This might fit better in the annals of psychology but there really is a loser mindset in day trading that can fire off a pretty consistent losing streak if you let it. Day traders often have at least one thing in common: they’ve lost money on bad trades and probably didn’t know when to let go.
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Even the most seasoned traders who’ve spent time trading traditional asset classes like Forex, company stocks, and equities have, at one point or another, gone through losing streaks in their day trading efforts. What differentiates the good traders from the not-so-good traders is the ability to recognize and reassess what they might be doing wrong.
Every-day traders go through phases where it feels like you can’t have a win no matter how much time and money you throw at it. In fact, some of those traders get so frustrated that losing money seems to be the only song in that playbook. And what a sad song that is.
Losing streaks happen because of a host of different things. If you’re new, it could be the need for more research and analysis. With so many cryptocurrencies to choose from, it’s hard to hone in on just a few. Sometimes it’s stupid mistakes because you didn’t read the chart right. Regardless of the excuses, sometimes the market zigs when you were zagging. It happens.
The good news is that the more you familiarize yourself with the tools, the exchange and the market charts, the better you will get a assessing the situation and pivoting before you lose your shirt. If you’re also in the mindset that all you do is lose, then there’s a good chance you’ll become a self-fulfilling prophesy. If you see yourself here; frustrated, losing, feeling negative about your trading experience, then you are in the right place. Here are some tips to help you out.
STOP DIGGING
Put down the shovel and stop digging yourself into a bigger, wider, deeper trading hole. Essentially, put a stop to your trading and prevent further damage to your pocketbook and confidence.
As mentioned before, mindset can make or break you. If you’re on a losing streak – STOP. Take a breath. Watch the charts more. If you’re looking at hourly changes, broaden your chart searches. Pick one or two cryptos that look promising and make small trades. Build up you confidence before you jump into larger or more diversified trades.
Sometimes you just have to stop digging your hole to look up and see what’s happening.
ASSESS AND ACCEPT
Let’s say you started with $5K in your trading account but that terrible losing streak siphoned you down to $2K. OUCH! No one on the planet likes to see a big loss like that. We’ve all got bills and that $3K loss hurts big time!
Remember what we said about digging that hole? Part of that is accepting the loss, finding the new line and moving forward with what you’ve got. Now that you’ve taken some lumps and assessed the situation, and those smaller trades are earning instead of losing, then you’re in a better mindset to keep going.
The trick is to realize that your trading account isn’t at $5K anymore. You’ve got to think like a scrappy $3K account trader and build it back to $5K and beyond.
There are more reasons to be on the losing end of a trade so think about identifying what they might be. Sometimes it’s over-trading where you might be trading too many position sizes; too many markets where you’ve got some assets in a lot of exchanges and it’s too wide spread; operational perspective is wrong, and maybe it’s something as silly as not accommodating for the fact that your trade fees aren’t covered by whatever profit you might even be accumulating. These issues put together can really compound the issue.
Assess. Accept. Move on.
REVIEW
Bad trades happen. One or two bad trades shouldn’t shake your world but if you’ve noticed a trend with consistent losses then remember what we’ve been saying here. No one comes out of the gate as a professional trader. Even the best of the best have their share of bad trades and losing streaks. The difference is they’ve stopped to reassess, got a better mindset about their strategy, rebuilt the confidence and dove back in…perhaps with a bit more caution.
If you’re new to trading, do not expect that you’re going to be good at this – at least not in the beginning. Ignorance is not bliss, but it sure can cost you a pretty penny. Learn from your mistakes by being as objective as possible. Broaden your research and chart outlooks. Become more familiar with your trading tools and the exchange you’re working in.
To review, let’s ask some questions.
What are my market entry points?
Am I holding for too long or waiting for market prices that are outside of the trends and analysis?
Am I leaving the position too late or too early?
Is my research more conducive to short day trades or long-term holds?
If you notice a pattern of behavior in your trading then it’s time to review what and how you’re doing things in order to change your results. Reviewing and evaluating is a crucial step to a better outlook.
Spend time with your charts, read on the crypto or blockchain projects that really gained your interest, don’t spend too much time listening to the shillers and hype. The history is a good voice, not the trollbox. The more time you spend getting to understand the markets and your trading style, the better off you’ll be once the trading begins.
PREPARE AND PLAN
We’re on the home stretch! You’ve put a stop to your losing streak by literally stopping your trades. You’ve assessed and accepted your current situation. You’ve put yourself into a better mindset with small, confidence-boosting wins. You’ve reviewed the things you’ve done wrong and what you’ve done right. Finally you’ve reviewed everything again.
Feeling better? Good, because you’re not done. If you plan to make day trading something of a habit or career, technically, you’ll never be done with the preparation and planning.
Mindset is everything and good planning should get you more wins than losses. No one’s perfect and an occasional loss is expected because if it was easy, everyone would be doing this.
Whether it’s Forex or crypto trading, exchanges, charts, and reading history is very much alike. The difference is that crypto tends to have a bit more volatility, which is why it’s challenging to trade for a profit. But making good money is possible if you’re open to some critical self-reflection and implement a bit of discipline.
Start small. Gain knowledge and confidence. Tune in your strategy and keep going. You’ll be turning those losing streaks into winning streaks before long!
Disclaimer
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