4 Reasons to Invest in Trading Education
So you are interested in learning how to trade? Many people are just like you, but the Cryptocurrency market is not homely for newcomers.
The market is volatile and extremely dangerous, threatening you to lose most – if not everything – of your capital in a few weeks.
Trading Education is crucial for novices.
At Nova Blocks, we strongly believe in this principle, especially since the Cryptocurrency market can be complicated if one does not have some basic notions.
While most people are starting trading with curiosity, they quickly realize how hard it can be, mostly losing their precious capital.
Know What You Are Doing!
The Dunning-Kruger Effect
Maybe you have heard of the Dunning-Kruger Effect, which envisions a person’s confidence level compared to their competence as they learn a new skill (like trading).
The Dunning-Kruger graph starts with a huge spike of confidence early in the journey to mastery. You’ve learned a few skills, maybe had a little beginner’s luck, done well in a simulation like trading in free-mode … this isn’t so hard! Maybe you’re a natural!
As the graph progresses from basic competence to mastery, the confidence level suddenly takes a nosedive. You realize there is more to learn than you could have possibly imagined. You thought you were hot stuff, but you actually looked like an idiot. Maybe your beginner’s luck runs out, and you take some licks. Midway through the journey to master, your confidence is in the gutter.
As you get closer and closer to mastery, your confidence begins the slow and steady climb until your confidence with the new skill is commensurate to the mastery level you attained.
The problem with a Dunning-Kruger journey to mastery in trading is that you can lose a fortune along the way. A better choice is to adopt an attitude of humility, of a lifelong student. There is so much to learn, and this early in the journey, you don’t even know what you don’t know.
Investing in trading education before a lot of money is at stake will put a backstop on how low that Dunning-Kruger curve can fall. You will learn from experienced trading professionals some do’s and don’ts, what the rules are and when to consider breaking them. You will learn to trade at your level, achieving the kind of small wins that bolster your confidence and propel you toward mastery.
Following someone is not trading
It is not uncommon to see newcomers coming into the game and being sucked into Cryptocurrencies communities called “Signal Groups“.
Most of those groups are scams and/or are not here to help you out. In exchange for monthly fees, they will give you entry/exit signals on cryptocurrencies and showing you good results.
This method can be extremely dangerous for the beginner. More than a signal, he should respect a risk management strategy, and the group leaders will not teach him the basics, causing him to lose a significant part of his capital.
Following trading & financial advice is not trading!
The Experience behind a Professional Trader
Being a Professional Trader means you have been exploring most of the mistakes a beginner did.
I cannot count how many liquidations I have been experiencing in my life. Fortunately, back in time, I was trading with peanuts and I was thirsty to learn more about trading.
More than the simple art of charting coins, apply your trading plan and risk management strategy, you must go through all the phases of Psychological Trading weaknesses the human body has. This experience can not be learned anywhere else than in the markets. However, it is still very useful to learn about what you are experiencing and what you are risking before entering in the market.
Empower Your Own Nature
We often think of trading as a game of numbers and business fundamentals, but so much of trading success lies in the understanding and mastering of trading psychology—that is, understanding your own human nature, what your feelings are trying to get you to do, and what you should do instead.
Many trading markets are governed by base human emotions—fear, greed, the urge to conform and follow the pack. A successful trader must learn why they feel those emotions and must learn to master them instead.
To trade successfully, traders need to understand:
● Their own psychology. What sits at the root of the fear response? The greed response? What patterns do you fall into mentally that serve you? What self-destructive patterns need to be avoided?
● Market psychology. How does the “mass psychosis” of market groupthink move markets? How can you recognize destructive groupthink patterns and avoid destruction yourself—even profit from it?
Trading psychology is a critical component of trading education. You will learn how to make snap decisions with total presence of mind. You will learn how to create a trading plan that you can stick to, even when fear tempts you to hesitate or greed tempts you to overreach.
Human minds look for patterns and have an affinity for rules. Successful traders build a game around their trading and scrupulously follow the rules rather than gut instinct. They also know that many other traders don’t master those instincts, and how to exploit their own mastery to prosper when other traders follow the herd right off a cliff.
Learn the Characteristics of Financial Wellbeing
Despite what some people think, trading is a business, not a casino game. Whether you trade as a side-hustle or a full-time enterprise, certain fundamentals of business apply to trading. Like in any other business, traders ignore those fundamentals at their peril.
It’s easy—almost too easy—to get started trading, but you wouldn’t open a restaurant without the first clue of how to run a restaurant, would you? Or start a marketing business without any idea of how to market? Trading is no different. Before you go into business, it helps to learn the ropes.
Good trading education helps aspiring traders learn business management skills that allow them to systematize and standardize their daily grind. Students learn about the balance of risk and reward, as well as practical tips for how to manage risk in their trading careers and create exit strategies to bail out of disaster.
Trading education also addresses the principles of world economics and finance. Millions of people entrust their money to stocks, index funds, and currencies without the first clue of how global markets actually work. Investing in trading education remedies that deficit on a fundamental level.
These aren’t just crucial principles of trading—they’re basic components of financial wellbeing, of being a literate participant in the global economy.
Generate Consistent Income
Again, trading isn’t a casino game. “Win some, lose some” is not how a profitable trading career is built. Yes, not every trade succeeds with flying colors, but successful traders are hardly pawns at the whims of fortune.
When the markets boom and everyone is popping champagne corks, educated traders make money. When the markets bust and everyone is losing their shirt, educated traders make money. When the markets stagnate and everyone else is jumping out of their skin waiting for something to happen, educated traders make money.
The strategy changes … but educated traders know how to change with the markets because they know how to profit in any market. It’s not an accident—it’s a repeatable business strategy that wins more often than it loses. If you want to stick with the casino analogy, it’s as if you have the edge when you bet, not the house.
Some trades might lose, but enough will win that over the course of a day, a week, a month, a year, you reap profits instead of losses. Most importantly, you will never bet—and lose—all those profits on a gut call that isn’t supported by your trading strategy.
Anyone can make a fortune on a lucky trade, and chances are they will lose that fortune just as quickly on the next trade. But an educated trader builds a system whereby, over time, (s)he always comes out ahead, generating a consistent income through the agreeable, zen-like act of trading.
Where to learn about Trading?
Whether you’ve never invested a dollar in the cryptocurrency market or are still a novice yet, you will have a lot to learn about trading or investing. If your 2020 financial goals are to learn how to invest, you may consider our online trading guide. We compiled a list of courses that range in categories and prices, so you can find one that best fits your needs.
Our Complete Trading Guide has been written after 4 years of experience in the cryptocurrency field and already helped many people to learn the basics of the market.
Invest in your Trading Education with our Complete Trading Guide series below: