset can be costly, and I, once in a while, have to still be reminded of that by my trader friends.
What I remind myself: If something isn’t working, it’s okay to move on. Regularly reassessing my portfolio and staying flexible allows me to let go of assets that no longer serve my goals.
10. Taking Care of Myself
Early on, I underestimated the mental and physical toll that trading could take. I stayed up late watching charts, skipped meals, and let stress build-up. Over time, I realized this wasn’t sustainable.
How I stay balanced now: I prioritize my well-being. Regular exercise, proper sleep, and stepping away from the screen when I need a break have made me a better trader. I also make time for friends and family, which helps keep my perspective in check. We wrote a great article a few years ago about how to get rid of a trading addiction. This article could be the first step, but please get help from a professional.
My Crypto Trading Mistakes Conclusion
Looking back, every crypto trading mistake I made taught me something valuable. By sharing my personal journey, I hope to help you avoid these pitfalls and build a more sustainable approach to trading. Cryptocurrency markets may be volatile, but with the right mindset, strategies, and self-care, you can navigate them with confidence and achieve your goals.
