Day trading is a popular method of trading Cryptocurrencies that many new traders use to make money quickly. When you day trade, you trade Cryptocurrencies for fiat money (dollars, euros, etc.) in rapid succession. This type of trading is high risk and high reward. If you win, you will earn money quickly; however, if you lose it will be much harder to get out of that hole since it will take longer to sell your coins at a lower price. Keep reading to learn more about these mistakes and how you can avoid making them when day trading with bitcoins:
Focusing on short-term gains.
The first mistake you should avoid when day trading with bitcoins is focusing on short-term gains. Many new traders start by looking to make profits within a few days or weeks. This is all well and good if you have a solid strategy and trading plan. There are times, however, when this type of trading strategy does not work. When you are trading with short-term gains, you must be prepared for the possibility of losing money since you will likely be trading volatile Cryptocurrencies. This type of trading often does not work out well for most traders. Instead of trying to make quick profits, you should try to increase your long-term profits by placing larger trades.
Day trading with leverage.
Another mistake you should avoid when day trading with bitcoins is trading with leverage. When you use leverage to make day trading trades, you are using another person’s money to make a trade with you. This means that you have a small amount of money multiplied by a large amount of credit. This means that if you make a bad trade you can lose a large amount of money because you have a lot of credit that is tied up in the trade. You should avoid this type of trading with Cryptocurrencies because it is very risky. You should only day trade with leverage on Bitcoin Prime and other exchanges if you are experienced with day trading with a lot of leverage. Leverage is not something you should start with when trading with bitcoins.
Trading after a market peak.
Another mistake you should avoid when day trading with bitcoins is trading after a market peak. The problem with this approach is that you will likely trade during a high-market-trending period. You will have to deal with price volatility and a large amount of trading volume. This can be very stressful and may distract you from your long-term goals. When the market trend is up you may find yourself trading when you are normally not even thinking about trading. You may even find yourself day trading when you are not even sure what you are doing. This is very dangerous. You should avoid trading after a market peak.
Lack of patience.
Another mistake you should avoid when day trading with bitcoins is a lack of patience. You must have patience when trading Cryptocurrencies since the market is always in a state of flux. The market may be trending one way and then suddenly change direction. This is very common in all types of markets. The cryptocurrency market is no different. You must be patient and resist the urge to jump in and out of trades because the market may be trending one way and then turn around and trend in the opposite direction. This type of trading is often called momentum trading and is not a good strategy to follow. You should try to follow a trading strategy that has a good amount of patience because bad trades happen and the market will trend one way and then turn the other way. Patience is important when day trading with bitcoins.
Trading with borrowed funds.
Yet another trade you should avoid when day trading with bitcoins is trading with borrowed funds. This is a very risky practice and will likely lead to a significant amount of financial loss for you if you are unsuccessful. Most day traders try to make their first few trades with as little money as possible. This is fine for some people, but for others, it may not be enough money to make a big trade. When you are borrowing funds to make a trade it is possible to lose more than you have in your trading account. This is a dangerous practice and one you should avoid. When day trading with bitcoins you need to have enough money in your trading account to make a large trade. It is not safe to make a trade with borrowed funds.
Conclusion.
Day trading with bitcoins is a high-risk and high-reward activity, but it can be very profitable if you are willing to take risks and are patient. The best way to avoid making these mistakes when day trading with bitcoins is to be patient, to only day trade when the market is trending upwards, to limit your trading to only when the market is trending upwards, not to focus on short term gains, to avoid trading after a market peak, to use your own money instead of borrowed funds, and to only day trade when the market is trending upwards.