Professional trading gives you the freedom and this attracts many. But on the way to success the trader makes the same mistakes. What are the mistakes that do not give the trader to earn constantly?
Cryptocurrency price dynamics attract people willing to risk their capital. Every day, the next token shows an increase of more than 50%. This happens on slightly liquid instruments. On cryptocurrencies, which are in the top 5 in terms of capitalization, the dynamics is on average within 10%. It is tempting to think that cryptocurrency is bought and increased by half. The novice trader thinks that he will miss the benefit if he does not make a quick decision. This leads to common mistakes.
The desire to earn money
People who make this mistake look at the market only from one side that is beneficial to them. On the cryptocurrency exchange, tokens both soar in price and fall rapidly. Man sees a strong dynamic and he can not wait to get rich. In order not to lose profit, he hurries, ignores the risks and believes that the dynamics will continue. If a person comes to the stock exchange without knowledge or insider information, no matter how lucky he is, he will eventually lose. Because after each growth there is a fall.
In this market, as in every profession, without knowledge and experience to achieve nothing. If a person does not know the reasons for further growth, his earnings will be accidental. Chance and stability are the opposite. Also, because of the desire to earn fast trader inflates the risk.
Increased risk
Regulated brokerage companies recommend investing only what a person is able to lose. The definition of risk is part of the trading system. An experienced trader calculates it based on the capabilities of his trading system and his mental state. The less risk, the more chances to get a profitable deal. The number of successful trades is less than unprofitable. The main thing is to profit off the losses and revenue.
The risk is calculated based on the price movement options. Just do not take the amount at random and do not invest. If it is not known how many times the price will move against the deal, then it is not known whether the profit will be after losing trades. The trader either places a trade and hopes or calculates possible losses. The price does not move constantly only in one direction, but does not stand still. With proper calculation of damages is the cost. A good deal will block them and make a profit. This tactic will not work if you risk it at random.
The increased risk is present in aggressive trading and the probable loss is also calculated. Without experience, the trader will not be able to earn constantly. A person has gained knowledge, knows how to use indicators and technical analysis tools, but does not earn anything. That's because he has no experience. In each area, experience is gained over the years. Traders who know the trading system, but in the end not earning, you know, that's the problem. With the help of accumulated knowledge, price forecasts are made. The trader makes a forecast because he is afraid of losing trades. In fact, in trade forecasts are not needed, they only interfere.
Prediction
Analysts like to give forecasts of future price dynamics. Novice traders and even more experienced it seems commonplace. But forecasting not only does not make sense, but also prevents to earn. Making a forecast, the trader gives out what he wants for the reality. It happens because of the psychological state. A person buys and waits for profit. He's hoping for a positive scenario. It is difficult to accept a loss when the price goes against a position. Psychological pain does not give time to react to the situation and at least reduce losses. After a while, the pain passes and the trader sees that he could lose less or even open a deal in the opposite direction and earn. But the emotions did not allow him to adequately assess the situation.
The dynamics should be perceived as an ocean with waves. Perhaps the professional surfers and the exchange would achieve success. If you do not follow the big wave, the person will simply carry off the Board. Similarly, in the exchange. It is useless to fight the market. On the contrary, if you follow the price, the trade will be quiet. This is helped by the trading system. But the shotgun approach - this is another mistake that leads to losses.
Haphazard approach
When a person comes to the gym to learn martial arts, he is shown how to strike. Novice show time, and he learns the technique. But he does not immediately become a professional fighter. The studied technique is repeated thousands of times. Numerous repetitions form muscle memory. With this memory the athlete brings the blow to automatism and in a suitable situation puts it, without thinking. In the struggle solve fractions of seconds, the more experienced a person is, the better it is disciplined.
Together with experience, neural connections are formed. Professor of psychology and psychiatry Richard Davidson believes that by changing their neural connections, a person can manage their emotions. Emotions in trading interfere and emotionally excited person is likely to make the wrong decisions.
Biased judgment
Over time, these errors lead the trader to despair. Having suffered constant failures, the person begins to be biased against the stock exchange. He perceives this market as a deception or an environment against him. The trader will be disappointed on the way to success more than once. Success depends on his desire to see this market for what it really is, not from entering into a private, subjective judgment.
Translated from russian community "Coin Base" by Damir Koshkarov