The Two Biggest Mistakes Crypto Traders Make?

The first and most obvious is a broad-based adherence to buy and hold. This idea is very popular in crypto, that if you buy and hold, you’ll be a billionaire or be rich. That might be true if you happen to choose the right tokens. That might also be true if you just held Bitcoin or Ethereum. But the reality is, this is so new wherein we don’t know where it’s going regarding the market direction. We know that it’s a very strong market but there’s a lot of hype right now. If you buy and hold, you’ve got to sit through a gut-wrenching drawdown. I’m not a fan of 70%-90% drawdowns. It just doesn’t fit my risk tolerance and profile.

Buy and hold is one of the biggest mistakes or risks because most people will get into that massive drawdown panic. They think they’ve made a mistake, and dump it because they can’t cope.

The other big thing is because it’s a new and interesting market, it’s brought in a whole new generation of traders who are yet to learn a lot of the lessons that many of the listeners have probably learned over the last 5 to 20 years of trading. A lot of new traders are listening to random people on social media for tips. If you go into the crypto Facebook groups, it’s all about “what should I buy today? What’s going to the moon tonight? How can I get rich next week?”

There’s just no structure in the way many people are trading. In reality, we know if you want to succeed as a trader long-term, you’ve got to have a disciplined approach and a set of rules that will guide you. That’ll keep you out of trouble and be profitable. Stop listening to those social kinds of tips, pressure, and fads.

A big part of the crypto market that makes that dangerous is the many pumps and dumps in this space. Think about penny stocks before where one broker might get hold of a penny stock and pump it, push the price up, they cash out, and then it crashes.

It’s exactly what’s happening in many of the smaller tokens in the crypto space. So again, if you don’t have a strategy or a set of rules to get in early and profit from the pump, you’re going to end up holding through the dump, which will hurt.