Common Mistakes in Trading

Disclaimer: This is not a bit of financial advice. I am just going to share some of the mistakes and lessons I have learned in trading cryptocurrencies, which are somehow common to crypto traders and investors. Feel free to correct me if there are wrong things I have said in this post. I'm open to new learnings and ideas.

After almost two years of being exposed to the crypto world that started because of my blogging journey on this platform, I guess it is safe to say that I have tried and experienced some of the common things a crypto coiner should encounter when they are involved in this ecosystem. From just merely a frustrated blogger on read.cash, I became a small-time investor, then I stepped my feet into being a trader who only depends on luck until I became a farmer and staker.

And after some time of being a trader and investor, I found myself committing the same common mistakes any person would experience when they also try trading and investing in the crypto world. And I don't know why. Perhaps, we just never learn and we'll only get to apply the lessons we have learned when we're no longer that profitable with our investment ventures.

Anyway, here are some of the common mistakes and lessons we can learn and should apply when it comes to trading, investing, and holding cryptos.

"Be FEARFUL when others are GREEDY. Be GREEDY when others are FEARFUL."

I have been into the crypto world for quite some time already, and I always hear or read this phrase that a great businessman and Billionaire (Warren Buffett) once said when it comes to emotions and investing.

"Be fearful when others are greedy."

During a bull run or any type of market where people or traders tend to be greedy by accumulating as many cryptos as they can, especially when the price is starting to rise, it's the time to be fearful and mindful of the market. Don't go off chasing the bull run because you might end up buying at the peak and lose all your capital. Always remember to buy low not buy high. This is also where the Fear Of Missing Out comes in.

"Be greedy when others are fearful."

This is the time when people or traders start panic-selling their coins because the price of the cryptos is starting to fall or the market is in bloody red. Be greedy by buying at a low price. Consider this an opportunity to buy the coins at a sale price. Just like what they say, buy the dip. However, it's not always a good idea to buy the dip as there are circumstances in which you'll be catching falling knives. So still be critical and mindful when it's already the right time to jump in.

"Buy in Red, Sell in Green."

This is somehow just another term for "Buy low, sell high". When buying cryptos, buy when the coin is still in red not when the candlestick is green, as it's the time that the price is already dumping. And when selling your coins, choose to sell when the chart is green not when it's bleeding red, because you might just end up selling at a loss. Make sure to control your greed as well because most of the time, we get to buy in green because we're Greedy about the possible profits that we could make if the coin keeps pumping. Know that when the train has left already, there is still another train ride to catch.

"Take Profits."

Having a "long-term investor" mindset while trying to trade, taking profits is quite hard to apply. But when you already know how the market moves, that even if the price keeps pumping, the price will still go down somehow, so the unrealized profits you gained will be useless if you are not going to take and secure them.

Taking profits while leaving off the capital is a wise thing to do so that even if the price keeps pumping, you still have some coins left that can be sold at a higher price, but if the market moves in the opposite direction and you got to secure your profits, you'll have extra funds to buy back your holdings at a cheaper price to increase your bag.

"Diversify your portfolio."

While this mainly applies to investing, this can be applied to trading as well. Just like what a popular investment rule says, "Don't put all your eggs in one basket." So that when the other coin fails, you still have another coin to run to. However, it is not advisable to over diversify and buy coins and tokens that don't have solid fundamentals. Just pick 3-5 coins that you think are good for trading, or even in investing.

Well, these are just some of the common mistakes and lessons we could learn while trading and investing that we sometimes fail to apply. I myself forget about these things sometimes and it's good to remind ourselves about them once in a while to make better profits out of our trading and investing activities.