9 Common Mistakes in Trading
Hello, guys today in this post we will share our experience of trading and mistakes that we did in history and also will share that how to improve yourself after a loss and transform that loss into profit in a small time.
Risk Management
This is one of the basic mistakes every new trader did. Risk management is a must in trading and investing. A trader should know how much to invest in an asset and when to exit from it. Without risk management trading is called gambling.
Everyone knows what happens in gambling, 99% of the players lost everything in gambling. The same can happen in trading too. The traders should diversify his/her portfolio to minimize losses and make a good position in the market.
Technical Analysis
This is the most common mistake that people do. We have seen many people who always remain dependent on others. Here we are not saying that we should not follow technical analysis done by experts.
The main thing is that we want to emphasize to you is that you should use your own mind that how you are thinking and looking about the future of that particular asset.
Everyone has his own thinking and own understanding of prediction. If you think that you are following technical analysis that is given by experts are 100% accurate and reliable then surely you are wrong, no one here in this field of cryptocurrency is an expert. Everyone has the knowledge and everyone has his own idea to implement on the prediction of the market of coins.
So here we strongly recommend to all of you that use your own ideas and thinking about the prediction even you have prediction analysis data by experts. You should know the basics of technical analysis, there are many twitter and telegrams admins that do scams in names of TA courses. Be aware of them.
Stop Loss
Many traders think that stop loss is just a stupid option or just a button that removes our trade at dump or crash of the market. Actually this type of mentality owns mostly those traders, not all, who are very old in this field or those who are thinking that they are a very good analyst and predict the exact top or bottom of the market.
But as all of us know very well that even a high or very high level of analysis can’t tell the exact top and bottom point of the market.
So you can lose a very big amount of money if you will do trading without stop loss. So always do trading with stop loss option because stop loss will reduce the amount of loss in sudden dumps like happen on 12-13 March 2020. Those use stop loss got only 7-15% loss in the dump and those not using stop loss got more than 50% loss in the march dump.
Action After Stop Loss Trigger
According to the basics of the trading, stop loss is those point which is unexpected to touch in normal conditions because those points are a symbol of a dump in that coin’s price.
Stop-loss is placed just below the support zones means if your stop-loss is triggered then the price of the coin already broke the support zone. Many traders just re-buy the coin after hitting the stop loss, don’t even look at the support zones. This is a big mistake because the coin broke the support and may dump more in the upcoming days.
Once the stop loss is triggered wait for the market to stabilize and again do an analysis if there is a strong reason to re-enter the coin then open the trade otherwise choose a different coin.
Impact of News
Before 2015, Trading was an easy job because of technical analysis and prediction according to the news in the crypto market was much easy.
But in the present time numbers of people entered in this field who are big players and trade with a very high amount of money and also getting big profit by making fool to everyone by simple ideas.
These big players spread fake news and rumors with their power of money and this results in the worst prediction of the crypto market by a trader no matter how good he is in technical analysis.
So always go with the right platform to get genuine information or news. For example, if you got any news or rumor about a particular coin or project, excluding ICO projects, then visit their official website or blogs and figure out whether the rumors or news that is spreading in the market is real or fake and take a decision according to that, we mean you can make a profit from the fake news also because you can predict the result of the rumors.
Panic
This is most common mistake that people did due to fear.
We can see that in the market of cryptocurrency big fall and dump take place in the price of the coin and that crush the buy order wall at trading platforms.
That results in a big panic in our mind that we will lose all our investment in that particular coin. But here we should not get into panic and also should wait for the dump to stabilize and buy more at a low price.
Probably you will say how can we buy more and more with a dump if we have no more money in our pocket. If you are thinking the same then surely you did your first and big mistake in this field of trading because if you are in the trading then you should have a perfect management idea that how much you will invest, when to invest, and what if market dump then how much you will buy again and for that you have to save few amounts of money.
In short, we can say, if you are looking to invest 100$ In a particular coin then don’t buy at once, invest half or less then half and reserve the rest of the money to handle the dump of the market. Actually, at the dump condition, you have to buy more and more with the money that you saved in very starting (before investment) you can down your tension of high loss and also in this situation you don’t need to wait to sell your asset for a long time because the price of the coin that you bought at a high rate has been averaged due to buying at the dump of that coin.
Ignoring Order Wall
No doubt that money management is a big strategy to make a trade profitable but still we should not forget to see the market turn over per day and also order wall of the particular coin.
If there are no bulk buy orders for that coin then you should not go for the investment in bulk amount because that coin’s market can fall down with small effort by big players.
So always keep your eye on the buy order wall of the coin market and make decision perfectly to decide the stop loss point and investment amount.
Don’t Obstinate Your Mind To Change Decision
We saw many people who remain very stubborn to change the mind in trading. Everyone knows that in the present time market of the cryptocurrency can change its side to up and down easily.
So according to the extreme conditions of the crypto market you should change your decision according to that what you think is better otherwise with the strong mentality you can face a very big loss.
Ready With Plan B
As we know that in the present time even a better prediction with better analysis doesn’t work exactly so we remain always ready with plan B i.e ready to remain to tackle your trading loss and profit according to the dump and pump of the market.
Otherwise, of a very sudden you will not be able to take a perfect decision at the perfect time and that may ruin your trading work.
Summary: Don’t follow a single way plan in trade, aware yourself from fake rumors & news, make your own analysis instead of following totally other analysis.
