[Day 1] Top 7 Costliest Mistakes Trading Cryptocurrency #1. FUD and FOMO
As a new trader, you’ve already recognized the potential profits that trading cryptocurrency can offer. A lot of beginners jump right in without doing the proper research and often get burned during a market cycle (Bull & Bear). Everyone can make money when the market is going up, but it’s much harder to decide when the time to take profits is.
In this series, I will discuss the Top 7 Costliest Mistakes Trading Cryptocurrency
Table of Contents:
- FUD and FOMO
- Wrong Tools
- Wrong Entry Point
- Technical Analysis Done Wrong
- Not Understanding the Order Book Correctly
- Risk Management
- Is Day Trading Really For You?
#1. FUD and FOMO
One of the biggest mistake that a novice trader makes it make decision-based on emotions, rather than making an informed decision. Day trading based on emotions mostly leads to losing your money, and it’s also not good for your health as well.
The two key terms that describe an emotional trader is FOMO and FUD. FOMO stands for Fear Of Missing Out, whereas FUD stands for Fear, Uncertainty, and Doubt. As you can see, there is a “rational” thing about an emotional trade. They operate based on fear, anxiety, uncertainty, doubt, and other emotions.
Mostly media element spread FUD. Cointelegraph covered a very interesting article on how media tried to spread FUD on bitcoin, the most popular cryptocurrency. Another example is the Wall Street Journal post which mentioned SEC meet on 7th May. The wrong reporting of the SEC meeting lead to almost 50 USD drop on the price of Ethereum.
To overcome this common mistake is to have a strong day trading strategy. The strategy should cover your personal rules and indicators that work for you. However, this doesn’t mean that you should ignore the news. Read them, but always keep an open mind when dealing with them. Also, do not make a hasty decision based on news. Always analyze the source and try to understand its short term and long term effect.
The ruleset set by you should be flexible and you must update it as you gain more experience and understand the market in a better way
If you'd like information on cryptocurrency trading signals, I developed a script that tells me when to buy and sell. Check out my site to see some trading videos: www.altcointradingsignal.com/