Holding on to losers
The most important rule in bitcoin trading is to cut losses quickly and let winning trades run. By cutting losses and exiting the position, capital is maintained. Cutting losses early also reduces the risks of exposure.
Bitcoin traders often become emotional after a loss and hang on to their investment in the hopes that the market will turn around. This generally ends up in a more significant loss. The key to avoiding this is to set loss targets, so they know when they need to withdraw the trade.
Knowing when to exit trades comes through experience, so it’s important to remember that losing can always be used as a form of learning. According to the experts, the best thing to do after a loss is to sit back for a day or two and evaluate the trading strategy. Then start again without emotions and a clear trading strategy.
Listening to trading tips on Twitter
Most people on social media say or post what they do for one of two reasons. They are entertainers who will report on anything to get more followers or they have a hidden agenda. Most Twitter posts are useless and contain only speculation.
There may be economic or global news relevant to bitcoin trading market behaviour. It remains a traders’ responsibility to check the source before blindly trading on somebody’s else’s opinion. This may be one of the worst ways to invest or trade as it’s somewhat random.
This does not mean to ignore all posts. Some experienced traders offer very relevant tips on trading all the time. They can be very useful if their advice is backed up by facts.
Follow the news
Unless it is financial news where qualified analysts present facts, avoid taking advice from news articles, television and the local radio station. These daily news reports are often also based only on speculation to get higher ratings. They are biased because groups or companies have promoted them for their own agendas.
Trading based on other’s success stories is also not advised. The markets change daily, and what worked for somebody else may not work for everyone. Remember that even the most seasoned trading professionals can also get things wrong.
Now that it’s clear what not to do when trading. Let’s recap on the crucial points. Set daily targets for both profits and losses and stick to them. The only way to trade successfully is to learn the charts and follow the trading markets. Only follow tips from reliable sources.
There is no sure way to make easy money through bitcoin trading. It takes time and effort to learn about how the markets move and their volatility. Trading, just like any job, involves skills learned only through trial and error.