Top 10 Mistakes New Crypto Traders Make and How to Avoid Them

With the potential for enormous profits and financial freedom, cryptocurrency trading is one of the most lucrative opportunities available today. However, the harsh truth is that more than 90% of new cryptocurrency traders lose money within the first year, despite the excitement and success stories shared on social media. Bad luck isn't the only cause; beginners often lose their hard-earned money due to preventable mistakes.

 

However, we'll explain how to avoid the mistakes new crypto traders make. These pointers will help you trade more intelligently, control risk, and make better choices, regardless of your level of experience or desire to enhance your trading approach. Additionally, we offer the resources and tools you need to succeed if you're looking for a safe environment in which to learn, trade, and develop as a trader.

Top 10 Mistakes New Crypto Traders Make

1. Trading Without a Plan

One of the biggest mistakes new crypto traders make is not having a trading plan. In an attempt to make quick money, many novices rely on hype, luck, or arbitrary social media advice. Even though you might make a few profitable trades, you won't be able to support yourself over time. 

 

Emotions take over in the absence of a systematic trading plan, resulting in rash buy-and-sell choices that frequently result in losses. Instead of responding to sporadic price swings, a well-thought-out strategy or plan enables you to enter the market rationally.

How to Avoid It:

• Define your trading goals: Decide if you’re aiming for short-term profits or long-term portfolio growth.
• Set clear entry and exit points: Know exactly when to buy, when to sell, and at what price levels.
• Stick to a strategy: Avoid chasing market noise, trends, or influencer-driven hype.

 

You can eliminate uncertainty from your choices, lessen emotional trading, and increase your chances of obtaining steady returns in this erratic market by having a sound trading plan.

2. Investing More Than You Can Afford to Lose

Going all in on cryptocurrency and investing their entire life savings in the hopes of making quick cash is another common mistake made by new crypto traders. Although there is a genuine chance for profit, this strategy puts a lot of emotional strain on people. 

 

Fear takes over when prices fall, as they frequently do in this erratic market, and traders wind up panic-selling at a loss. In actuality, trading cryptocurrencies shouldn't ever jeopardise your financial security.

How to Avoid It:

• Only invest disposable income: money you can afford to lose without affecting your lifestyle.
• Follow the 1–2% risk rule: if you are new, never risk more than 1–2% of your portfolio on a single trade.
• Build your portfolio gradually: accumulate positions over time instead of betting everything at once.

 

Although cryptocurrency can be unpredictable, you can avoid catastrophic losses by practising prudent risk management. Read this article on understanding the risks and security of cryptocurrency derivatives trading to learn more about avoiding losses. It offers straightforward explanations of market trends as well as helpful advice for creating a safer trading strategy.

3. Chasing Pumps and Hype (FOMO Trading)

Investing in a coin just because it's trending on Twitter (now known as X), Telegram, or other social media platforms is one of the biggest mistakes made by new cryptocurrency traders. Without conducting adequate research, traders blindly jump in, hoping to ride the wave, when a sudden price surge sets off FOMO, or the fear of missing out. Sadly, early buyers have already made their money by the time the majority of novices enter, so latecomers are left holding the bag when the price plummets.

How to Avoid It:

• Don’t buy coins just because they’re trending: hype often fades as fast as it starts.
• Study price patterns and volume: do this before entering a trade to understand market behaviour.
• Focus more on fundamentals and technical analysis: instead of relying on influencer-driven signals, you should focus your energy on understanding fundamentals and technical analysis.

 

FOMO is one of the fastest ways to lose money in crypto. Patience and discipline always outperform impulsive decisions.

4. Ignoring Risk Management

Many newbie cryptocurrency traders ignore one important consideration: how much they could lose, in favour of concentrating only on possible gains. Your entire portfolio could be destroyed by a single poor trade if you don't practice effective risk management. 

 

Inexperienced traders frequently trade without determining the size of their positions or placing stop-loss orders, exposing themselves to needless risks.

 

How to Avoid It:

• Always set a stop-loss: before entering a trade to limit potential losses.
• Use proper position sizing: never risk more than a small percentage of your portfolio on a single trade.
• Follow a healthy risk-to-reward ratio: If you are new, aim for at least 1:2 risk to reward, meaning for every $1 you risk, your target profit should be $2 or more.

 

You should know that successful traders focus on preserving capital first and growing it second. 

 

 

SOURCE: Canva Images

5. Overtrading

One of the most common mistakes that new crypto traders make is overtrading, which involves making too many trades quickly while ignoring their A-plus setups. This frequently occurs when newbies attempt to "recover" past losses or follow every tiny change in price. 

Overtrading gradually reduces potential profits by causing emotional exhaustion, poor decision-making, and increased trading fees. Keep in mind that more trades do not always translate into higher profits.

How to Avoid It:

• Be selective with your trades: only enter positions that fit your strategy and risk tolerance.
• Set a daily or weekly trade limit to prevent emotional decision-making.
• Focus on quality setups over quantity: a few high-probability trades are better than dozens of random ones.

 

Only a few people realise that patience is a secret advantage in trading. Waiting for the right time rather than making impulsive trades frequently yields the best opportunities.

6. Misusing Leverage

In crypto trading, leverage can be a very useful tool, but it can also be a double-edged sword for novices. Because high leverage promises larger profits, many novice traders are drawn to it, but they fail to consider the risks. 

With leverage, your entire trading account can be swiftly destroyed by even a slight price movement against your position. Excessive leverage turns trading into gambling if one lacks the necessary expertise and risk management skills.

How to Avoid It:

• Start with little to no leverage until you fully understand how it works.
• Use leverage only when you have a tested strategy and clear entry/exit plans.
• Combine leverage with strict risk management: always set stop losses and manage position sizes carefully.

 

Think of leverage like a sharp knife; it’s only useful in skilled hands but dangerous if misused.

7. Trading Without Research

Buying coins mindlessly without knowing what they're investing in is one of the biggest mistakes made by new cryptocurrency traders. They depend on rumours, influencer tweets, or sporadic Telegram calls, only to find out later that the project lacked a sound basis. Lack of research in cryptocurrency trading can result in bad choices, needless risks, and occasionally significant losses.

How to Avoid It:

• Study the project’s fundamentals: understand its use case, team, and technology.
• Read the whitepaper and check whether the project solves a real problem.
• Look at on-chain data, trading volumes, and community sentiment before committing funds.
• Follow trusted sources instead of chasing hype-driven signals

 

If you want to succeed in this cryptocurrency business, knowledge is your strongest asset because without it, you will keep incurring avoidable losses.

8. Ignoring Security Best Practices

You could lose everything you've worked so hard to achieve with one thoughtless error. Many novices fail to implement basic security measures like two-factor authentication (2FA), click on phishing links, or store their money on unreliable platforms. Sadly, it is very difficult to get your money back once it has been stolen, so safeguarding your assets should be your first priority.

How to Avoid It:

• Trade on trusted and regulated exchanges like LBank, known for strong security and user protection.
• Enable 2FA (two-factor authentication) to add an extra layer of security.
• Use cold wallets or hardware wallets to store your long-term holdings safely offline.
• Always double-check website URLs and avoid clicking suspicious links

 

Protecting your funds is just as important as growing them. 

9. Letting Emotions Control Your Trading

One of the quickest ways to lose money in cryptocurrency is to let your emotions control your trading rather than reason. Many novices chase pumps out of greed, panic when prices fall, or even engage in "revenge trades" after losing money. The outcome? Larger losses, inconsistent performance, and needless stress.

How to Avoid It:

• Stick to your trading plan, avoid impulsive buy-or-sell decisions.
• Use limit orders to remove emotion from your entries and exits.
• Set realistic profit and loss targets and respect them.
• Take breaks when market volatility becomes overwhelming.

Discipline always beats emotion when it comes to cryptocurrency trading. Your long-term outcomes will be better the more you rely on strategy and data rather than intuition.

10. Neglecting Continuous Learning

A lot of newbies get into the crypto market thinking it's "easy money," but the truth is very different. The crypto industry is changing quickly. New projects come out, rules change, and trading strategies that worked last year might not work this year. Traders who don't keep learning fall behind and make expensive mistakes because they don't know about the changes.

How to Avoid It:

• Follow trusted educational platforms like LBank’s Crypto Research Platform to stay ahead.
• Stay updated on market news, regulatory changes, and innovative blockchain projects.
• Join trusted trading communities to exchange insights and learn from experienced traders.
• Experiment with new tools and techniques to refine your trading strategy.

Adaptability is the ultimate survival skill in this crypto business. The more you learn, the better prepared you are to make informed decisions.

Conclusion

The crypto market has amazing opportunities, but it also punishes traders who aren't ready. As said earlier, 90% of traders lose money, not because the market is unbeatable, but because they repeat the same mistakes. If you stay away from these 10 common mistakes that new crypto traders make, you'll be better able to trade smarter, control your risk, and keep your money safe.

LBank is a platform that can help you grow as a trader if you want a safe, easy-to-use exchange with access to educational materials and a global community. Stay ahead of the curve by learning, trading, and being disciplined.

 

This article is contributed by an external writer: Abeeb Babatunde

 
Disclaimer: The content created by LBank Creators represents their personal perspectives. LBank does not endorse any content on this page. Readers should do their own research before taking any actions related to the company and carry full responsibility for their decisions, nor can this article be considered as investment advice.