Crypto Academy Season 2: Week 4 – Typical Mistakes of Trading – by @fendit

Hi everyone, In this homework week 4 task post, I will be answering this week’s task on Typical Mistakes of Trading, a task by @fendit - I will be giving my opinion and writing about my experiences in trading, some of my mistakes and what I have learnt from those mistakes. When it comes to trading any cryptocurrencies, it is important to avoid these mistakes so as to reduce the chances of losses.

A. What I would do if I buy BTC at USDT 62K and The Image Below happens

Source

Looking at the chart candlestick on the image above, it clearly shows that BTC is heading in a bearish direction and what it means is that there is already a loss from USDT 62K entry price. In my opinion, what I would do if I buy BTC at USDT 62K and it entered a bearish direction and dipped to 54,585k, what I would do is…

What I would do before

• Just Hold and Wait - I would just hold the BTC if I bought BTC some days ago at USDT 62k and there is a sudden dump in price. The reason I would just hold is because I wouldn’t want to sell BTC at a loss because BTC is the leading cryptocurrency and has shown time and time again that it always recovers. If it is another cryptocurrency, maybe a risky cryptocurrency, I would sell at a loss and cut my losses to avoid losing every capital. However, because it is BTC, I would just hold the BTC and wait.

What I would do now

• Dollar Cost Average and Buy More at Lower Prices - if I bought BTC some days ago at USDT 62k and there is a sudden dump in price, I would dollar cost average and continue to buy more BTC at the lower prices. Why this is a good idea is because BTC will always recover and when it does, I would be in profit before the price of BTC even hit 60k USDT.

B. My Experiences and Mistakes in Trading

My experiences and the mistakes I have done when trading

I’m pretty sure every cryptocurrency trader has made a couple of mistakes here and there when trading. However, what separates a good trader and an amateur trader is the ability to learn from mistakes and become better. For me, I have made a couple of mistakes when trading cryptocurrencies and have learnt… some of the mistakes I have made when trading cryptocurrencies are;

• Not using stop loss when venturing into a risky trade which resulted to big loss
• Trading with all the capital all at once
• Trying to be too smart for the market and investing all my capital on a single trade
• Not paying attention to sentimental analysis because sentiments can affect the price of any cryptocurrency
• Not taking profit when immediately and losing the profit to sudden dump

What I have learnt from my mistakes

• Making use of stop loss especially on low cap coins
• Always take profit and not be greedy
• Always follow social media channels, read news and blogs for any sentiments that may affect price
• Only invest with risk capital
• Never trade with all the capital on a single trade

The strategy I find the most useful when trading

Stop loss strategy - This is a really powerful strategy to use when trading low cap altcoins because the prices of these low cap altcoins can dump at any time. The stop loss helps to reduce the loss. Every trade loves to trade low cap altcoins because of the huge profit potential. However, they are extremely risky and can dump at any time. The stop loss becomes very useful in this type of situation because it can allow me to buy this risky altcoins without any fear of losing all my trading capital.

C. What I would do if I see this tweet…

Source

What I would have done

I would definitely rush and buy BTC with huge capital so as to capitalize on the price increase. Whenever a tweet like this is made, there is a very high chance that there will be a rush in and that would push the price of BTC to go up. For me, I would rush in and buy BTC without thinking about any risk because in my mind, there is a big chance of making profit from the FOMO.

What I would do now

Never FOMO in with huge capital and only invest with capital that I can afford to lose. Yes, there is a big chance that I would make big profit when I go all in and FOMO into BTC because of the tweet. However, it is very risky because whales can dump the price at any time and that can lead to some loss.