Cryptocurrency analyst and YouTuber Lark Davis says digital asset traders frequently make six mistakes that prevent them from generating massive gains in the midst of a bull market.
In a new video, Davis tells his 242,000 subscribers that investing more than you can afford to lose is a recipe for disaster.
“If you are doing crazy **** like leveraged trading with your rent money… you are going to be ending up in a very bad way.”
Davis also reveals another common mistake that he says separates successful traders from the rest.
“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.”
Lack of proper position sizing is the third mistake on the cryptocurrency influencer’s list. Davis advises traders to limit their allocations in the different stakes that they have.
“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 next mistake is the tendency for traders to invest in coins without doing their own research.
“So many people just randomly FOMO into coins ‘cause an influencer mentioned it or something like that… You need to understand what that coin or token actually is, what it actually does. Why did you invest in it, what’s the actual reason to invest in and hold this cryptocurrency?”
The YouTuber discloses that the fifth mistake is selling way too early.
“Instead of selling all your coins all at once take out small portions as the price moves up. [This] lets you get your capital back, protect your capital, helps to keep your portfolio balanced and you capture profits the entire time.”
The last mistake according to the cryptocurrency trader and influencer is limiting investments in the cryptocurrency space.
“If you really want to manage your risk, spread out your investments because the entire cryptocurrency market really moves like one big massive messy tech stock. When Bitcoin dumps, everything dumps. That’s crypto. If you want to lower your overall portfolio risk, invest outside of cryptocurrency.”
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Disclaimer: Opinions expressed at The Daily Hodl are not investment advice. Investors should do their due diligence before making any high-risk investments in Bitcoin, cryptocurrency or digital assets. Please be advised that your transfers and trades are at your own risk, and any losses you may incur are your responsibility. The Daily Hodl does not recommend the buying or selling of any cryptocurrencies or digital assets, nor is The Daily Hodl an investment advisor. Please note that The Daily Hodl participates in affiliate marketing.
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