As human beings, we are prone to mistakes. As traders, we are human beings prone to making mistakes that cost money. If you knew the common mistakes ahead of time, wouldn’t you take the opportunity to pivot and turn a loser into a winning crypto portfolio?
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Habits are real and part of the fabric of every man. There’s a certain amount of comfort and stability with repetition, but when you’re on a losing streak and can’t seem to catch a break; always chasing a crypto asset up or down without success, then it’s time to reassess. Seriously. It’s time to stop the bleeding.
Traders often have a way of developing habits that can work for, or against, them. Oftentimes, those habits just perpetuate the same old thing. Some might say, No Guts. No Glory, but without going to extremes, it’s important to stay fluid in a volatile market.
If you see yourself here; kind of plodding along, then you might be in the trap of toxic bad habits. It’s how we react that separate the trading champions from the amateurs.
Let’s go over the six trading mistakes that must be avoided to save your crypto trading portfolio.
Risking Too Much
There’s a saying: “Don’t bite off more than you can chew.”
This holds true to trading. If there are too many trades relative to the size of your account, then you are putting your whole portfolio at risk.
Trading is a game of numbers. Risking a disproportionate amount of your assets in the market at the same time is unhealthy and unwise. For example, let’s say you have $50,000 in your trading account. Would you stake 50% on a single trade? I hope not!
The potential for the 50% loss plus trade fees as an extra kick will damage your portfolio and your confidence. Do not put yourself in that situation. It’s reckless.
Wisdom requires that you trade modestly in relation to your account size.
Over-Trading
Almost as bad as risking too much is over-trading.
There is a misconception that trading more determines your success. The truth is, how many hours you sit in front of your computer making trades does not coincide with success at all. In fact, it could be detrimental to your trading portfolio and your overall health.
First, consider that every successful trade has fees. If you have a multitude of small trades that barely cover the fees, are you really making any money?
Try condensing your time to analyzing charts, doing the research and refining your trade strategy for a couple of good crypto assets to focus on. You may find that you’re doing better in the market because of this vital change in your trading habits.
No Exit Strategy
Too many people jump feet first without thinking about how they’re getting out. Sometimes an opportunity arises that might be too hard to resist. Traders who make emotional decisions have a much greater chance of losing their shirt.
Because our emotions are in the moment, an entrance into a trade makes us blind to some of the warning flags that may exist. It would be like asking a rock to swim without a life jacket or without a tether to guide it back to safety.
Look around you. From planes to boats and movie theaters, we all know about the exit strategy should something go wrong. Why wouldn’t you do this for your trades?
Too Good to be True
If it’s too good to be true, it probably is.
How many times have you entered a trade based on a tip from a friend? First of all, is it a friend that you actually know or some anonymous crypto enthusiast that you’ve been following on social media? Really. Let’s think about this.
A random tweet and a rush of social media attention should actually trigger caution, not a buy order. There are paid marketing entities, bounty hunters, and trolls out there who make a living from getting suckers to buy what they are shilling.
If you’ve fallen into this trap more than once then it’s time to wake up. Successful trading is based on timing, and finding the right opportunities to make a profit.
I know. I know. Dreamers gotta dream. No one really knows what the market is going to do, but we can save ourselves some heartbreak and keep our portfolios safe from bad decisions based on something that sounds too good to be true. Get your head out of the clouds and listen to facts.
Revenge Trading
This is 100% emotional trading and one of the main reasons why people take losses on their investments. Love and hate are not too far apart and can be equally damaging if you’re bringing that kind of energy to your trading.
Sit down and listen to reason. The market doesn’t care about you, your life, your family, or your dreams. It does not care. So getting mad and revenge trading is just spiting yourself.
Complacency after a Winning Streak
Is complacency one of the seven deadly sins? Well, no. But sloth is; and it’s defined as the absence of interest and laziness.
Look, just because you’ve won a few trades and padded your crypto portfolio doesn’t mean you get to be nonchalant about trading. Complacency will eventually kill your trading mojo because it gives you too much confidence in the idea that you’re doing everything right. And maybe you are but the market will turn on a dime. If you’re chillaxin’ then you’re not paying attention.
The best thing to do after a winning streak is to accept the win, be thankful for it, and keep doing the work that keeps you apprised of a fluid market. A winning streak doesn’t last forever. Be diligent.
Disclaimer
Content provided by CryptoTraderNews is for informational purposes only, and should not be construed as legal, tax, investment, financial, or other advice. All information is of a general nature. As always, there is risk with any investment. In exchange for using our products and services, you agree not to hold CryptoTraderNews Pro, its affiliates, or any third party service provider liable for any possible claim for damages arising from decisions you make based on information made available to you through our services.
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