Buying Bitcoin can seem so complicated especially if you are a newbie in the crypto world. Read this article to know the most common mistakes so you can avoid them when buying.
March 11, 2020 | AtoZ Markets – Cryptocurrencies are often known as digital currencies and they have changed the concept of the traditional banking system. Blockchain technology has created an amazing method by which large transactions can take place without the presence of a middleman.
Thus transaction cost is cut down to a great extent when we use digital currencies. Due to many companies embracing cryptocurrencies, the price of major digital assets is surging furiously. The smart investors are taking advantage of this bullish rally and making a decent profit by buying the cryptocurrencies.
Today, we are not going to deal with different forms of the digital asset. In this article, we will discuss the most common mistakes committed by rookie investors while buying the Bitcoin. Let’s start digging deep.
Failing to deal massive correction
When the price of certain asset rallies strongly, you should be prepared to deal with massive correction. A correction is a small movement in the price against the major trend. Since the obvious trend in the BTC/USD pair is bullish, any downward movement is known as a bearish correction.
The rookie traders don’t have the skills to deal with such a massive correction. Some of the naïve traders often trade with a big volume and a slight change in the price results in a significant profit or loss. So, they become too frustrated to deal with the corrective moment in the Bitcoin.
You should scale the lot size in such a way so that you can easily deal with massive bearish correction. If necessary, start using the protective stops in each trade so that the trades get automatically closed when you incur a certain amount of loss.
Trading with the money that you can’t afford to lose
Some of the investors think the price of bitcoin will go higher for sure. They never think about the bearish correction of a major trend change. They are biased in favor of the bullish concept and buy BTC without even analyzing the risk factors. But as a cryptocurrency trader, you should never trade with money that you can’t afford to lose. Instead of taking high risks in each trade, learn about lot size scaling.
Effectively managing the trades is like driving a car on the highway. You can’t afford to lose concentration for a single second. If you do so, you are bound to have an accident. So, trade with money that you can afford to lose without any emotional stress. Use a standard risk management policy so that you are not under pressure after executing a trade.
Buying Bitcoin at the top
Naïve cryptocurrency traders often buy the bitcoins at the top. They are not familiar with the concept of major retracement in price. Just after placing the trades, the price starts to fall and they think the market is manipulated. But no one has the power to manipulate the crypto trading industry.
You should avoid trading the tops and bottoms of the asset since these are the most dangerous spot to trade. Try to learn about the retracement trading strategy so that you can trade with the major trend. Once you learn the trend trading strategy, you will feel more confident with your trading approach.
Using an unreliable exchange house
Some of the investors often buy Bitcoin from an unreliable exchange house. They do so because the unreliable exchange house often offers a much cheaper price. They think this is the best deal they can get in the market and eventually invest a huge amount of money.
But after giving the payment to the unregulated exchange house, they often get scammed. There is nothing you can do about your investment. For this reason, pro investors always prefer to exchange Bitcoin and other digital assets using the bigX platform. You must deal with the cryptocurrencies with well-reputed companies or else you might get scammed.