3 Common Trading Mistakes
Now that you are on track to become a crypto trader, before you create your first trading strategy you need to keep in mind a few fundamental teachings that should be the pillars of each of your future decisions.
Thanks to these tips you will avoid some of the most common mistakes traders make.
Even more advanced traders struggle to stick with these principles all the time, so sticking to them methodically will grant you remarkable results.
Avoid risking more money than you can afford to lose.
No matter how confident you are in your trades, you should be prepared for the possibility that the market will go in the opposite direction. You can simply be wrong with your analysis, but even if you are right, that doesn’t necessarily mean that the price will reflect that correct view. “The market can stay irrational longer than you can stay solvent” is a useful quote that you should always keep in your mind.
That means that losing money is “part of the game” and in no way you should compromise your financial stability because of a trade (or more consecutive trades) closed in loss. Applying risk management tools to your trading plan will prevent you from getting rekt!
Keep that in mind when deciding on the size of your orders. It’s always better to start with low amounts and if you feel comfortable, increase them with time. To reduce the risk to zero, you can also start trading with Coinrule using our Demo Exchange. When you see satisfying results, you can create your first active trading rule on the market with more confidence.
Never act without a clear trading plan
Another mistake that people make when getting started with crypto is to jump in too quickly without a proper strategy. Inexperienced traders take their decisions randomly based on the current conditions without taking a look at the big picture.
Take a step back and create your first assessment of the market, then look for a specific opportunity. Then create your plan to take advantage of that. If you need some suggestions about effective trading rules, Coinrule offers an extensive template list of automated trading strategies you can get started with.
Don’t allow feelings to lead your decisions, ever!
Finally, emotions are probably the most tricky and dangerous threat to your crypto trading results. Don’t be too euphoric when a trade is in profit, just like you shouldn’t be frightened by losses. Managing the sizes of your orders will significantly help you with that.
When you don’t make your decisions using a rational and calm approach, there is a real risk that your choices will be compromised. If you carefully plan your trading strategy at the beginning, you can stick with the plan until market conditions change and only then consider a proper adjustment.
But don’t forget to state at the beginning what are the precise signals you will track to determine that market conditions actually changed for you.
We are all humans, after all. Managing our emotions is probably the most common among the mistakes traders make.
That’s why a trading bot can help you manage your orders and achieve better trading results.
Your journey from noob to whale has just begun!