The Cryptocurrency market lure many traders because of the massive gains some people made in the last years. Some of the traders are completely new to trading and some have experience trading stocks, futures, forex and etc.
In both cases the traders are joining the cryptocurrency market for the first time and this market is quite unique.
In this post you will learn about 3 common mistakes made by beginner cryptocurrency traders and I hope this post will help to prevent you from making the same mistakes that cause many people lose money in this incredible market.

Trading Cryptocurrency market the same as the other markets

The Cryptocurrency market is different from any other market and even if you are a successful trader at other markets such as the stock market for example, it doesn't mean you immediately will become a successful cryptocurrency trader, especially if you will try to trade the same way you traded the other markets.
There are major differences between the two markets, here are few of them:

• Cryptocurrency Market is Open 24/7/365 - The Cryptocurrency market is open all the time unlike the stock market for example that has trading hours, pre-market hours ,after hours weekends and holidays.
  If you trade cryptocurrencies you need to take that in consideration - the whole world is participating in this market so there are different waking hours for the United States and the Asian market for example, that can influence the price at different times of the day.
  Also, even though the market is open all the time Friday-Sunday tend to be less volatile as people prefer to close/open positions before the weekend probably to get some rest.
• Professionals VS Amateurs - The Cryptocurrency market is still relatively new and has many amateur traders and less 'institutional money'/'smart money' unlike other markets where most of the transactions made by computer algorithms developed by institutions with a lot of money, experience and smart, highly educated people. The players of the market decide the prices and when you have different players it results in different market behavior.
• Volatility - The Cryptocurrency market is extremely volatile! Prices can drop 30% intra-day or surge 100% intra-day and that is not even rare! This volatility is caused by many different reasons, one of them for example is low supply - the number of bitcoins is very small, only 21 million and once the demand start to rise the price of bitcoin tend to surge - like every product with a high demand and low supply.
  If you can't withstand seeing your portfolio goes done 30% in one day this market is probably not for you.
  So before you risk a lot of money spend some time learning this market and its behavior even if you are already a successful trader at a different market.

Trading CryptoCurrencies Against FIAT Money

This is a common mistake among beginners, they tend to value cryptocurrencies against fiat money such as USD or EURO but the truth is that altcoins are valued against bitcoin, because the easiest cryptocurrency you can buy is bitcoin and only after you got bitcoin you can buy different altcoins with it. This is slowly changing and as the time passing by it becomes easier to buy different altcoins using fiat money and more exchanges adding trading pairs of altcoins against tether so this can be changed soon but still many traders prefer to trade altcoins against bitcoin so if you are using technical analysis you should look at the same charts as the majority of traders - if you trade for example Litecoin against USD and see a double bottom at the chart and believe that you found support - this support can be just an illusion if only you looking at this chart. If most traders will look at Litecoin versus Bitcoin chart and will see bearish signs the double bottom at the USD chart can be easily broken as most of the traders will not consider it as support.

Linear Versus Logarithmic Scale

When looking at a chart there are 2 options to display it - using linear scale or logarithmic scale. Logarithmic scale is often used when looking at a long term period or when the price is changed drastically. It's the same idea as the last mistake - if you the only one looking at linear scale and you see a bullish breakout for instance, but everyone else is looking at logarithmic scale they would not consider it as a breakout until it breakouts on the logarithmic scale. Look at the chart below:

This is Bitcoin daily chart in linear scale and you can see at the yellow circle a clear breakout of the down trend line. But as you can see it didn't last long and the downtrend continues causing massive lose to traders who bought the breakout and thought that the down trend is over.

Now look at this chart:

This is the same chart but this time it's in logarithmic scale and you can see clearly that the breakout that we saw at the linear chart (yellow circle) didn't broke out at the logarithmic chart, instead it's perfectly touched the down trend line and immediately rejected and continued the down trend. Traders who looked at the second chart if were patient enough could short bitcoin and make a nice profit.

Price Versus Market Cap

Many beginners look at the price of a coin instead at the market cap and make false estimations. If we look for example at bitcoin and at ripple, many beginners assume that if bitcoin went up to 20,000$ then ripple can easily go to 10$ and decide to invest at ripple - they think that it's more likely for ripple to go from under a dollar to 10$ and make an easy 10x on their investment than bitcoin to go to 90k from around 9k and make the same 10x profit. But in reality it's not true - you should look at the market cap of the coin and right now when bitcoin is almost at 9k the market cap of all the bitcoins together is around 150 billion dollars. If ripple ever will be 10$ the market cap of all the ripples together will be around 390 billion dollars! If Bitcoin price will be 90k the market cap will be 1.5 trillion dollars.
Right now the market cap of ripple is only fifth of bitcoin's market cap. If bitcoin will be 90k and ripple will be 10$ the market cap of ripple will be fourth of the bitcoin market cap.
Now, I'm not saying it's impossible, all I'm saying is that the assumption that it's more likely for ripple to go to 10$ than for bitcoin to go to 90k is wrong.

Hope this post was helpful. Good luck to all traders!

Legal Disclaimer: This is my opinion, and my opinion only. I am not a financial adviser and the information provided in this blog post is meant for use as informative or entertainment purposes only.
Do your own research before investing your hard earn money and never invest money that you cannot afford to lose.

Visit our store and blog: http://shutupandtakemyfiat.com/
Facebook: https://www.facebook.com/ShutUpAndTakeMyFiat-148978335666173/
Instagram: https://www.instagram.com/shutupandtakemyfiat/
Twitter: https://twitter.com/takemyfiat