Cryptocurrencies: Avoiding Common Trading Mistakes
be a successful criptomoeda It is one of the most difficult activities anyone can undertake. The road to success is littered with countless examples, even those who are considered “the smartest people in the room”, who have failed, gone broke and burned out.
Like all hard paths, a long set of ground rules was established by those who went first. Many find it difficult to heed the advice, however painful the consequences.
You will find that many of the reasons traders fail fall under the category of behavioral deficiencies rather than technical errors. Let's talk about the most common mistakes in cryptocurrency trading and how traders can mitigate them.
Cryptocurrency: Holding Too Long
One errors common mistakes made by traders and investors is holding on to losers for too long. A trader and/or investor must have objective criteria for entering a previously established position, as well as objective criteria for exiting..
without it, and without the discipline to follow rules diligently, a trader's brain will become a cognitive bias machine whenever a position goes against him.
They will start creating new narratives and seeking confirmation information as to why these conditions are suddenly now acceptable when they were not before.
This is a mind trick and a big mistake that needs to be fixed asap. Your first guess doesn't have to be the right one, don't go down with the ship because of no negotiation.
Out-of-Reality Profit Goals
Another common shortcoming is not setting realistic profit targets and “rocking up”. Trading should be approached like a baseball game; sometimes you get it right home runs, but often should simply focus on making successful base hits.
In the end, the difference between the two is not huge. No baseball player can hit a home run that scores 10 points; there are obvious limitations.
Only in the markets do most new entrants and players constantly think in terms of massive exponential gains and growth every time they take a position.
The key to success is consistency and frequency. Consistent performance over time makes a great trader just like a great hitter.
Making profits and locking down your trades so you can live to get another one is key. You are trying to take advantage of combination and the law of large numbers, not a single negociação working out.
Make sure you collect your capital based on goals you've decided beforehand, and that you don't let him continually walk in hope.
Another lesson traders and investors need to understand is to never overcommit to any position.
Again, this would be the same as hitting the home run or the big win. Position sizing should be based on predefined levels of risk as well as consideration of other variables such as volatility.
Not only so that you always have dry powder in case more opportunities arise, but so that no defeat can take you off the board completely. Remember, the goal is to be able to play as many hands as possible, not win the entire game at once.
Think of the big picture. Once you have a profitable system, your goal is to be able to put as much volume (trading frequency) behind these ideas as possible.
Losses are a very real part of trading, and negative compounding with large positions can reduce the portfolio to a point where recovery is nearly impossible.
Have a Plan and Keep Records
The last thing to cover is having a plan and recording your performance. Having a predefined plan ensures that we are following some sort of axiomatic approach in our decision making; recording our performance allows us to judge how we followed or deviated from our plan and what the costs of those divergences were.
Whenever money is involved, people's emotions are also involved. By having a plan, we have something to fall back on when situations suddenly change. By recording our performance and journaling, we can maintain accurate details about what works and what doesn't. Plan your trading and trade according to your plan.
Be professional about your approach. Make your trades as any top athlete or entrepreneur would with their own performance.
The reason most traders fail often has more to do with behavioral and psychological failures. lack of discipline, instead of bad trading setups.
By improving in the key areas defined above, you will be one step closer to trading like a machine and thus performing better overall.
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