Have seen people's profits destroyed too many times.
🚫 Have seen people's profits destroyed too many times.
Enough is enough.
Here are 4 Trading Dangers you MUST avoid.
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Crypto. New research from Glassnode, an on-chain data platform, shows continued growth in bitcoin held between one month and six months, indicating strong conviction behind the recent price rally.
Legacy. U.S. stocks rose to all-time highs as increased stimulus in the world’s largest economy fuelled optimism about the global recovery. Oil gained as OPEC and allies prepared to debate production cuts in an online meeting.
A step by step on how to open an account
How to deposit and withdraw funds
Placing a buy or sell order and stop loss
4 Trading Dangers
The best technical and/or fundamental knowledge is nothing without the self understanding to match it. In The Behavioural Investor, Daniel Crosby draws our attention to 4 trading dangers that, if we do not address, will destroy our trading and investing returns 🚫 Let’s take a closer look.
Almost everyone in the world thinks that they are better than average 🌎 Logically speaking, it would be hard to prove that we are all better than average. So it seems some people are not thinking straight. Now whilst there is nothing wrong with self confidence, the issue with overconfidence or ego is that we do not fathom the idea we could be wrong. Instead, we seek out information that strengthens our beliefs and ignore that which challenges them. And in doing so, we are looking for validation rather than the truth. Do you think the market will be looking to soothe your ego? Certainly not. It will more than likely look to exploit it.
It is essential that you come up with reasons why your analysis could be wrong 💡 Write them down for every trade idea you have. Once you have them written down, look out for them. If you have a hard time fathoming that you could be wrong, try shifting your mentality. Even if you don’t think you are ‘wrong’, you cannot deny or eliminate random events. So you must have a plan for the downside or loss.
Conservatism causes one of the greatest trading mistakes of all: holding on to a losing position. We prefer that which is familiar over that which is profitable. If you find it difficult to abandon assets that you feel comfortable with, try to invert the problem. Don’t ask yourself why you are long an asset you are holding but rather, try to consider why you wouldn’t want to be long the asset. You might realise it’s not such a good idea after all. There is nothing wrong with looking for trading options different to that which you are used to. ⏰ So take ample time to come up with your trading decisions but do not be afraid to rock the boat. Calculated risks are part of the investing process.
Whilst there is merit in fundamental analysis, there is not merit in getting carried away with stories. We need to also play attention to mathematics and statistics in our trading and investing. For someone with a short attention span, stories stick much more than numbers. Sometimes, crypto influencers raging about coins can seem much louder and more convincing compared to what the charts are saying.
If this sounds like you, it’s essential to stick to a rules based trading system. When you are bombarded with hype, don’t just take it at face value. Assess the news against your trading system and see whether and how it can actually impact your position. Importantly, what will the size of the impact be? Sometimes, for a lot of hype, the impact might not even be enough to take you over your stop loss target. Whilst access to the internet and resources is a luxury, it is also pertinent to be able to see the forest for the trees 🌲
When strong emotions are at play, the set of rules you set for your trading are left at the door. You find yourself completely disregarding the value of that stop loss level you so carefully selected. If your emotions are controlling you, we cannot stress the importance of meditation. Meditation is the practise of recognising your emotions but not letting them influence your current task. Practise just 10 minutes a day and you’ll see serious improvements in no time. At the very least, learn to notice when you are hungry, tired, agitated or upset and don’t make trading decisions in those states ❌ If you don’t trust yourself to make this assessment, you can look to automate your trading with stop-loss orders that will close out your position automatically.
📊 Another trading danger: not getting free alpha as part of our Market Meditations community 👇
ALTCOIN NEWS & ANALYSIS
DOGECOIN ON THE MOON… LITERALLY
In a tweet earlier this morning, billionaire Elon Musk wrote, “SpaceX is going to put a Dogecoin on the literal moon.” Whilst it could simply be an April Fools joke, traders quickly longed their longs, causing the price of $DOGE to rip upwards 30% in a single candle 🚀
This is an example of momentum trading. Momentum trading is a strategy whereby traders try to profit off of the recent strength of the price trend. Here are three things to consider when trading momentum.
A profitable momentum play often has a catalyst (i.e. a reason that the coin is showing relative strength at this time) and volume (proof that other traders are also looking to long or short the move). In this regard, trading momentum begins with knowing the coins to choose for your watchlist. A valid reason to have $DOGE on your momentum watchlist is knowing that it often has follow through when Elon tweets. Check out my 👉 Tutorial 📺 to see how I find the best altcoins to daytrade.
Consider scalping rather than swinging the move (if this fits within your trading system). Scalping is a strategy whereby traders try to capitalise on small price movements (i.e. they buy and sell quickly). Whilst momentum plays benefit from the attention from other participants which can push the price up aggressively and quickly, when momentum subsides, the price of the asset often stagnates (causing traders to give back their profits during chop) or retraces the move up entirely ❌
If you’re concerned about leaving profits on the table due to selling momentum too early, consider utilising trailing stops. Trailing stops can be set at a predetermined percent or dollar amount away from the coin’s price. That way, you can ride the momentum of the move longer whilst managing your risk if price ultimately shows weakness 👍
💡 As traders we work with charts on a daily basis and should be comfortable with data representation. Today’s puzzle focuses on exactly this, have a go!
Which of the following bar charts could represent the data from the pie chart below?
MARKET NEWS & ANALYSIS
Filecoin Replaces Litecoin As 9th Largest Crypto
Decentralised storage network Filecoin’s FIL token has entered the list of top 10 coins on the back of increased institutional demand 📈
The cryptocurrency has surged by 42% in the past 24 hours and 150% in seven days, replacing Litecoin (LTC) as the 9th largest digital asset by market capitalization. Members of our premium community will remember we said it is not too late to buy Filecoin. As traders our job isn’t to buy the bottom or sell the top, it’s to make money in between.
😎 This has likely been aided by the inflow into the Grayscale Investments’ Filecoin Trust which picked up today. The world’s largest digital asset manager has become the preferred avenue for institutional investors to gain exposure to cryptocurrencies starting with its early bitcoin trust.
7 Tips to Protect your Profit with Koroush AK
In this episode, we explore everything you need to know about protecting your bull market profit 🏆
✅ Well done if you got this, you clearly have a great understanding of data representation.
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Disclaimer: The content in this newsletter is for informational purposes only. Nothing in this email is intended to serve as financial advice. We are not financial advisors. Every investment and trading move involves risk. Do your own research when making a decision.