6 Trading Mistakes Every Beginner Do
Getting started in trading is never easy, and it is perfectly normal to go through difficult phases before questioning your strategy.
Over the last two years, many people have entered cryptocurrency trading activities without any notion of technical analysis or risk management. They have lost considerable amounts of money due to trading errors.
Recent market movements lead us to remind beginner traders to keep an eye on the various indicators to avoid repeating unnecessary trading mistakes.
Here are the worst beginner trader’s trading mistakes that we have frequently observed when discussing with our readers.
1. Trade with No Stop-loss
2. Set Stop-Losses too tight
Conversely, placing a Stop Loss too tight is also a mistake in such a volatile market.
It’s common for the price to reach your Stop Loss for a short time and then move up again, which is incredibly frustrating. In crypto-trading, a Stop Loss must be low enough to play its role correctly.
3. Revenge Trading
Revenge Trading is the biggest self-destroying trading mistake for a trader.
It often happens after an unexpected loss. Trading with anger after a loss will give you a strong cognitive bias and has a high risk of failure, and they may have a snowball effect.
Each trade should be independent to avoid any bias. What is lost on the previous trade is lost forever, and you need to reset your mind. Otherwise, you put yourself at risk of having a bias.
4. Being Overconfident
Overconfidence is often at the origin of the overactivity of the trader.
In essence, overactivity is a situation where the trader starts to take positions in a frenzy way, without really basing himself on rational criteria. He is caught in a kind of spiral from which it is difficult to escape.
This overconfidence can prevent you from perceiving all the ins and outs of a situation. Indeed, being overconfident can make you overly optimistic and irrational. As a result, you have a false vision of reality. It is the same mechanism that will have adverse effects on trading.
5. Trading Impulsively
Most of the time, the impulsive trader will get into position before he even sees a signal that fits his strategy. Often with a fear of missing out on the potential explosive price movement that could make many profits.
The problem with going back into position on price accelerations is that you will anticipate a movement when there has been no confirmation. Moreover, the result is that you are bound to come back late when the movement is already well underway. You will be hit hard by the corrective move, which will end your position with a loss.
6. Hold for extended periods
Many have also made this mistake… Hold has its limits, and we lose a lot more by trying to hold at all costs rather than following the market to make smart trades. Sometimes you have to accept to lose to bounce back!
All this seems obvious to you? And yet, many beginners have accumulated some (or even all!) of these errors by joining the crypto-ecosystem. Take the time to go at your own pace so that you can learn from each mistake. To follow our training courses in cryptocurrency trading, go here.
Good crypto-trading to all!