Mistakes you must avoid while trading.

 Hi crypto traders,

 I hope you are doing well despite this slow market 😆😆. 

I would like to share with you some common mistakes made by new traders. I have made a few mistakes myself, which I am sharing with you below. However, I can affirm that I understand how trading in cryptocurrency works. You can still refer here to my previous posts, where I explained the two basic order types in crypto.  Let's jump into the common mistakes to avoid when trading. 

• Avoid always basing your purchase according to the 24 hours change rate. 
  

I remember a friend of mine told me that he is always purchasing cryptocurrencies with a high positive  24 H rate of change, because, according to him the cryptocurrency price is increasing. Do you see where the issue is 😏😐? In fact, as its name states, the 24 hours change refers to the change in currency price in the interval of 24 hours. This is not a continuous change in a cryptocurrency price. This means it does not represent the increase of the cryptocurrency for the last hour or minute for example. What the trader should do is to purchase the crypto and record its value at the time the purchase was made. Just by visualizing the current crypto price, they may know if it is good to sell/buy and take a profit or if they need to sell/buy and stop their loss.

• New traders should avoid the confusion between a take profit order and a stop loss. 

This is actually a mistake I have done when starting to trade. We have mentioned in our previous posts the different orders you can find in the crypto environment, as well as the difference between them. Now let´s take an example based on the take profit and stop loss orders. For users with an account in Kraken, you can find the following on their support page: ¨A stop loss order allows you to buy or sell once the price of an asset (e.g. BTC) touches a specified price, known as the stop price. This allows you to limit your losses or lock in your profits on a long or short position but can also be used to enter the market.¨: Let´s imagine that you have a long (buy) position entered at the BTC price equal to USD 18000. BTC´s price is now USD 19000. You wish to close your position when the price of the BTC reaches USD 20000. According to the definition of stop loss order, and without experience in trading, you decide to open an opposite sell stop loss position to close your position. You select therefore a stop-loss price of USD 20000. The moment you submit your order, the BTC price is USD 19100. What do you think will happen to your positions 😊? Obviously, they will be executed and, the Long position will be closed. You wonder why your position got closed. What did not work well? It is simple: by opening a sell/stop loss at a stop price of USD 20000, you gave an order to the system to execute your order at the best price when the last BTC price will be lower or equal to your stop price 👎👎👎. You even receive here double punishment. Since your order is directly executed, it means the trading fee that applies to your position is a taker fee, which is higher that the fee (maker) you expected to pay for that position. 

These are two basic errors I have done while trading for the first time. You can see my previous posts, where we explain the difference between most of the order types encountered in the existing cryptocurrency trading platforms. 

Let's accelerate the integration of cryptocurrency in our society 😘😘