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The Worst Bitcoin Trading Mistakes and How to Avoid Them

Bitcoin trading can be an incredibly attractive option for investors of all types. Currently Bitcoin is rising in value at an astounding rate and as decentralized finance gains in popularity and legitimacy the world of cryptocurrencies is going to gain even more ground. However, there are certain common errors, most frequently made by novice traders, […]

Bitcoin trading can be an incredibly attractive option for investors of all types. Currently Bitcoin is rising in value at an astounding rate and as decentralized finance gains in popularity and legitimacy the world of cryptocurrencies is going to gain even more ground. However, there are certain common errors, most frequently made by novice traders, which have the potential to turn a lucrative opportunity into a substantial loss.

There is plenty of advice out there on how to invest in Bitcoin and make money, with article titles like “How to Be Successful in Cryptocurrency – 5 Rules of Bitcoin Trading” or “How to become a Bitcoin Millionaire”, but what a lot of beginners really need to get to grips with first is how to not lose money in bitcoin.

What are the types of bitcoin trading mistakes most commonly tripping up novice traders? The main errors involve not understanding the risks inherent in crypto investing or knowing how best to mitigate your exposure. Let’s take a closer look at some of these major missteps and examine how you can avoid them.

Lack of Preparation

biggest mistakes in crypto trading

One of the biggest mistakes you can make is to assume that crypto trading is exactly the same as any other type of currency trading. While there are many similarities, the exceptionally high levels of volatility and the decentralized nature of the crypto space make it a very different playing field. Not only are greater risks involved, with the dramatic price shifts for which Bitcoin has become famous, but the factors impacting the crypto market will also be unique and won’t necessarily parallel the market-moving events influencing the price of Euro or USD. If you are new to crypto investing, one way to ensure you are not one of those who end up losing money trading bitcoin is to do your homework. Before diving in, learn about the crypto exchanges. Find out how they function and keep a close eye on the recent activity of any coin you trade. Going into Bitcoin investing blind, without taking the time to learn about the crypto markets is one of the worst bitcoin trading mistakes you can make.

Picking the wrong crypto service providers

wrong crypto service providers

Another of the major ways that Bitcoin investors lose money is by trading with an untrustworthy platform or BTC wallet. Unfortunately, the crypto arena has its fair share of bad actors and since the world of digital currencies is minimally regulated, there is very little oversight and transparency, which exposes investors to a high risk of fraud, hacks and other criminal activity. If you are wondering how to not lose money in bitcoin then do some research on your chosen wallet. Check their online reputation, through social media and consumer review sites. See what other Bitcoin traders have to say and verify that they are well regarded in the industry press. Any decent cryptocurrency security guide will tell you to only go with a licensed wallet, as that is the only way to trade with peace of mind and be absolutely certain that when you get up in the morning and check your account your funds will not have suddenly disappeared. That way you know that your bitcoin is stored in a wallet with multiple protections in place, with a provider that has implemented tough security measures. A safe wallet for cryptocurrency traders is critical, as it guarantees total accountability, security, and accessibility to your crypto funds.

For example, here at ArbiSmart, we have a new updated FIU license that will enable us to offer fully regulated wallet services, starting in 2021. In adherence to strict EU laws, ArbiSmart’s interest-bearing wallet will implement air-tight security protocols, guarantee AML/KYC compliance and undergo regular auditing, ensuring a safe wallet for cryptocurrency and fiat investors as well as providing a profitable source of passive income, with interest reaching up to 45% a year.

Abandoning the plan

how do you lose money on bitcoin

There are countless answers to the question “how do you lose money on bitcoin?” When it comes to trading crypto the rewards are hard to match, but there is no shortage of ways to lose your shirt. However, if you ask any professional trader the answer you will most frequently receive will be that you lose money by deviating from your trading plan. As with any form of trading, the golden rule is to set your strategy and stick to it. Otherwise, you fall into a variety of traps that are a direct result of getting emotional and throwing careful planning right out the window.

What really makes the difference between cryptocurrency gainers and losers is knowing when to step away. You must never invest more than you can afford to lose, but sometimes the thrill of a steep market shift can cause you to put in more than you intended so as not to miss out. Alternatively, it is also a mistake to pull out in a panic if there is a dip and out of fear of a free-fall, you sell before the market has the chance to adjust.

We’ve had a look at some of the worst bitcoin trading mistakes and they can be side-stepped by taking some basic precautions. If you want to know how to not lose money trading Bitcoin, then the answer is simple. Prepare yourself practically and emotionally. Come to the crypto exchanges fully prepared, with knowledge of the crypto markets, use a licensed and regulated crypto service provider that offers a safe wallet for cryptocurrency traders and come armed with a sound trading strategy.

There is of course one other way to avoid each and every one of the mistakes outlined above, without any of the effort, while still making a profit on your Bitcoin, and that is with crypto arbitrage. This is a strategy that involves taking advantage of the fact that a cryptocurrency can be temporarily available at different prices across a number of exchanges at the same time and it is widely considered to be one of the lowest-risk forms of investing.

At ArbiSmart, our fully regulated crypto arbitrage platform is fully automated. This means that no market knowledge is required, so there is no research, no homework and also no danger of the software becoming emotional and making the wrong moves. All you need to do is sign up, deposit and then let the platform take over. It scans 35 crypto exchanges at once, 24/7, finding and exploiting price disparities to earn you a safe, passive profit of up to 45% a year, depending on your deposit amount.

To learn more about the crypto markets and Bitcoin investing, check out the rest of the ArbiSmart blog, or start putting your Bitcoin to work straight away on our FIU licensed crypto arbitrage platform.

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