Common mistakes crypto Investors and Traders make
By Yuriy Bishko Updated November 21, 2022
It’s perfectly natural to make mistakes as long as you’re learning to trade. We’ve all been there.
We’re going to tell you about the most common mistakes all traders have made. But we definitely want you to avoid them.
Have you ever seen an ad that promised the moon and stars in exchange for a small investment?
I have, and have seen it so many times. And they’ll do it. Why? Because when you’re new to trading and don’t even know what’s black or what’s white, you’ll believe every word that promises you FAST. But let’s stop for a minute and think about it.
How many good results have you achieved WITHOUT effort? As for me, I’ve accomplished nothing if I didn’t work hard. And we are not in a fairy tale. There is no fairy tale godmother with her magic. The real situation is that you can’t make $1000000 in a few days with a $100 down payment.
LACK OF EDUCATION
Just imagine – you’re driving down the road and you realize you don’t know how to turn, you don’t know where the brake pedal is, a truck is coming toward you, and you yank that wheel right into oncoming traffic, your car is going faster and faster…It sounds like a nightmare.
No one takes the freeway without a driver’s license and a basic knowledge of traffic signs.
So tell me, why start trading without an education? Is it easier than driving a car? I don’t think so, and I really know what I’m talking about. I made the same mistake, guys. And I’ve lost a lot of money through negligence.
I don’t want you to lose money, it’s not a good feeling, believe me.
Maybe you’re sure you’ll get lucky. It’s a common rookie mistake. And, of course, you can try it. But if you know a broker’s stats…
With 99% certainty the trader will lose his first deposit. In fact, I was there and lost 7 deposits.
NO TRADING PLAN OR SYSTEM
We believe that you should trade only with a well-defined trading plan. We know the exact entry and exit points, the amount of capital we can invest in trading, and the maximum losses we are willing to take.
This is called a trading plan. We’ve been developing our system for many years and that’s why we now teach people all over the world.
Beginning traders may not have a trading plan, they don’t even know what they are looking for. I mean, what is a pattern or an entry point. Even if they make a plan, they may be more prone to deviate from a certain plan than experienced traders.
You must remember that any return on investment comes with risk. Beginning traders do not have a clear plan for what situations and how much they can risk. This needs to be justified. You need to know when to increase the amount of risk and when it is better to decrease it. If the investment offers a very attractive return, also look at its risk profile and see how much money you could lose if things go wrong. Most beginner traders lose their money for lack of a plan. Never invest more than you can afford to lose.
YOU ARE A HOSTAGE TO YOUR EMOTIONS
It seems to me that emotions are a trader’s main enemy. Indeed, fear, greed and lust for profit rule the market. Investors should not let these feelings control their decisions. It is better to focus on the bigger picture. Stock market returns can fluctuate wildly over a shorter period of time, but over the long term, historical returns on large-cap stocks can average 10%.
In my practice, patient and emotionally hardened investors can benefit from the irrational decisions of other investors.
Emotions can cloud reason and making rational decisions will be highly questionable. Don’t let that happen. It is better to take time out to calm down than to regret bad decisions, especially since it is fraught with the risk of losing money.
HOW ABOUT DOING YOUR HOMEWORK?
Do you analyze your mistakes? Do you do adequate research or due diligence before you start trading?
Newcomers to trading usually don’t have the knowledge of seasonal trends, data timing or trading patterns that experienced traders have. The urgency of making a trade for them exceeds the need to do some research, but it can end up being a costly lesson, and it is, so we don’t want you to make this mistake. It’s a big mistake to not research the investments you’re interested in. Research helps you understand a financial instrument and understand what you’re getting into.
I mean, it’s a type of self-education. All new traders really need it. So you can use trading platforms to see all your trades and try to analyze the pros and cons.