Top 5 Mistakes Beginner Crypto Traders Make

As 2025 is coming, many people consider investing their money in different assets in the new year. Among others, the constantly growing popularity of cryptocurrencies attracts the attention of many potential investors. But do you actually know how to trade on the crypto market? Today we’ll talk about the 5 most common mistakes of those who start their journey as a crypto trader so you can avoid them at all costs.

Why Mistakes Matter?

“Making mistakes is the best way to learn how to approach something correctly” — a well-known saying that actually has a point. However, when it comes to the financial area, making mistakes sounds too scary, meaning inevitable losses, sometimes really huge ones that are difficult to recover both financially and psychologically. Here’s where other people’s experience comes into play, allowing us to analyze and make conclusions on what not to do to avoid getting in trouble. Therefore, mistakes, especially the most common ones that beginners might fall for, are vital to know for you as a trader to stay out of losses and learn the safest path in crypto trading.

We understand how difficult it is to enter a new space with its own rules and limitations; that’s why we've collected the most common mistakes of beginners in crypto trading.We talk about them below.

Mistake #1: Misunderstanding The Field

It’s rightfully considered the “number one” mistake among beginners, because lack of knowledge of how the crypto world functions will definitely lead to making wrong and even dangerous decisions. Here are the most important things you have to understand before trading:

1. Complexity of the crypto market that combines technology, finance, and global economics. You are basically blindfolded if you don’t understand what a blockchain is, how cryptocurrencies work, and which factors influence their prices because it’s literally the building material of cryptocurrency. Lack of knowledge about it may lead to mistakes on the most basic levels like mistaking one type of token for another.

2. High volatility and risks that are way higher and less predictable than in the fiat market. You may not fully understand the degree of danger and speed of change without proper research, leading to significant financial losses.

3. Scams and fraudulent schemes that are very likely in the crypto space. You have to look into them attentively to understand why and how they happen as well as the ways to avoid them. If not detected in time, one may face enormous financial losses and get psychological damage. You can read more about the most common scam schemes in the cryptosphere in our article here.

4. Lack of knowledge about where to start trading, which wallet to use, on which exchange to trade, or where to even get crypto are the things that you have to address before diving into the area. These initial steps set the stage for smooth and secure trading. Otherwise, lack of attention to it may lead to losses due to possible usage of services with high commissions or absence of reliable security features.

Mistake #2: Failing To Develop A Trading Strategy

Jumping into crypto trading without planning out a clear strategy will most likely lead to wrong decisions and emotional trading. The most important thing you have to remember is the fact that crypto trading, just like any other type, is a process that takes time. The media often pictures it as an easy and fast way to gain a lot of money in just a few clicks, but you have to keep your head cold and not fall for it.

Keeping a cool head also applies when we talk about emotional, impulsive trading. Emotional control is as important as market knowledge when it comes to crypto, where decisions are driven by temper rather than logic; such a situation is common for new traders. Here also FOMO—Fear of Missing Out may come to light. Beginners often feel the need to constantly trade or chase every opportunity possible. This behavior may cause situations where they spend too much not being ready for losses that may occur due to market conditions or other reasons.

Another common mistake is to put all your assets into cryptocurrency. You need to diversify your portfolio not only by investing in other spheres but also by buying multiple types of crypto to protect yourself from losing everything at once.

Mistake #3: Ignoring Security Measures

Traders, especially new ones, may sometimes be overconfident in market predictions. It happens when a user starts to understand the basics of trading and treats themselves as a professional, forgetting to measure and manage risks effectively, neglecting the volatility of cryptocurrencies, and failing to prepare for sudden price swings.

Such confidence also leads to forgetting about the proper security of the assets. In crypto trading, you act as your own bank, and even though it sounds empowering, it also means that the responsibility of protecting your crypto rests entirely on your shoulders. Many beginners fall victim to hacks, scams, and other security risks because they neglect proper safeguards.

Mistake #4: Neglecting Of Following Taxes And Regulations

New traders tend to overlook their local crypto regulations and taxes either due to a lack of knowledge or the assumption that crypto transactions are anonymous and tax-free. This may lead to big fines, audits, and even consequences like criminal charges.

Mistake #5: Ignoring Fees And Costs

Lack of awareness about the types of fees associated with crypto trading and focusing on gross profits without accounting for transaction costs can accumulate over time.It may significantly eat into your earnings and affect your overall trading strategy. It can also happen if you trade frequently, move funds between wallets without considering the cumulative fees, or don’t count the network-specific costs like gas fees for Ethereum transactions and others alike.

Tips On How To Avoid Mistakes

So, what should you do to avoid making these mistakes? Here are some recommendations to get success:

1. Educate yourself. Learn about how cryptocurrencies work and the factors that influence them. For example, you can find the useful information on the Cryptomus blog. Follow reliable crypto news sources and keep up with trends, regulatory updates, and tech advancements.

2. Develop the trading strategy. Create your personal investment strategy: set your financial goals, decide how much capital you’re willing to risk on each trade, and set stop-loss orders to protect against significant losses.

3. Focus on security. Give preference to hardware wallets if you have such an opportunity; they provide a high level of security by storing your cryptocurrency assets offline and protecting them from online threats. And if it's still more convenient for you to store online, then choose a reliable exchange with strong security measures. For example, Cryptomus uses advanced encryption technology and AML for keeping your funds safe. When using a crypto platform, you also may enable two-factor authentication, set a recovery phrase and create a strong password. These measures ensure that your funds are securely protected and minimize the risk of unauthorized access.

4. Keep track of taxes and regulations. Research your local tax laws and regulations for crypto trading and ensure you report gains and losses. Keep a detailed record of trades, withdrawals, and deposits. And, finally, always dedicate a portion of your profits to cover tax liabilities.

5. Learn from the professionals. Look up to someone with lots of experience and who you can trust to understand how each strategy or trend affected them in the past. Take notes and make conclusions.

6. Diversify your portfolio. Never invest more money than you’re ready to lose and follow the first rule of any type of investor: diversification is a key. Invest in different assets, not only in crypto, and when crypto becomes a part of your strategy, make sure to buy multiple coins or tokens to balance out the overall portfolio. You can learn how to create a well-balanced crypto portfolio in our article here.

By following these tips, you’ll be able to protect yourself from the most common mistakes new traders fall for and be sure that your assets and profits are secure and legit.

Did you find this article helpful? Which common mistake do you think happens more often? Share in the comments below!