Experienced traders often draw lessons from their predecessors and develop that knowledge into specific trading rules to avoid ‘walking around”. They absolutely adhere to these rules, no matter how much temptation to cross the line. Accordingly, each person sets themselves different rules as long as they are comfortable with it. The following article will summarize what to keep in mind of a veteran trader before entering trading.
Say no to the revenge transaction
When completing a trade, whether it makes a profit or a loss, the trader sets his own rules and forces himself to adhere consistently: close the chart, don’t look at it for 24 hours. This prevents him from taking revenge transactions. One reason for a trade close is that there is no reason to step in immediately.
Revenge trading is a major cause of emotional loss for traders. There is no valid reason to try to recover a loss on the same losing asset while being able to make a better trade elsewhere. This is especially important when scaling Bitcoin with leverage. Traders keep an eye on Bitcoin every hour of every day, and this makes it difficult to separate after losses and not reinvest.
Avoid trading on weekends
Weekend price action in crypto markets is often volatile and occurs at low volume. As such, it will be harder to predict a price trend. At the same time, whales are very easy to influence prices – or worse, manipulate prices – in poorly liquid markets when walls are not protected. This puts retail traders at a disadvantage. In addition, the weekend is a time to relieve stress and have fun instead of the ‘weight’ with charts.
Never trade Forex on Friday
Friday is known as the day of the greatest increase in volatility in the Forex market. This is largely due to the fact that professional traders withdraw profits and close positions to avoid price action on the weekends when they are unable to manage their positions. Like the experts, you generally don’t want to take an open position on the weekend because there is a possibility of a halt on a Sunday if the price trend goes against the prediction. Friday afternoons are often referred to as “chop and slop” as most traders are distracted by the weekend.
Maintain specific trading hours
Traders only trade when fully focused and sitting at their desks. The crypto market is active 24/7 but cannot be tracked all the time. Therefore, he sets his trading hours and sees it as a job. If you hold an open position then the orders will be made and then not checked the status until you return to the office during “official” trading hours. This eliminates the urge to constantly stick with the market and the phone, allowing players to spend time with family and do other meaningful things.
Never go crazy with a fortune
If you love the asset or investment you are trading too much, you may make the wrong decision. As a trader, your job is to capitalize on inefficiencies, making money while others are on the wrong track. Emotional trading means trading without attachment. People tend to become emotionally attached to altcoins, groups, and specific projects. This is good for investors, but a potential disaster for traders.
Think everything is simple!
This is one of the trader’s steadfast rules mentioned. Inexperienced traders often check many indicators, news and charts to try to find the intersection of two or more important zones for their trades. This often leads to paralysis due to over analysis. When he sees something on the chart that is suitable for his system, the trader usually makes a trade. At the same time, it must be understood that the stop loss and the position size are much more important than the entries and exits.
Only trade with the right mindset
This principle is the bottom line. Traders should not trade while angry about something, tired or stressed. The player must be in a state like meditation, not dominated by emotions in order to trade and have the best judgment. Don’t just revolve around trading, but also have other life activities to maintain the right mindset. Going to the gym, spending time with family and friends, reading books, playing sports are all keys to success in trading.
Don’t forget to journal
Journaling may sound boring and tedious, but is essential because it helps you avoid making the same mistake twice. Traders have to remind themselves to slow down, stop looking at the charts and take the time to record as much information as possible about their trades.
Daily paper transactions
The veteran trader says he still trades paper regularly. He admits he has more open positions on paper than he actually does at any given time. He trades multiple Bitcoin positions as well as several altcoins every day. Because he dislikes risk and does very little real-world trading, he uses paper trading to test new ideas and indicators. At the same time, this way to sharpen your trading tools when needed.
Do not try to punch and eat sticky rice
The phrase ‘trying to punch a punch’ describes a trader who is buying an asset that falls at or near the bottom of a significant move. This usually happens when someone is trying to offset a loss due to a sharp drop in price or trying to drop the average to the lowest point and bring the asset back up. It would not be wise to try to bottom trade and it is much safer to wait for confirmation in the form of flipping support to resistance. Trading in an uptrend is much less risky than trying to buy the bottom and sell the top.
Don’t trade too much
Traders find that the less they trade, the more money they make. Even when the market has many opportunities, he still tries not to open more than 3 open trades at once. Managing risk across multiple positions is much more difficult, as it can suffer heavy losses if every trade goes negative at the same time.
Above is a set of rules that a veteran trader sees as the motto of life. All are developed through traumatic lessons and loss. You should create your own rules, according to which, you will make the right decisions and stay profitable!