Whether you are a newbie or a pro in trading, you are ought to make mistakes but one should have the attitude to learn from those mistakes and never-ever repeat them. In this blog, we will speak about 5 common mistakes that most traders make and when you wish to buy BTC for trading, make sure to bypass them while doing the technical analysis.
Before we get into the mistakes of TA, we must first understand what is TA or Technical Analysis. Most traders perform specific analysis of the market, like how it is responding to policy changes, demand or economic situation. Keeping all of these aspects in mind, they frame an analysis based on which they make the decision. But often these traders commit mistakes in the process. If you are doing trading on your own, here are a few common mistakes that most traders make which you can carefully assess for long term benefits.
Not Going Big Straight Way or Cutting Losses
If you are a newbie in trading, it is not a good idea to start with big experiments. On the contrary, you must begin small and see how your strategies are working. Such an approach can help you mitigate huge capital losses. Always remember it is good to lose a little than anticipate gaining a lot and lose everything in the process. Same should be the case with pro-traders, even if they are bound to make mistakes and keeping themselves well aligned can mitigate the losses. Try to integrate the stop-loss order that could check the consistent dip in your analysis making you lose out significantly.
Trading shouldn’t be taken as something you ought to do daily, therefore, keep a check on this. Make sure to keep enough funds at your disposal for volume trading when market conditions are favourable. With that said, be wise with your investments and do not fall into the false notion that trading every day would bring benefits to you. Such is never the case and you must be receptive to market conditions, not your stimulus to trade. Short term trading might always sound tempting for exponential profit gains but they are never rational. As a trader, you must always focus on long-term goals that bring considerable stability to your trading portfolio.
We began the piece with TA or Technical Analysis and revenge only comes via emotional stimulus. Most traders, whether they are a newbie or even professionals turn reckless when they incur losses. At such times, they might make irrational decisions which could do more harm than good. Therefore, it is wise to not be driven by emotional outbursts and make big blunders that completely cut your capital into half. Rather, you must act like a crocodile that stays in the water for days till it can analyse all the movements of its prey and attack at the right time. Similarly, you must also analyze the market conditions and look for the best scope for trading. Most traders had traded in BTC when it was at a whopping US$20,000 market in 2017, also when it fell to the ground in early 2020. But again the market for BTC is picking up pace. Such developments showcase that trading is all about patience and the right moment.
Stubbornness is bad for sustainability in the trading business. When the market has been changing thick and fast, you need to shift your focus from what you were doing all this time to what is necessary at the moment. Doing the same things once and excepting a different result doesn’t show the rationality you should possess for sustainability. With that said, diversify your investment portfolio and make sure that you are going with the flow of the market.
Failing To Understand Market Conditions
Blackswan events in the market might tempt you to buy or sell cryptocurrency assets in bulk, but that doesn’t mean that you have a favourable money-making opportunity. Sentiments are necessary for market-making but they do not make it sustainable. If there is a huge gap in the supply-demand and you wish to exploit the favourable, it shouldn’t be extremely based on technical tools like Relative Strength Index that shows the strength and weakness of assets in the market and traders might take an action based on such reading. Likewise, a reversal is also not imminent when you have lost significantly during the black-swan events. Such fluctuations are very hard to decipher and one cannot just rely on technical tools to take actionable claims. This is the most common mistake that traders do by relying too much on technical tools.