Adrian Reid outlines two principal crypto-trading mistakes: (1) broadly adopting a buy-and-hold strategy without appreciating extreme drawdowns (he cites 70–90% potential drops and argues many panic-sell), and (2) following unstructured social-media tips instead of using disciplined trading rules and a clear trading plan. The tone is cautionary and advisory, aimed at traders new to crypto.
The first and most obvious one is.
A broad based adherence to buy and hold. There's this idea that's very popular in crypto that if you just buy and hold, you'll be a billionaire or a bazillionaire, whatever it is. And if you happen to choose the right tokens, that might be true. And if you just held Bitcoin, maybe Ethereum, that might be true. But the reality is this is so new, we don't really know where it's going in terms of the market direction. We know that it's a very strong market. There's a lot of hype right now, but if you do buy and hold, you've got to sit through absolutely gut wrenching drawdown. And I don't know about you, but I'm not a fan of 70, 80, 90% drawdowns. It just doesn't fit my risk tolerance and profile. And so I think buy and hold is probably the one, the biggest mistake or risk because most people will get into that massive drawdown panic, think they've made a mistake and dump it because they just can't cope.
So I think that that's probably the first big one. The other big thing I think is because there's, because it's a new and interesting market, it's brought in a whole new generation of traders who are yet to learn a lot of the lessons that, that many of the listeners have, have probably learned over the last 5, 10, 15, 20 years of trading. Right? And so there's a lot of people listening to, you know, random people on social media for tips. You know, you go into the crypto, Facebook groups, it's all about, well, you know, what, what should I buy today? What's going to the moon tonight? How can I get rich next week? And there's just no structure in the way a lot of people are trading. And in reality, you know, we know if you want to succeed as a trader long term, you've got to have a disciplined approach and you've got to have a, a set of rules that will guide you, that'll keep you out of trouble and actually be profitable.
So, you know, listening to those social kind of tips and pressure and fads, all of that, and a big part of the crypto market which makes that dangerous is that, you know, there's a lot of pump and dumps in this space. I mean, think penny stocks way back, you know, where, where one broker might just get hold of a penny stock and really pump it, pump it, push the price up and then they cash out. And it crashes. It's exactly what's happening in a lot of the smaller tokens as well, in the crypto space. So, again, if you don't have a strategy, a set of rules to get in early and profit from the pump, you're going to end up holding through the dump, and that's really going to hurt.
