Trading isn’t difficult, most people assume you have to be some kind of math prodigy or Gordon Gekko to make money on the markets, which actually isn’t true at all– even though knowing the math behind common indicators does help you understand what your looking at, it isn’t by any means necessary.
You don’t have to have x number of decades experience trading to be successful either. I’ve seen many very new crypto traders have great success, even with very simple methods.
So what makes a good trader?
Trading isn’t about amazing instincts or coming up with some super-advanced unheard-of technique no one has ever heard of before, it’s about discipline. Even trading based on EMA crossovers will in most cases be profitable, as long as you have the discipline to stick to it. There’s this tendency for new traders to ‘trust their instincts,’ they think they can somehow feel upcoming market movements and try to buy at their predicted lowest possible price and sell at the highest.
Although you may be right a few times or even many times, this is a recipe for disaster; the market will eventually take an unexpected turn on you and unless you are extremely disciplined with your stop loss, you will be crushed.
The Four Noble Truths of Trading
The quicker you accept these to be true in your heart, the sooner you will be able to become a consistently profitable trader of bitcoin or any other altcoin.
You do not know which way the market will go. I know what you think your instincts are telling you, and I know what the indicators look like, but the market is like the weather. At best we can only predict probabilities, but in the end, the market will do whatever the hell it feels like.
It is not a good thing to buy in at the ‘cheapest possible price’. If you find yourself saying this with pride you’ve made a mistake. All this means is you are still trading by feelings, the truth is with any system you’ll probably end up hopping on a trend a little bit after it starts. There’s nothing wrong with this as long as the trends you are hopping on are consistently profitable.
You will not be a millionaire by the end of this year. Even if you do end up a millionaire its never going to happen as long as your thinking this way. This is real life, not a movie – you are trading for inches of ground on a 10,000-mile wide battlefield. Setting realistic long and short term goals will make trading not only more gratifying but likely more profitable.
There is no skating around your stop loss.
When you hit your stop loss you are done, game over, the cards have been dealt and you lost, you were wrong. Even if the trend ends up going the way you thought it would later your stop loss exists to save you from yourself.
I’ve seen so many traders end up buying at extraordinary prices and continue to hold even though the market swung 40 or 50% in the opposite way in which they were hoping. I know it sucks losing on a trade you would have ended up winning on if you had held a little bit longer, but it sucks a lot more to lose 25% and have to decide whether or not to just keep holding because you’ve already lost so much.
In the end, it’s much better to just take the one or two percent loss and live to trade another day.