Top 5 Mistakes To Avoid When Trading Crypto - Crypto Breakdown February 1, 2022

Episode Summary:

Today on the Crypto Breakdown I look at

Today I look at the top 5 mistakes to avoid when trading crypto.

Questions? Ask at [email protected] and we will answer!

Hosts:

Joe Dewitt Follow at: https://twitter.com/metabitz

Crypto Heat Map

Subscribe to our Benzinga Crypto Youtube Channel

Subscribe to Moon or Bust Podcast

Past Episodes of Daily Crypto

Disclaimer: All of the information, material, and/or content contained in this program is for informational purposes only. Investing in stocks, options, and futures is risky and not suitable for all investors. Please consult your own independent financial adviser before making any investment decisions.

Unedited Transcript:

Hey everybody happy Tuesday. My name is Joe Dewitt, and this is the crypto breakdown. Today. I'm going to discuss some top five mistakes when trading crypto now, number one would be not having a goal. Now it's super important when you're trading cryptocurrency to establish a goal at whether it be short-term or long-term.

And this really helps put into perspective what your returns are going to be. So, for example, if you were trading short term, you would have a different trading strategy than someone trading long-term. And this is really. Important to actually develop a plan and stick to it because it helps steer you in the right direction rather than, um, just trading off a FOMO, which is the fear of missing out, which is often a huge motive, um, for people to be trading crypto, as they think that they will grow exponentially.

So forming a plan and sticking to it is absolutely. Now the second mistake, I want to talk about goes a little bit off of that, not having a goal, and this would be thinking too short term. Now, a lot of people like to think about their immediate returns and what a project will be doing for them in the short term, but in crypto, considering that decentralized finance is so new and upcoming, and it's really important to look at the bigger picture and take a step back and say, More long-term than the relative short term.

Now this could be good or bad. Now, if you think of a token going exponential, if you take a step back and think, um, long-term, there may be a reason why it is going, uh, parabolic. It might be because it is in a short squeeze. It might be because of the FOMO and recent launch. There are many different factors.

On the other hand, you could have a token that is highly valued in. Um, an insane amount of utility and it is extremely undervalued or the price is going lower and lower. Now, if you take a step back, you would, you'd be able to understand that the project is very fundamentally strong. So, you know, the longterm, um, benefits are going to be better than the short term and see these.

A few examples, but I'm sure you can imagine all the other examples from thinking to short-term. So I recommend don't do that. Try your best and take a step back and look at the bigger picture. Number three would be directly jumping into trading without any sort of knowledge or any sort of experience and technical analysis.

Now, if you want to begin trading, there's a lot of websites that help break down some indicators and teach you a little bit about market structures. Trading view is an absolutely great resource. If you want to go on and learn some indicators, um, you can also use their charts and they provide free. And go on and look at different timeframes and look at different indicators.

Now, what I will recommend with charting is use different indicators to paint the bigger picture. You do not want to be looking always at an RSI and a 50 day moving average, because you will paint a biased picture. You always want to change your indicators to help you gain a better picture of where the price is going.

And as well as timeframes, don't be afraid to look into that 30 minute, that one hour, four hour, 12 hour, one day, one week. Taking a look at every sort of timeframe really helps get in perspective where price is going and will help make you a better trader. So number four would be trading on a platform that is not secure.

And all I will say about this one is, um, just do a bit of research when you're looking for an exchange. And if you are looking for a secure. I highly recommend Coinbase FTX exchange Binance. Those are some of the most used ones. You're looking for a decentralized exchange pancake swap Eunice swap curve.

There are a lot of exchanges that provide a secure platform for traders. And finally, number five, I would say, would be, do not overextend. This is probably the number one mistake that people make when trading crypto and trading other commodity. It would be to overextend their position. Now, even if you were very confident in a trade, it is very important to make sure you diversify your positions.

Now, what this does is actually help mitigate some of the risk when you're trading crypto. And, um, I guess one would say don't put your, all your eggs in one basket. That is a way you could. This, it is really important to try and diversify into many different projects as it will be a lot better. Long-term and this plays into the building a plan.

You will build a plan to diversify and structure your portfolio to accommodate a few different areas of crypto. So you could go into defy a little bit of utility tokens, maybe some store. Bitcoin, and this will help make sure that you get the entire value out of everything that you were looking for in crypto.

And this makes it a lot safer. Although these are some of the most volatile assets that can be traded, diversifying your assets and not putting all your eggs in one basket really helps mitigate that risk. And that's all the time we have for today. Guys. Thank you so much for tuning in. You could fall and subscribe to the podcast, which will all be the description.

Have a great Tuesday