Panic selling, not diversifying enough assets and misjudging the market: these are the biggest crypto trading mistakes.
“It’s good to learn from your mistakes. It’s better to learn from other people’s mistakes.” In German: “It’s good to learn from your mistakes. It’s even better to learn from other people’s mistakes.” That’s what Warren Buffett once said, and he is, after all, one of the richest people on earth and considered one of the most successful investors in history. So when it comes to trading, he’s certainly one you shouldn’t write off immediately – even when it comes to crypto stocks.
If you’re trying to supplement your pocket money or provide for retirement through smart trading, your own mistakes can not only be annoying, but can rip big cracks in your wallet. A recently published study has now addressed this very issue, asking 1,000 participants about the biggest mistakes they made in their crypto investing careers.
Panic selling, diversification and lack of understanding
38.2 percent of the 1,000 crypto investors surveyed cited panic selling as their biggest mistake. What’s clear is that the crypto market environment is one of the most volatile in investing. Nowhere else do more assets, some with gigantic market capitalizations, vie for the favor of their investors in such a volatile manner than in the crypto market. It is quite possible that one or the other coin will lose 20 percent or more of its value overnight, even though it was one of the day’s winners the day before. Even die-hard traders get scared – newcomers often sell everything immediately, at prices far beyond their entry markers. If the respective token then breaks out again shortly afterwards towards the north, the despair is great – possible profits were not only missed, but a lot of money was lost.
Another mistake respondents said they made was not diversifying their assets enough. What has always been true in the stock market, one or two crypto investors don’t seem to realize – or want to realize: Putting all your eggs in one basket is negligent. Bitcoin maximalism or not – a proven and far more risk-resistant strategy tends to rely on distributions of 70/20/10, i.e. around 70 percent Bitcoin, 20 percent Ethereum and 10 percent in other altcoins.
Learning from mistakes
The third most common mistake for study participants was that they misjudged the market and its operations. That it wasn’t just a short setback, for example, but the beginning of a bear market. Or, conversely, that it would remain with the one green candle and that percentage price increases in the four-digit range would not be possible.
After all, 12.5 percent saw their biggest mistake as a lost password – and thus the loss of all their assets on the respective wallet.
To be noted: Anyone who actively trades in the crypto market will make mistakes – sometimes sooner, sometimes later. It is important to learn from them. Next time, recognizing the bear or bull market as such, the Diversify assets (at least a little) and at the same time don’t panic and sell everything just because a red candle appears in the portfolio. If you also pay attention to the safekeeping of the wallet passwords, then you are already on the safe side.