10 MISTAKES which will TAKE YOUR WEALTH AWAY in Crypto Markets

1. Trading Daily — If you are a compulsive trader, you will definitely lose more often than you win and perhaps also lose larger than your win. Money is made in trading by waiting for the right opportunities and catching the big moves. If you are impatient, crypto is the best place to lose your money!
2. Holding a losing position — Sometimes, people hold onto a position for the sentimental value of their faith in that particular project, often referred to as HODLing in the crypto world. While, it may be okay HODLing for the mainstream projects (the large cap cryptos like BTC, ETH etc.) which will definitely bounce back in the next bull cycle (and perhaps stronger than before), most alt coins may not!
   It is always a stupidity to hold a contrarian view to the market and justify your optimism with random logic while being swept away financially. It’s always good to cut your losses early to preserve your capital to see another day and find another opportunity. Much worse can be doubling down on a losing asset by buying more of it to average your price while the price plummets. The bad thing with crypto is that, while you keep expecting a positive news and trend reversal, the price can actually go to pennies! So, beware and listen to what the price action tells you and not your own opinion/intuition or your favorite influencers’.
3. Buying the hype — The age old adage is “If something is too good to be true, it probably is”. If everyone is going gaga about something, it may be a red flag. Nothing is without risks (huge ones) in crypto and its best to DYOR before you trust the paid PR. If you have heard only the positives of a projects and how it can change the world, but nothing on how it can also fail and who are the people behind that projects, what’s the stage of development and what the industry experts think about it (not the financial advisors and the crypto influencers but the industry insiders), then it’s better to stay away. The most painful thing that can happen to you is getting caught at the top of the shill pump and dump.
4. Neglecting the market cap — While small market cap coins can be a great way to 100X but not all bets will work out so it’s best to keep a majority of your money in large caps and relatively much smaller portion into a well diversified small cap projects. Small cap projects often suffer from liquidity problems and are prone to price manipulations which can be hard to tell for an average person unless they track the on-chain activity closely and observe the share and vesting schedules of insiders.
5. Not evaluating the utility of the tokens — The hype runs the price in the short term, but in the long term its the utility and adoption that drives the price. If you have to just take one point home from the article — THIS IS IT. While, some may ridicule me for this, I would advise staying away from the Meme coins no matter how attractive the returns may look like (there is similar or more money to be made in crypto elsewhere too anyways!)
6. Not cashing out on profits — My own experience says that if money only flows one way into your crypto wallet, you are definitely doing something wrong! Here is a GOLDEN RULE — Whatever profit you make, take atleast half of it out and keep playing with the rest. There are chances that you never took something out and all of it crashed. And even more importantly, there are chances that as your wallet grows, you will take bigger AND RISKIER bets for that quick chance towards retirement money and lose more than you can afford, wiping out your capital (been there, done that :D)
7. Poor risk management — Can’t stress enough on this! While taking positions, most people are over optimistic of their assumptions and expectations without realizing that there is a hidden hand of the market that can destroy the best of analysis! If you take excessive leverage or play without using the safety of a STOP LOSS then sooner or later you will be REKT. Even in spot markets, it’s important to diversify and to keep rebalancing the portfolio. Stay alert and tuned to the news (macro-economic, regulatory, industry and project-specific) and be fast and smart in your actions. Look for multiple indicators and conformations before taking a position and ALWAYS REMEMBER that taking a smaller profit is better than taking a large loss!
8. Believing the unrealistic yields — If you have seen the 2021 bull run, I am sure you now what I mean. DeFi projects promising huge, impractical yield and passive riskless income have either rug pulled or “rewarded” their users with inflationary tokens of their own which lost value faster than the 10,000% APR promised, finally to go into a spiral towards ZERO. The project founders retired peacefully then thereafter, not the investors :D
9. Discounting the power of low risk, less fancy ways of making money in Crypto — Staking, Loaning your Crypto, Finding Arbitrage Opportunities and Yield Farming are some of the low risk (with relatively low reward) and less exciting ways of making money in crypto. These can be a great ways of adding to your wealth (in crypto terms) during a bear market as you HODL.
10. FOMO & REVENGE — The market is full of opportunities at all times so don’t act out of haste without duly understanding the price action, underlying utility and quality of team. Sometimes, acting on the news may already be too late (most news are stale as the insiders may have already known ahead of small investors and already bought and pushed the price) and you may actually be getting in at the top while the insiders are dumping on you as you transfer your wealth onto them and they walk away laughing. Wait for a pullback and for trend confirmations before jumping on the bandwagon. Always remember that the worst decisions are made when people act out of FOMO.
    Revenge on the other hand is that when you miss a trend and now hate the rally and you start expecting a reversal and take the contrary position too early and get rekt or, much worse, you try to recover your losses by taking much riskier trade in the hopes for a quick recovery.

While sounding like a smart ass saying all of the above, I must admit that I have done each of the above mistakes. In fact, these are the cardinal rules were learnt from observing the patterns of my own thought and actions when I made significant losses and have been reaffirmed by the advices shared by some other, much more experienced traders.

Hope you learn from the mistakes of the others and skip committing them yourselves but if you do, I am sure the mistakes would reinforce these principles more strongly in you than reading alone could and would make you a better trader! All the best and happy trading!