Don't get lost in the Fuzz!

Source: steemit

What I would have done

Before reading this lecture

Before reading this lecture, what I would have done is to leave the position open as I would be anxious and fearful at that moment because my beloved position is not going as I expected it to. I might have felt that the price of Bitcoin would soon go back up as it usually does so I would leave it.

After reading this lecture

Now that I have read this lecture, what I would do is have a plan towards this trading activity.
After buying at USDT 62K the price increased to USDT 64K, then later started going down gradually. So instead of getting anxious and fearful about the trade what I would do is this, I would place a stop loss at a certain price point i.e. at USDT 63K so that the trade automatically get me out of that position to reduce the prospect of huge losses.
I would look at the technical analysis of the price of BTC, that is, analyzing the movement of the price of BTC using chart tools. There are two that I'm used to and that is Moving Averages (MA) and Support and Resistance lines. This is to ascertain where the next direction of the market will be, using my trading method it would give me an idea of where the market is heading to. So from there I would open a sell position a the price of USDT 61K and put a stop loss at USDT 62K.

My Experience as a trader.

When I started trading I was very excited about the prospects of trading. Added to this was that the currency market is traded at $5T daily, so I thought to myself, how come people are not making trillions from the currency market. Little did I know that I was in for a serious rude awakening.
First of all, I read books to get a picture of what is going on in the markets and to see what method I could use.
I felt that since the market is a 5 trillion dollar per day market I could just place any trade and make some money quickly, but one of the earliest problems I had was that I didn't know what I was doing, even though I had read books and I also knew how to open a position and close a position.

So the next line of action was to practice on a demo account which I did for a very long time and still did not get the point of trading. There were times I opened a successful position an felt since the market was going along the direction of the position I opened, let's say sell position and the market was going down, I felt that it should remain so forever.
So I demo traded for a long time, used different tools as indicators such as Moving averages (MAs), Bollinger bands, Moving Average Convergence Divergence (MACD). Still no hope of knowing how to trade and most especially making money.
Then I started gaining small confidence, I knew when to open a position, but didn't know when to close the position. I was confident, but I wasn't skilled, I was also scared of going live, that is, opening a position using real money because I was scared of losing money and not knowing how I would survive after that. I was LOST!
Then at one point I believed myself so much that I actually became better than how I was previously was behaving in the market. There was a time I turned $5000 in my demo trading account to $17,000 within the period of two weeks.

Because of this personal feat, I thought I had what it takes to win trading in the market. So I loaned a nice sum of amount from a close friend of mine, he gave me and I traded with it. I made only three trades and lost all the money. The first position I opened, I made $400 from it, but the market was still moving the the direction I opened it, so I felt the urge to open another position in that market. The second position I opened was terrible, because I felt the market would continue in that direction, which it did by the way, but on the occasion of this second position it went opposite and when I checked, I had lost $300 so out of fear I closed the position. Then I saw the market going towards the direction I hoped for the previous day, in the next day, so on the third day I opened the third position and the market that day went the opposite direction and I lost another $300 that was how my account got liquidated and I owed my friend some money.

This is my personal experience based off trading the currency markets. But I'm confident in sharing it here, because it is the same principles as well as trading psychology that you apply to trading crypto currencies, that you also use in trading any other asset class such as stocks, bonds, currency etc.

Useful Strategies for Trading

These are the strategies that I liked because I came across them when I started my trading journey and experienced them as I continued to trade. Looking at this lecture brought back some of the memories attached to it. And looking at them again makes me feel like this is what I needed to know when I started my journey in trading.

Typical mistakes at trading moments.

• Over Trading

When I started trading I used to think that getting into every position I could lay my hands on was the fastest way to success in trading. Any small movement in the market and I'm ready to buy or sell as the case may be.
Sometimes too I traded because it made me feel like I was doing something special, like I was using technical analysis on a price chart which looks like dealing with things out of this world. So I thought to constantly utilize those tools on the trading platform to make trades regularly, man i was wrong.

• Revenge Trading

I also had this problem too, Revenge Trading, once a position goes against me I would close it and open another one so that I can make quick gains and try to maintain my account. I became so emotional when my positions are not going as planned, which is not good for trading, so I make a huge loss, close the position, open another one and make another huge loss. Those times I forget about the analytical side of the game as which includes numbers and facts.

• Not employing the use of stop-loss

When I started trading I didn't even think about stop loss, all I thought about was that I would be present to close the position if it goes against me. But it didn't always happen that way, I made huge losses. Then I came across an advice that we should always put our stop loss at 10-20% of the position depending on how much you used to enter the trade. I took that advice and continued trading and my results improved.

Trading Psychology

This is an important aspect in trading, because it would help you know your strengths and weaknesses which would in turn help you make better decisions and as an effect get better results.

• Get to know yourself

Before you start trading it is a good start to know yourself, your personality. Are you anxious, are you emotional, what is you risk appetite, these are some of the things you need to consider when starting out as a trader.
When I started trading I didn't think of all these and it truly affected me as a trader. I showcased some of those traits. I became anxious when a position is not going according to plan, I also get emotional too. It helps to know yourself when trading.

• Control your greed and fear levels

There are generally two directions the market goes, up or bull market and down or bear market. When the market is on a bull run and you open a long position, and because of greed you don't close the position at a certain point, then the market changes direction and you lose all. Also you can as well fear the worst and close the position early enough and not make as much profit. This can happen to any trader especially those that are just starting.

• Never trade money you are not comfortable losing

This is an advice that should be at the top of any traders list—never trade money you are not comfortable losing. This is so because to enter the market you need to be calm, having less thoughts about the money invested. Always keep money aside for emergencies and bills that are important, then also set aside money that if gone, you wouldn't think about it too much or it wouldn't affect your psychic while trading. This doesn't mean that because it's money you are comfortable losing, then you go ahead to lose it all. This is a concept that reduces all the pressures and burdens associated with money you invested on the trading platform.

When Browsing Twitter

Source: steemit

What I would have done

I would have been caught up with the buzz of the moment and the fear of missing out would make me become emotional thereby following the market sentiments which was propagated by the tweet from Elon Musk. I would be very excited and bet a very large amount of money in order to make big gains, I wouldn't have thought about risk management, by employing the use of stop-loss to reduce the damaging effects of losses I could incur should the market go the opposite direction. Then I would start panicking and become fearful because I would be wandering what would happen if the market goes against me.

What I would do now

Now that I have taken this lecture, I would take a predetermined approach to entering the market. I would be excited that the price is moving up, but not as excited as when I didn't read this lecture. I would throw my emotions to the wind and focus on the numbers, trading indicator and facts lying in front of me. I would not use money that I'm not comfortable losing, that means I wouldn't use plenty money to buy the asset even though the announcement made the price of the asset to increase, I would use only the amount I'm comfortable losing.
I won't become emotional or anxious concerning the position I have opened, because I have taken a much matured approach to this market without being sentimental about it because of the news from the big guy. Lastly, I would employ the use of stop-loss to help reduce the damages that can be incurred in my account, thereby leading to liquidation of account.

Thanks @fendit for bringing such opportunity to participate in this exercise.