Recently, popular New Zealand-based crypto analyst Lark Davis (@TheCryptoLark on Twitter) talked about six “dumb” mistakes that crypto traders must try to avoid during this bull market.
“If you are doing crazy **** like leveraged trading with your rent money… you are going to be ending up in a very bad way.”
Next, Davis talked about the importance of risk management and protecting your capital:
“The second common mistake is not understanding that protecting your capital is a mega important thing in this game. In fact, most successful investors end up being really good at one thing – risk management.“
Davis also explained traders commonly skew their position size disproportionate to the risk of the trade:
“The third mistake is not keeping position sizing according to risk… High-risk altcoins, token sales, they should not be more than 1% to 3% of your portfolio per coin… If you keep your position sizing low, you are only going to lose a small percentage of your portfolio. You can probably handle a 1% or 2% loss of your portfolio.“
The fourth, fifth, and sixth mistakes that Davis warned about were traders not doing their own research and instead FOMOing into a trade based purely on the words of an influencer, exiting a profitable trade by selling everything at once instead of selling small portions as the price goes up, and going all in on crypto instead of lowering your overall risk by also investing outside the crypto space.
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The views and opinions expressed by the author are for informational purposes only and do not constitute financial, investment, or other advice.