Skip to main content

The Mistakes Most Traders & Investors Make

Trading and investing is a probabilities game kinda like poker, it is the art of finding and timing the next opportunity and putting the odds in your favor. It is no surprise that a lot of gambling and trading rules are the same and for good reason.

Predicting a market is hard, the lower your trading time-frame is the higher the risk of quick draw-downs. Mistakes can come in any form, it can simply be not paying attention, pressing the wrong button or just simply making the wrong judgement.

The first mistake is not limiting your size per position, leaving a large part or all of your capital exposed to a single price prediction that could end up against you for some of the reasons stated earlier. A simple question to ask yourself is, do you expect yourself to be accurate 100% of the time and I doubt there is any trader that will answer yes, so diversifying across at least a few uncorrelated positions high and low risk should be a fundamental part of your strategy. This can include a 30-40% cash or cash-equivalent position.

The second mistake is not having an exit strategy in the form of a stop-loss, taking losses is essential to be successful as a trader, there are gonna be times where things don't go as planned and a decision has to be made to cut a bad position, the earlier you can recognize a loser and cut it the better your performance will be. People are risk averse, we don't like admitting that we lost but we fail to acknowledge that we can be biased and make the wrong decision because of natural tendencies to stick to beliefs. Placing a calculated stop-loss removes the mental strain of having to make the decision in real-time, this means you can walk away from the trade and let the odds play in your favor.

The third mistake is trading impulsively or emotionally causing you to break rules or make bad calls, you should never deny your flaws as a human and always properly evaluate your potential losses against your potential gains. If your system has some kinks in it the worst thing that can happen is being too excited and bet too much on the wrong information. Just as not taking a trade out of fear is also a waste of opportunity and shows lack of discipline. There should be a balance and it's beneficial to second guess yourself.

Comments

Popular posts from this blog

Bitcoin to $10,000 while Hedge Funds Flow In

Bitcoin reached prices close to $10,000 in anticipation of more regulated derivative product launches like the CME, the influx of institutional capital is at an all time high and OTC dealers should be running dry. Now where will this rally end? $10,000 has been a heavy promoted number by the larger players, usually this means their distribution is around those prices and possibly calling the target makes them credible in the future. At some point it becomes irrational to have any expectations of significant increases, smarter money will pull buy orders and the selling cascade that follows will initiate a full crash, till we see some clear reversal signals though the trend is still up. I think the public promotion of the $10,000 number though will have down pressure on the price, this will create all the more momentum.

Bakkt platform, CBOE ETF withdrawal, more Wall Street manipulation for Bitcoin

Bitcoin inherently doesnt work any different than traditional commodity markets, informed players accumulate under the radar and manipulate the media to shake out scared money. With the ETF withdrawal and price testing the 3-4000 area the market is scared to buy but in reality smart money is anxious to buy and get their contracts filled. After this delayed reaction from the ETF withdrawal and other ppl spreading FUD we will most likely see a hard squeeze of shorts and a quick recovery for a few months. Bitcoin pump and dumps usually peak at 100-150% gains so be mindful of short term euphoria. Altcoins will simply lag behind like they always do.

The Genesis Blog - Bitcoin, Cryptocurrencies and Why You're Missing Out

This is my genesis blogpost. Blockchain is gonna change the world and I'm here to explain you why, I'm a programmer, owner of a marketing/communication company, a financial market & cryptocurrency trader and educator . Welcome to my blog. Bitcoin is an implementation of whats called a Blockchain, this is a decentralized database that can server as many things one of them being a value transfer like a payment :). The keyword here is decentralization , unlike traditional FIAT currency like $USD or $EUR, Bitcoin ($BTC) has a limited supply of 21million and is not controlled by a central authority. It's network is secured by a global decentral network of people who contribute power to secure and encrypt the data so it remains valid. This makes sure the database can never be tampered with . What people fail to realize though is these cryptocurrency networks (or Blockchain implementations aka Bitcoin & altcoins) have intrinsic value to exist and a known finit
Powered by Markten & Economie