Yes, you can make $20 million with only a $20 portfolio from crypto trading. The right question is how? As all of us know the crypto market is quite speculative and volatile. One minute it is touching new heights and in others, it is going down. Crypto trading can be challenging in many ways and when you start trading, it’s a whole different ball game. Crypto trading can leave you with mental exhaustion, feeling wiped out, and confused.
New traders can feel baffled by the chaotic and volatile price action of cryptocurrencies. Traders can be confused with the erratic and impulsive behavior of the crypto market. Novice traders might be trading with the intention to learn from the previous day’s mistakes but still, price turns in the market can be hard. The crypto market doesn’t care about anyone and it may seem crazy. Initially, it has the potential to become an irritate foe that you feel you must beat.
Common mistakes when trading
There are some common mistakes that crypto traders make when they deal with the crypto market. By understanding these mistakes, you can evaluate whether you make such mistakes or not. Let’s dive into these:
- Many crypto traders are unwilling to study the market on their own. They usually rely on other sources like Twitter, Slack, or any other source. Well, let me clarify one thing which is that if you do not want to learn about the product and its value then avoid investing your money and time. Explore and analyze the market on your own.
- Sometimes people with little research invest such an amount of money that they cannot afford to lose. Even professionals in the industry can bear heavy losses so no one is insured against failure and mistakes.
- The most common mistake is that people fall for messages like “project is skyrocketing” and this FOMO leads them to heavy losses. No one in the Telegram or Twitter will tell you the truth and why would they? They are there to make living for themselves.
- Most people sell their holding when the price just starts to grow. Experienced traders will advise you to hold and do not sell because no one knows how much a token will grow.
- Some people try to invest in small tokens just because they can buy them. There’s a chance that a small project will grow but it can also be true that it is a fraud.
- People often fall for the trap of huge incentives and earning maximum profits from the start of any project. This fear of missing out (FOMO) is dangerous because initial coin offerings (ICOs) are more dangerous than other types of investments.
Reaction of Mistakes
Anyone can make mistakes as it is in human nature. Your reaction is what differentiates a successful trader from a failed one. People tend to react differently in the same situation. The human brain is designed for survival and it wants to keep people safe. The brain is not in the process of evolution and it can’t differentiate between actual risk and perceived risk.
The brain understands the risk in the same way whether it is from a saber-toothed tiger or stage fight. The fight, flight or freeze reaction is the same, no matter the level of risk. Some people go for taking an act of revenge from the crypto market in case of loss, which is a pretty bad reaction. And with this mindset, people can lose more.
Think like a Successful Trader
Thinking is what separates a novice trader from a successful trader. We have enough success stories to know the thinking of a successful trader. We have designed a list of what successful crypto traders think. Let’s take a look at them.
- They believe that they can remain detached from the crypto market which is of utmost importance when the crypto market is consolidating.
- The Crypto market has no emotion so to become a successful trader you should also have control over your emotions.
- Winning traders don’t need to be always good for you. Sometimes failed trades are more beneficial for a long-term stand-in crypto market.
- They also believe that being good at market analysis will not create more wins for you.
Actually, the psychological reaction to the crypto market is the main key to success. A lot of time and effort is required to develop such a mindset. So, there’s no need to beat yourself up when things go pear-shaped.
How to develop such a mindset?
As we have discussed earlier, it will take a lot of time and effort to develop such a mindset that can help you to be a successful trader. Are you ready to commit to the work needed to develop a mindset for trading cryptocurrencies? If yes, then continue to read.
- The trading routine is what determines whether you’re going to be a successful trader or not. It’s all very well rocking up to your trading platform when you feel like it. Start your daily trading routine with quiet time. Try to remove distractions like your mobile phone and your social media alerts.
- Try to learn about the crypto market and how all of this works. Do thorough research and read books to know what successful people have done.
- Controlling your losses is another thing of extreme importance. You should never risk more than 1% of your portfolio and always have a stop loss.
- Keeping a record of your trades is also important. Write down all of your emotions with the trade and then forget about it. Learn from previous failures and then go with a new mindset into the trading.
- Crypto traders will win or lose so no need to show an impulsive response. Keep it calm and cool and the day will come when you will be winning.
The time to develop such a mindset is different for everybody. t depends on how much time you commit and how self-aware you are. Once you can quickly observe your habits and emotional responses, you are well on the way to regulating your emotions.
Patience is the key to trading in cryptocurrency. Do not be afraid to miss any deal – the market is so big and developing that there will be enough money for everyone. However, remember that it is easy to make money on the market, but it’s hard to keep what you have earned. Do not let greed and greed get over you. I will repeat once again: there will always be cryptocurrency, ready to fly like a rocket!