How to avoid losing money trading crypto

Many newcomers to crypto trading complain that a coin’s price always drops right after they buy it. They blame bad luck, when in reality the problem is a poor entry or a hasty sale.

Here are four key ways to reduce your chances of losing money trading crypto:

Check the coin’s recent activity

Before you consider buying a cryptocurrency, the first thing you should do is check its recent activity. A coin that has already rallied hard may have very little momentum left and is likely to go through a correction, so buying at that point is asking for trouble. On the other hand, a coin that appears to have bottomed out (at a support level) has a much better chance of rising, though perhaps not right away.

Influencers shilling on social media

Thinking of buying a coin because it has been hyped as the next 10x on Twitter? Stop! The influencers promoting coins on social media do so because they bought much earlier (when you should have) and are actively trying to get people like you to FOMO into the coin, so they can sell to you at a profit.

If you see a coin being promoted heavily and its price hasn’t gone up, then it may be worth researching.

Patience is a virtue

Many people know that if you are at a loss on Bitcoin, you haven’t held it long enough. The same goes for altcoins (in a bull market). No sensible (experienced) trader buys a coin and panics when it drops 5% in a day.

When the price is so close to your entry point, there is of course volatility, which is inherent to the crypto market, and you may temporarily see the coin drop below the price you bought it at. But over time, a good coin pick will see its price move higher and away from your entry point, reducing the chance of losing part of your capital.

Constantly checking your portfolio after buying a coin is almost guaranteed to lead you to bad, rushed decisions. How many times have you sold a coin at a loss? Quite often the coin bounces back; it just needs a little time.

Trading strategies can reduce the role of luck

When it comes to trading, there is a reason many people fail. As we saw in the last two bull runs, many people in the space had never traded before and didn’t know how to ride out the swings of a trade, let alone manage a diversified portfolio.

Many jump from one trade to the next based on what they see on social media and sell at the first dip, blame bad luck and pile up losses until they leave crypto altogether. As we just saw, luck can be reduced to some extent, and the more you can replace luck with a trading strategy using the tips above, the better.