Cryptocurrency like Bitcoin and Altcoins are catching up in India and are above the skyline of technology like a furious raging river. Swimming against the current can lead to complete disappearance from the scene. Diving into this sea of trading without adequate knowledge or diligence is a recipe for disaster. Listed below are three important mistakes to avoid while trading in cryptocurrencies.
Using the Order Book Without Knowing to Place Commands Properly
The value of a coin depends on the last executed transaction, at the very intersection between buyers and sellers, or as per the forces of supply and demand. These supply and demand commands are set in a table, popularly known as the order book.
Set the sell level to take profits as soon as you enter a position as the crypto market is very volatile. It is also critical that you set a stop loss so that the losses are minimal. However, knowing exactly where to place commands is tricky. The graph needs to be analyzed at the basic level in order to determine the resistance (where we want to take profit) and support areas.
The order book will guide in finding the optimal levels at which these commands have to be placed, according to Crypto Coin Mastery. It is important to remember that losses have to be cut if support levels break down.
Blindly Trusting Third-Party Wallets
This is one of the biggest mistakes to avoid. Storing your cryptocurrency is like protecting your fiat currency in vaults. While trading cryptocurrencies, your valuables will be stored in the third-party cloud storage. This can lead to many problems considering how the cloud is managed by both humans and the centralized system. The risks involved can be reduced by diverging funds on diverse exchanges. This ensures that your funds are taken care of by other parties even if one party is not in the picture.
Panic Selling After Noticing Fluctuations in Bitcoin
Remember that highs and lows are part of trading. Do not panic when you see skyrocketing and falling graphs. Keep your calm and observe. The future of cryptocurrency is bright, mainly because of its transparency.
India’s cryptocurrency trading volume is increasing with each passing day. Even though there are no accurate official figures, there are an estimated five million active traders in the country, according to Forbes. The only way to avoid mistakes while trading cryptocurrencies is to think and act like a professional investor. If you want to become a master in Cryptocurrency trading, you would need to read and observe the market. Make it a point to do your research, plan well and then execute.