With the advancement of the internet, the possibilities of carrying out various activities online only increase. Commercialization of products, search for information, social interaction and many other things.
A practice that has increased considerably in recent years thanks to technology has been trading.
Previously restricted to trading floors and people who had a lot of money and time to trade, today that reality is quite different.
The alternatives are many: Forex, which allows anyone to trade derivatives of different types of commodities, indices and currencies; centralized exchanges, such as NYSE, FTSE, DAX, BOVESPA and more recently the market that has attracted more and more people, that of cryptocurrencies.
All this thanks to technology, which allowed the Trading Pit to be transferred to the web where the brokerage gives match between buyers and sellers online, through the Home Broker.
Before the advent of technology, negotiations were based on a lot of shouting and running, with men dressed in strange jackets, gesturing frantically while taking notes on their pads.
With the advancement of technology, the figure of the human operator has become a relic of the past.
Trading floors have become virtual and negotiations are now conducted through computer terminals and smartphones, with increasingly sophisticated platforms.
The London Stock Exchange was one of the first major exchanges to change, making the conversion in 1986. Borsa Italiana followed in 1994, the Toronto Stock Exchange changed in 1997 and the Tokyo Stock Exchange changed to the format fully electronic in 1999.
Many professionals who worked at the exchange at that time ended up going to other activities and some continued to operate, trying to get used to the new tools.
Then, there is also the crypto market, increasing the possibilities and alternatives, working 24 hours, with a volatility that can generate great opportunities for gains, and several tokens available for trading.
In view of the increase in possibilities that allow anyone to have access to different types of markets, it is necessary to be careful, because accessibility does not mean guarantee of profits.
The market is difficult and not everyone is able to obtain good results, either due to lack of technique, or due to harmful behaviors that take many people out of the game.
With all this in mind, let's look at the main mistakes that should be avoided by investors and traders in the consistency process.
1 - HUNTING TOP AND BACKGROUND
Trying to guess which way prices are going to be is tempting and a trap that many people fall into, especially those starting out in the market. When verifying the drop in prices, it is normal to believe that the asset may be cheap, in the same way that an expressive increase can bring the perception that the price is expensive.
Generally, the operations that originate there are not accompanied by deeper analysis, but only based on guesswork. The result, margin calls and broken accounts, after insisting on staying on the opposite side to the flow.
If the strategy is HODL, take the opportunity to buy in the drops, but in a partial way, always trying to keep up to date on the information related to the chosen asset and if it keeps the same fundamentals that originated the purchase.
Not even the biggest investors know the exact time to buy and sell, they deal with probabilities and risk management.
2 - DON'T BE UPDATED ON THE MARKET
There are people who invest using only technical analysis and price action, believing that all the information they need is already in the charts. Others, in addition to analyzing the graphs, are also interested in studying the fundamentals, use case, stage of development and news involving the asset they have chosen to invest in.
There is no right or wrong, since what counts is whether the strategy used brings consistent results or not. If the person just looks at the graph and makes money, ok, if you analyze the whole context and make money, ok too. However, those who only look at the charts to operate tend to be in the minority and generally have many years of experience.
So, if you are just starting out, try to stay well informed about everything that involves the cryptocurrency market and, if possible, the traditional one, to understand the relationship between movements.
Updates, hard forks, news, improvement proposals, indicators
and statements by political agents and regulators, all of which can cause price movements.
3 - SELL FUND AND BUY TOP
Selling in a panic and buying out of euphoria is common among newbies, who let themselves be swept away by emotions and are not adequately prepared to act in the market.
Although selling to reduce losses is a wise decision in some cases, in others it may happen that prices rise again in a few days, as it may have been just a movement of realization.
When this happens, people who have sold desperately realize the price rising again and buy back their positions at a higher price, creating a vicious cycle of losses
4 - TIPS DEPENDENT
Most people who start in the market search for tips, either through groups on Telegram, WhatsApp or another social network. So far so good, the problem is when dependence on the opinion of others for decision-making arises. This is extremely harmful, as analytical skills are not exercised.
Every investor goes through phases in his journey, starting with tips, correct and incorrect analyzes, losses, gains, until reaching a broader understanding of the market dynamics.
Be willing to build your base and learn to be responsible for your own analysis, risk management, decisions and results, otherwise you will be at the mercy of other investors.
5 - DO NOT KNOW HOW TO MAKE PROFITS
After making a good purchase and seeing the price go in favor, it is normal to doubt about where to make the profits. This is not a simple matter and it is very personal. But one thing is necessary to understand, the profit that appears on the screen is not guaranteed, it will only take effect after realization.
If you are seeing a good profit on the screen, seriously consider doing one part and letting the rest surf the trend.
Large investment funds make a part of the profits obtained, to generate cash and make the quota holders profitable. Therefore, consider that prices never go one way and that profit realizations have never broken anyone.
6 - MARRIAGE WITH A LOSING POSITION AND Few CHANGES OF REVERSION
Who has never been stuck in an altcoin that came in believing it was cheap and never returned to the initial price, right?
If the basics have changed and the information is not positive, consider rationally rethinking your position. If the intention is really to make money as an investor, do not get emotionally attached to any asset, as there is nothing so cheap that it cannot get cheaper prices.
7 - SEARCH FOR THE NEXT BITCOIN
It is common the illusion that among so many cryptocurrencies, one could replace Bitcoin in a short time. It is important to always remember that for some other cryptography to reach its level, it would need to gain a huge scope in terms of network, users, popularity and trust. An increasingly difficult task, which would require a highly original, and disruptive proposal.
Instead of spending energy looking for the next Bitcoin, spend time studying its fundamentals and understanding why it is so innovative.
8 - DO NOT UNDERSTAND THE RISK / RETURN RELATIONSHIP
The risk / return ratio is something that every investor should take into account for every type of investment, as it is an important guide to analyze whether the final profit that an investment can provide is worth the possible risk of capital loss that may occur if the thesis is wrong.
Always look for assets that offer an advantageous risk / return ratio, for example: If you risk $ 5,000 and the potential profit is $ 15,000, the risk / return ratio for this operation will be 1: 3.
Acting this way, in a sequence of operations, even if the hit rate is lower, the result will still be positive.
9 - LEAVING THE LEVERAGE LEVEL
Leverage is basically a loan with which it is possible to open a position larger than the actual amount available in the account. For example: In a broker that allows you to leverage in 10x, with $ 100.00 you can trade $ 1,000.00.
It looks attractive, doesn't it? But know that it is the reason for many broken accounts, because just as it can amplify your gains it can greatly increase your losses.
10 - EXCESS OF CONFIDENCE AFTER A PROFIT
The euphoria that comes after a successful operation is intoxicating. Self-esteem goes up there and along with the feeling of invincibility a darkness in the capacity for judgment arises and the desire to open new positions on impulse often ends up leading to losses that can eliminate the gains made.
When closing a winning operation, close the screen and let the emotions cool, then go back to analyzing the market, making planning adjustments and looking for new opportunities.
A profit suggests that your plan is working and should serve to validate previous analysis and projections.
11 - DO NOT TRY TO UNDERSTAND THE BASICS ON TECHNICAL ANALYSIS AND PRICE ACTION
Many may find it complicated, others believe it is not important. However, there is no doubt that market movements and prices often follow patterns that, when identified, can be used to increase the chances of obtaining successful trades.
It is interesting to try the main technical analysis tools, as they can be extremely useful to identify regions of value, areas of overbought, oversold, funds and relevant tops and through candles, detect which strength is predominant, whether that of buyers or sellers .
Therefore, understanding the graphs can assist you in the process of reading the market and making decisions.
Do not underestimate graphical analysis, as large funds, managers and famous investors use it and you should try to understand this subject.
12 - IR PRO ALL IN
This is another expensive mistake that newbies make, investing everything they have in a single cryptocurrency. Even the best assets suffer significant declines, not even Bitcoin has a guarantee of long-term survival.
Putting all your eggs in one basket can only leave you in a position vulnerable to sudden drops. So try to diversify.
13 - LET EMOTIONS HARM THE DECISION-MAKING
In the same way that overconfidence can arise in moments of gains, despair after a negative result can cause damage to the investor. It is important to always try to be as cool and rational as possible with your investments.
If the adrenaline starts to speak louder, get off the screen before emotions lead you to open positions without any analysis to support them and you fall into the so-called Pitfalls, which are nothing more than behavioral traps that lead to self-sabotage.
14 - DON'T GIVE TIME TO TIME
A doctor or an engineer studies for years so that they can intern for a while longer until they become professionals who will dominate the activities related to their areas of professional activity.
Likewise, the process of becoming an investor with consistent results takes time and only through years of experience do you gain the knowledge and experience of what works and what does not work for you.
Nobody will get rich overnight investing. What exists is a lot of patience and determination, study and discipline, with a gradual multiplication of assets. Therefore, steps should not be skipped. The idea is to stay alive in order to take advantage of the opportunities that the market will generate and not take a single shot.
Although some negotiation mistakes are inevitable, it is important that you do not make them a habit but learn from the mistakes and successes that will be part of the process.