Tip for traders that I learned from experts

in #bitcoin5 years ago

Technical analysis, which is the science of analysing price graphs in stock market, Forex and crypto trading, is a great skill to learn. Whether you came to it via any of the three markets, the same skill applies to all of them. In the past year I have taught myself the basics in theory and have applied them in practice, both as a day/swing trader as well as an investor on Binance and other exchanges. Anyone can do it, but to succeed it helps to have a mentor. Youtube and www.tradingview.com have been my schools and there you will find many mentors. One of the best I have seen is Chris Dunn. I recommend his videos. Today I’m going to mention some of the classic tips he taught me for improved trading so that you can also brush up on skills which may take at least 10 000 hours to master but will be worth it once you find your way. Price charts are like maps to the pot of gold. Learn to read them and you will be able to make money in any market at any time for the rest of your life.
There are numerous kind teachers online who freely share their knowledge and experience in technical analysis and currency/stock market trading. Chris is just one who sums it up well in his videos. I’m still a novice but if I can learn to make 2-3% profit in a matter of hours or 20-30% over days or weeks then so can you if you have the interest and the mindset. Of course even more important than brain capacity or interest is psychological temperament when it comes to profiting as a currency or stock market trader. It is through trading that I learned a lot about my mind, the way it works, the way it’s hardwired, the unconscious programmes and patterns that I run, based on nature and nurture. You can become a self-aware, focused person just by practicing trading, just as much as practicing yoga or meditation. It’s you against the markets, no one else is involved, there’s no one to blame or call upon during the trading experience. You simply apply your mind as best you know how on the day and watch all the results fall into place, for better or worse. And then you analyse your performance and aim to improve the next time, armed with self-knowledge like a sports person on the field of play. The trading exchange becomes your field of practice, and the profits or losses you acquire are the results of your mindset. It’s like the field of life I guess, but more concentrated, because no one else is involved, and the results are immediate if you’re day trading or fairly quick if you’re swing trading over a few days or few weeks. Longer term than that would be called investing, which is actually considered by Chris and other mentors to be the wiser path to take actually.
“There is a big difference between a trade and an investment.”
Before even beginning to trade you need to decide what type of trades you will be taking. Step one is to have a plan and stick to it. That’s because so much of the market or price movement is simply noise. Like a General on the battle field, you need to know your terrain, as well as the conditions on the day, and you need to know your opponent, in this case the price of the stock that you want to profit from. The market is not going to give away profits to you freely. You have to use strategy and tactics to extract those profits. The best strategy, according to Chris Dunn and others is “don’t day trade.” He rather suggests finding a stock, currency or asset that you have researched and believe has big potential before the rest of the public find it. He’s suggesting that you invest in ICOs or new releases onto the market before they go live on the exchange. That is where the “Angel Investors” buy in, with the expectation that they may lose all their investment, but with the understanding that one win will make up for nine other losses. Now this is very valuable advice from an expert and is the best move if you have a lump sum to begin with. Of course if you’re like me and only have a small stack or third world pennies to begin with and need to grow that first, then you might not be able to resist the appeal of day trading. However...
“Overactive day trading is not where the best profit is.”
Rather aim for the next best strategy (after long term investing) which is swing trading a highly emotional or volatile market or asset. In this way you catch the big moves rather than fighting for peanuts. I have personally been able to catch the odd 1-2% profit in a matter of hours in a day trade here and there, but with all the exchange fees on each trade, your profits get eaten into. And that’s fees on both trades, the buy and the sell. Then sometimes you miss-time a trade and lose 1-2% as well. Unless you are consistent and have all the time in the world, day trading will only ever result in peanuts compared to a swing trade, where you buy and hold over several days or a week for larger profits and less fees, or even better simply investing longer term. So as part of your long term strategy Chris suggests that we don’t seek daily profit goals but rather set long-term performance goals. And to add to that we should never invest long term unless we fully understand and have researched the asset we are investing in. This is all part of the greater preparation that occurs before trading even begins. We first study the market, research the potential assets we could invest in, and know the waters before jumping in. Also – most importantly – we get to know and prepare our mind before jumping in. The mental side of trading and investing is the hardest to master but may be the most important and under-appreciated skill of all. It is your mental state that will cause you to make or lose the biggest amounts of money at the end of the day. And if you are unaware of the way your mind and emotions work before trading, you will certainly get to know them by the time you’ve finished. The emotions are actually the unconscious habits hardwired into the physical body, which sometimes even override the mind and intelligence. The nervous system involves the entire body and mind as one organism and it all comes into play in the heat of the moment on the trading platform. So never underestimate the power of your instinctive impulses to revert to sometimes less intelligent reactions based on past bad patterns, programming or conditioning, when it comes to trading. Your bad habits and emotional states that you did not even consciously know were there may get in the way. Therefore experts tell us repeatedly to avoid emotional trading. Get your emotions out of the way, remove them from the equation. That is the way of the master trader.
Common sense leads to lots of common dollars
So much for the overall strategy of trading. Now for the more detailed tactics recommended by the experts. Some of these points may seem obvious to you, but still need to be pointed out as a reminder. Now when it comes to day trading and swing trading, it appears that the people with the best mindset for it are high risk career types like pilots, fire fighters or police/military people. After all, you will be expected to take on high risk, make instant decisions, keep calm under pressure and control your emotions and instincts. Impulse control is the key here. That requires the use of your frontal lobes in the brain. Those are the newest parts of the brain that actually differentiate us from the animal kingdom. The rest of the brain – the mammalian and reptilian parts – are older, shared by all creatures and more involved in survival instincts. But they can get in the way of conscious and calculated trading when your wealth is on the line and the blind market is behaving unpredictably, as it generally will. Chris reminds us that even the best entrepreneurs and CEOs also typically make bad trades sometimes. It’s going to happen to all of us. In fact you can lose 50% of your trades and still be profitable if you manage risk properly. For example, don’t use the exchange as a bank but rather move your assets off the exchange and into cold storage. Then you really are in possession of your assets. Even gold and silver are only really in your control when you hold physical. “Paper” gold held in storage by someone else, whether bank or vault, is still at risk of being removed from you in a crisis. Next, don’t trade money that you actually need for living expenses. The odds are always against you in trade and the chances of it going south are high. There are no guarantees of immediate profit, so only invest what you are prepared to lose. If you need to pay for living costs today, then never fall victim to greed. Keep your budgets separate or you will suffer the consequences. This seems obvious but in the heat of the moment many a trader has fallen under the spell of less mature emotional impulses.
“Trade less – profit more”
Generally we learn best from our own mistakes, and we will probably make every mistake in the book in the beginning, so don’t berate yourself. Learn about the market and about your mind from your mistakes and carry on. Don’t be disheartened. You can make an entire career’s worth of profit in one year, or a year’s worth of profit in one trade. Don’t feel every day has to be a home run. Rather play the long game. Be patient and wait for the best trades to come along. First learn to survive in the market, then thrive. Learn about market conditions and choose your timing. There will always be opportunities tomorrow. You can’t catch every trade. Remember the markets in crypto are open 24/7. There are always going to be opportunities so avoid high risk speculations and focus on accurate investments. Sometimes the hardest thing to do is... nothing. Sometimes this can be the most profitable thing to do. Let the market conditions tell you, and if they tell you not to trade then rather step away and wait for a better trade setup. In that way we become a reactive trader, following the two most important indicators, namely price action and volume. Other technical analysis signals are secondary. All markets are cyclical and the trend is your friend, so watch and wait, like a hunter, keeping your ammunition for the best target. It is a rare trader who can catch the actual tops and bottoms of price swings, so rather focus on getting in on the general trend of the price action, and don’t worry about trying to call the top or bottom. That is almost impossible. Even one whale or bot can destroy your technical analysis, especially in a low volume crypto market. That being said, it is probably better to avoid low volume coins altogether, as well as low market cap coins, although you can still trade the momentum on bad coins. Ultimately most crypto assets may eventually go to zero in price ironically. ICOs have a reputation of having a 90% fail rate, much like most start-ups.
Conclusion – less is more
To sum up it seems that most experts agree that the biggest problems in trading are over-trading, hesitating on entries (fear) and closing prior to profit targets when a trade is still intact. So, plan before you pull the trigger on an entry. Entries are important, but risk and money management are more so. Also avoid get rich quick gurus. There are so many scams in the industry. Never give your money to someone else to invest. Become your own bank, broker and trader. You are the sovereign ruler of your economy in today’s crypto trading world. That of course is empowering but also requires more responsibility. So become self-sufficient, don’t rely on or blindly follow alerts from anyone in trading. Watch and learn perhaps but ultimately you have to take control of your research, investment and trading. Especially avoid those dodgy pump and dump groups. They are immoral and you could end up the sucker at the end of the line too. Also remember that exchanges sometimes freeze, crash or lag during times of high volatility, so be a step ahead if you can when the herd is rushing to sell all at the same time. Market bubbles will come and go, like now, but it doesn’t mean the asset is going to die. All markets go through boom and busts. Sometimes it even helps to learn to think like a contrarian, doing the opposite to the herd even if you get called crazy. That tip is quite a mystical one for those sincere seekers who have read this far. Also remember that the biggest challenge for many traders is the ego, or the need to be right. Everyone is a genius in a bull market. Don’t be a blind bull, and rather watch for the cycles. Even trends can go way past what was thought to be rational sometimes so let the trend tell you when to buy or sell. You can control your entries and exits as well as your amounts but you can never control the market. It is an entity unto itself and we are just along for the ride, harnessing that vast collective unconscious price volatility as best we can, like surfers riding the worm in the sci fi classic Dune. Besides that don’t try to trade in front of news. News agents are simply trying to make money or get views from their media sites. Just look at the recent BCH disaster. Bitcoin Cash was about to fork so people tried to “buy the rumour, sell the news” by loading up on Bitcoin Cash so that they could get the free fork coins. But then BCHABC went and dumped hard as well as the BCHSV fork dumping even harder. It looked like a loss all round in that unpleasant trade war. So I stayed on the sidelines altogether and simply watched. You never can tell exactly what will happen. Better to manage your trades in such a way that you will have no regrets either way. Safety first as they say in other industries.
To conclude I save the nicest tip I learned from Chris Dunn for last, namely when you make that huge profit one day in your trading career...do nothing for 30 days. You can imagine what he means here. Many a lotto winner has had millions rain down on him or her only to lose or spend it all in a matter of days or weeks and be worse off as a result, especially without proper financial and even psychological counselling and money management advice. So take these tips of advice from a winning trader with years of experience in all markets, and you too will be blessed with insight, foresight and a winning hand. Fortune is out there at the nearest exchange for every one of us, so may the Goddess of fortune Lakshmi devi smile upon us and Mercury the God of traders be at our side as you work our way to self mastery and career profits as the traders we are.

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