Cryptocurrencies are known to be volatile, exposing inexperienced traders to significant loss. However, crypto futures traders can educate themselves on common mistakes to avoid, which would improve their trading experience. This will also help new crypto futures traders to maintain emotional discipline, develop clear trading plan, and use the right risk management strategies. Thus, the mistakes discussed below will gradually increase traders exposure as they grow in trading experience.

1. Ignoring Stop-Loss

Since cryptocurrencies are highly volatile, informed traders implement a stop-loss strategy to minimize potential loss once the market price reaches a particular position. Thus, traders will set a minimum price on an exchange, and the platform will automatically release their money when the price hits this minimum amount.

When Ethereum and Bitcoin experienced a bearish market in 2021, the rate of stop-loss orders was high. This is because investors saw it as an opportunity to earn profits without constantly getting involved in the market movement. As a result, we highly recommend this strategy for new crypto futures traders who are yet to be familiar with market trends or how they work.

2. Revenge Trading

Revenge trading is when crypto futures traders are too focused on restoring their losses. They go into new trades every time to recover a significant loss. Unfortunately, the futures trading market is unpredictable, so many of these traders incur more losses. 

One of the most common ways to stop revenge trading is to self-assess. Set realistic objectives that are not bound to emotions. Another thing is to assess the market condition frequently. For instance, when you observe that the market volatility is too high, you may hold back from trading, so you don’t make careless decisions.

3. Over Leveraging

Leverage is a common strategy employed by informed crypto futures traders. It simply means borrowing a large contract value to increase your market position. This happens when investors don’t have enough capital to pose a trade. However, this supposed gain strategy could lead to massive losses when you over-leverage.

The reality of leverage is that you will enjoy a massive profit if the market movement is in your favor, and if otherwise, the loss will be significant. Wherein the extent of loss is usually proportional to the investment capital. Thus, when you over-leverage, and the trade goes wrong, it will affect a large volume of your investment as well.

4. Poor Understanding of the Margin by Crypto Futures Traders

Margin is a critical concept crypto futures traders should know. It is mainly of two types, cross margin, and isolated margin, while each type of margin has pros and cons. Traders often make mistakes when they don’t know how to handle margin deposits appropriately.

In cross-margin, you can use one deposit to cover multiple trades, which is mostly suitable for novice traders. On the other hand, an isolated margin requires traders to set different margins for each position. Thus, an isolated margin is most appropriate for learned crypto futures traders with high leverage.

In a nutshell, understanding what margin entails and how it works, will help you to identify the right type of margin for you.

5. Trading Without a Plan

This is a common mistake among new futures traders. They trade without budgeting capital or planning how to react to sensitive market situations. While studying market trends, it’s essential to have a plan concerning your trading quantities and time margin.

When drafting a plan, you must be wise, especially with strategies that minimize your risk exposure. More so, if you are not conscious of the plan in place, you are very likely to trade by emotions. You must always keep track of your actions and the results.

6. Choosing the Wrong Trading Platform

Unfortunately, many traders ignore the reputation of the trading platform they use. Choosing a reliable trading platform can influence your trading experience. Thus, search for trading platforms with good reputations within the crypto industry.