Technical Analysis: A Newbie Trader’s Guide to Survive
We have two pieces of news for you, and let’s start with the bad one: mistakes are an integral part of a trader’s crypto-routine. The good news is that an experienced market player makes fewer mistakes than a novice trader.
In every book on trading, you will surely find the “secret” of success, but this is not enough.
Accumulate your knowledge and experiment with strategies, analyze your actions, and be sure that your “to the moon” doesn’t have an endpoint.
During the red market, the professional trader is always calm and confident.
High-quality technical analysis is the key to profit
If this is your first article as a beginner trader, you need to understand what technical analysis is.
Technical analysis is the basis for trading. It’s used not only by crypto enthusiasts but also by fans of forex, gold, stocks, and other financial market derivatives. In technical analysis, traders should detect patterns and trends in the asset’s movements, which will repeat under similar scenarios in the market. Thus, traders will be able to build a forecast, assuming in which direction and at what tempo the asset’s price will move in a certain period of time. Based on the charts’ data that are formed online, you can find the reasons that influenced the digital asset price and, by analyzing this data, you’ll see similar trends in history.
But before we dive into the complex techniques, let’s take a look at the basic mistakes that almost all beginners make.
The winner isn’t the one who won, the winner is the one who didn’t lose
You must understand that after investing money in trading, the main thing is not to lose it in the first week. Therefore, act gradually, without investing impressive amounts in the early stages. Entering the market with large positions carries unjustified risks. With a 99% probability, you will lose your funds and become disappointed in trading.
To train your trading skill, start your career with demo tokens, on which you will experiment and test different strategies in the real market.
This approach will save you money and help you to achieve excellent results in the future.
Paranoia as a remedy for bankruptcy
It sounds strange, but it is true. You can make a mistake, and stop-losses will help you to protect yourself. Don’t neglect this tool because watching your balance go to zero when you’re powerless is a real test of your nervous system.
Using stop-losses will help you to achieve long-term trading success and to keep your portfolio safe from the market decline effects.
Activity is not always profitable
Many newbies have the misconception that trading should take all the time, and several transactions must be made a day. However, trading isn’t based on intuition but a thorough analysis of market situations. Sometimes you have to wait for months to get in the game.
Entering a trade just for vigorous activity increases the chances of a decrease in your balance. Expect good trading opportunities and make your profit gradually.
Don’t stop at one asset
As a rule, novice traders prefer to work with only one asset without examining the potential of other cryptocurrencies. At the same time, it must be remembered that the market isn’t only green or only red. Your favorite may show negative dynamics, while other coins/tokens are showing growth.
So, it’s worth taking a portfolio approach and not limiting yourself to just one asset.
Of course, working through these mistakes doesn’t guarantee you lightning-fast success, but it brings you one step closer to your goal.