To have a great monetary resource you need a great intellectual resource to manage it. Unfortunately, most people have a minimal second resource, wanting an excessive first resource.
CONTENTS:
Mid-level traders' mistakes.
Techniques for solving mid-level traders' mistakes.
This material is a translation of the original article in Russian. Links to the author and the original article can be found at the bottom of the page. The structure of the article is preserved, the photos are presented as links and are taken from the original article as is.
1) Mistakes made by mid-experience traders.
No one knows the exact future, not even those who create it. There are only more likely outcomes of events that may or may not materialise. One always works from the situation and against the expectations of the crowd.
Think about it, how can he, who is always trying to adapt to the market, but who has no influence himself, know the exact future? How can a slave know what the master does not know? How can a mouse know when a cat decides to eat it? Today, tomorrow or never?
The more stupid a man is, the more he is sure that he is right and tries to spread the word in order to be noticed. He is completely controllable, his thinking and consequently his behaviour is completely subordinated. His thoughts are not his thoughts but the effect of programming the masses.
Typical mistakes made by mid-level traders.
Working on instruments that everyone works with and as everyone else.
Trading with the help of various publicly available indicators for the crowd.
Trade strictly by the rules prescribed in TA books, without understanding the actions that generate these rules and movements.
Bad entry points. Using a long Stop Loss on a bad entry point from the start. Large losses when price goes against you.
Frequent pulling out of the market backwards with a very short Stop Loss. Not taking into account volatility of the trading instrument.
Copying of common strategies and trading methods from TA books and trading courses.
Copying effective strategies and trading techniques from traders who actually make money on these strategies, but it is not a fact that in your work, these methods or strategies will work for you.
Working with only one strategy and those methods that have become less effective over time.
There is no plasticity of trading strategy. Straightforward thinking.
Not knowing how to work both ways when the price goes against you. No plan "B".
Emphasis on working for profits, but no consideration of potential losses. A lot of losing trades in a row. Willingness to "win back".
Entering trading tools with inherently poor risk/return ratios.
Not taking into account market phases and trends, both local and global.
Trading against the trend. Being patient with losses when the price goes against you.
Not exiting a position after breaking support.
Trading on margin with high leverage.
Defrauding the developers of a particular coin: "printing" new coins, various coin unlocks, Swap (replacement) coins.
Delisting coins with a bad legend. As a consequence of a drop in value or no chance to sell the coin at all.
Operating a large portion of the depo on high-risk trading instruments. Which are both pamped down by a large percentage, as well as being pamped down by a corresponding percentage.
Entering a large part of the trading depo in outright scams without a strong legend of the creators in the hope of a short-term pamp.
Entering coins that are only traded on obscure exchanges.
Entering large portions of the trading floor into coins that have been pummeled many times.
Entering or accumulating a large position in an illiquid coin. Not being able to exit a large portion of the same position when important support levels are broken.
Entering dead coins at minimum price with no opportunity to exit the position. For example, buying at 1 Satosh. Selling on the market is not possible, as you need someone to buy from you at the same minimum price. Freezing your money.
Entering a large part of your deposit into a position at a specific price "cheap" at the "bottom". Money Freeze.
Entering with a large portion of the profit after the pounding to re-buy.
Failing to hold a position in a trend. Exiting the market prematurely. "Jittery bidding.
Nervousness. Very frequent jerk trades. Tiredness from trading.
No "cash cushion".
Not knowing how to be "out of the market".
A trader's behaviour in the market is a result of their thinking. Whoever understands the thinking of the majority will be able to turn it against them. This is not magic. It is the level of intelligence.
Your way of thinking affects your habits, and your habits are basically what makes or loses money in the market.
2) Techniques for solving mid-level traders' mistakes.
Your seemingly independent smart and non-smart decisions are in fact an elaborate mass algorithm for the likes of you. An obedient predictable flow. It is devised by those people (shepherds) who herd you in the market field for slaughter until harvest time.
There are wild "hamsters" who are killed very quickly by their own greed and stupidity. Then there are the "scientific hamsters", who are killed according to certain rules, slowly but surely. This has always been, is and will always be the case.
Orient yourself in global financial market cycles other than cryptocurrency. At this point in time, cryptocurrency follows the echo of other larger markets, not the other way around.
Don't work against the trend! Be guided by trends. You can work on bounces, against the trend, but don't get carried away with it. Or limit your money risks in this kind of work from the start. Determine in which trend in your trading strategy you are going to work. Main, secondary or minor (small). This is very important. Otherwise you will work against the trend without realizing it.
Learn to be "out of the market" when there is no good entry point or doubt about further trend development. It pays to have patience and a plan of action.
Disengage from the news FUD if you notice that your opinion is not radically different from that of the majority. The majority always loses. Understanding "crypto news is for fools" is only effective if you can read "between the lines", if this is not the case and you take everything literally, then you should not be interested in "news" at all. Work only with the chart and the glass.
As the great Dow said, the chart and the price takes into account everything, and he's right. From the chart you can understand where the next positive or negative tales will be and what the impact will be.
You can sometimes listen to others' opinions, but always make the final decision yourself. You are the authority in the trade!
Use your working strategy when trading. Always have a plan of action, for different outcomes of situations, including less likely ones. Do not work without a strategy, plan and understanding.
If you trade because of hopes and expectations rather than a trading plan, you are following a nervous and losing crowd. Always keep this in mind.
Be guided by where on the instruments there has been accumulation and where on the allocation. It is very foolish in the allocation on XXL to build up a position and expect a significant price increase, believing the news noise (background for the big market participants to reset the position to fools).
Buy in accumulation - sell in distribution. Accumulate positions in accumulation, get a feel for compound interest in trading. Maybe you won't be interested in superpumps any more.
Buy when everyone is scared (start a partial set). Sell when everyone is euphoric about the profits. Don't get greedy. At least think about partially locking in especially profitable positions or protecting profits with a stop loss.
Protect your profits when trading in a rising trend or during a spike, don't get greedy! This is achieved by a trivial stop loss or a partial lock before resistance. It is better to use two methods simultaneously and not to get greedy. Don't let your local profit turn into a loss.
Monitor your open trades at all times. There are many tools and applications for different tastes for this kind of monitoring. Not always everything goes according to plan A. But at the same time don't stop profits from growing.
Do not open many positions on trading instruments at the same time. Otherwise your attention will be scattered, hence there is a greater chance of not keeping track. Don't collect "faith cards" for fools (adult children). There should be a maximum of 5-6 large positions.
Always be cool in your trading and analysis. Do not "fall in love" with a trading tool. Don't collect "faith wrappers for true fools". Have iron nerves and strict self-discipline. The less you believe in the reality of crypto projects, the greater your earning potential in the market.
Don't enter one position with a large amount of capital. As tempting as it might seem. Every trader strives to "squeeze" the maximum profit out of their deposit. That is why it is absolutely logical that most traders open positions with a full deposit. As practice shows, this approach has more of a disadvantage than a plus.
Surely you have been in situations where the market gives you a great chance to enter, but you are already sitting in the position and cannot afford to buy more? To solve this problem you just need to enter the market gradually. For instance, open a position for 5-10% of your deposit. This way, you will still have plenty of chances to buy in.
The ratio of potential profit to loss is at least 3 to 1 or more. The classic approach to strategy development is that the trader knows in advance where the stop loss and take profit will be. Therefore he/she knows the potential profit/loss ratio.
For example, the potential profit is 100% and the loss is 20%. In this case the ratio is 5:1. This is a good ratio. If there is a signal, it is worth entering such a trade.
The main idea of this rule is to open trades which can bring a potential profit more than a loss. The optimal ratio should be somewhere between 3 to 1 and more.
Limit the risk per trade. The maximum loss in the trading books is taken as 2% of the deposit. That is, in one trade (or group of trades) you should not lose more than 2% of your deposit. Of course, nothing prevents you to choose other values 1%, 3%, 5% for your trading. The main idea: to limit the loss on the basis of the purchase amount. If you trade with leverage, your stop loss will be correspondingly shorter.
This rule allows you to comfortably survive losses and have a sensible view of the market. The risk of losing 50 times in a row (at 2%) is so small that it's hard to put a number on it. Therefore, those traders who stick to this rule never lose all of their money.
Stop Loss allows you to limit losses. If your strategy allows you to use protective orders in your trade - Stop Loss. Keep in mind, however, that a stop loss level should not exceed 5% of your working position.
Because of the stop loss traders are reluctant to place them. But think about it, if I, for example, know where the crowd places the Stop Loss "by the book," why not take advantage of it? Why do I need passengers? How many times, after triggering of a stop loss, has the price turned and went in the opposite direction? Everyone is familiar with such situations. For a trader, it is extremely painful to be thrown out of the market with a fixed loss, even though you have generally guessed the direction. There is often an element of Stop Loss in the crypto market.
But despite this, Stop Losses allow you to limit your deposit from taking heavy losses. It is mandatory to use Stop Loss for beginners! A trader should understand that not all deals are profitable. That is why it is a must to place stops and limit your losses. It is better to lose now 2%-5% than in a week with 20%-50% of losses.
Use leverage only when necessary, or better not at all. The problem is that by opening a position with leverage you are not guessing market moves, but have already signed up to play casino games with the exchange. The exchange is interested to lose money.
You just need to remember how many squeezes were taken out on Bitmex or Bitfinex. Or such an unpleasant situation, when for "technical reasons of exchange" your stop loss does not trigger, and you receive a huge loss on a margin call. Naturally, you can not prove anything, because all this is done on purpose.
Money management allows for margin trading using borrowed funds (leverage). During the periods of strong trends it is useful to increase your capital. The main thing is to do everything adequately, and never wait for the loss.
Such play is a violation of money management rules, because sitting on losses without proper collateral can hurt your deposit.
Money management offers prudent management of your deposit, not creating unnecessary risks for yourself. Leverage allows you to make more money, but lose it in the same proportion.
The mathematics is not on the trader's side in case of loss. Remember, to win back 10% of a loss you need to make 11% in profit. And to win back 50% of losses you need 100% of profit. There is always more to win than to lose.
So use leverage only if absolutely necessary, when the market gives a clear chance to make money. I recommend never taking a leverage higher than 3 in trading. Leverage of 100x as on Bitmex guarantees 100% zeroing of the hamster's deposit at the slightest movement against it. Don't lose your sanity when you can buy even more.
Don't stop profits from growing. There is a very simple rule: "Don't let profits grow". Novice traders see profits and always try to lock them in as soon as possible. As a result they exit earlier than they should and earn pennies. This approach is wrong. You have to get over yourself and let profits grow. Don't look for exit points on a rising trading instrument.
If you have made many losing trades in a row, it means you are tired and just need a break from the market for a while. The market won't run away, but the money might in the hot head.
Similarly, if you've made a lot of profitable trades - be sure to take a break from trading for a while. Control your faith in yourself, overconfidence and boldness in action can hit your wallet excessively.
Don't lock up all your capital in a single Stablecoin, sooner or later it will end badly. Apart from stackablecoins, keep some funds in bitcoin and fiat currencies. Stablecoins are altcoins, sooner or later there will be a "purge" to zero. Don't mess around with it.
Diversification of instruments. Invest your profits in other types of trading (stocks, metals, forex) or real non-virtual businesses. Don't put your eggs in one basket!
Diversify your trading. Do not keep all of your capital on one stock exchange, no matter how reliable you think it is. Use a mix of 3-4 highly liquid exchanges for trading and making money, and 1-2 less liquid exchanges for directing the price of a particular trading instrument.
Always cash in some of your profits (goods and services), perhaps the most important rule everyone forgets about, and when they do, it's too late.
No matter how much virtual money you make on the exchange, the profit not cashed in in real goods and services is zero!
What worked in the market once may no longer work in the present time. You have to go with the times and adapt to changes in the market. If you work like everyone else, you will get the same results as everyone else.
To be continued...
The author of the original article - Spartacus of Macedon
Communication with the author (telegram) - @SpartakMakedonskiu
Link to original article - https://telegra.ph/152v6v66v66v66v66a589k66pa666i6i66i5i55i55pp99p99yuyu99zh9zhzh9zh9zh99zh99zhzh66d6d66d6d66d66d6d66d6d66d66d6d66d6l66l666o6o66o66-08-10
Link to the author's telegram channel - https://t.me/SpartaBTC777
Article translated by https://www.deepl.com/translator