Fundamental Mistakes

The primary challenge every trader faces is the experience of tilt. Originating from the world of poker, tilt refers to a state of mental or emotional distress or disappointment that leads a player to adopt suboptimal strategies, usually resulting in excessive aggression. From a practical standpoint, tilt is a consequence of sharp negative market developments and an attempt to quickly recover lost funds through actions not within the trading plan.

Another equally perilous aspect in terms of decision-making errors is the well-known Fear of Missing Out (FOMO). After observing the market for an extended period, a trader develops a symbiotic relationship with it, feeling attuned to its movements and direction. In an effort to maximize gains, a trader might enter positions with excessive amounts, violating proper risk management. It is crucial to understand that each market situation at a specific point in time is unique. Predicting future market movements based solely on past behavior is not foolproof. Entering with excessive sums entails excessive risk, always.

A common mistake made by beginners on various trading platforms is using a deposit they cannot afford to lose or trading with “someone else’s” money. The risks are evident – excessive psychological pressure during unsuccessful days or a string of losses can induce tilt. A fundamental rule for novices is to operate only with a financial budget on the market that they can afford to lose without emotional consequences. Only in such a scenario can one accurately assess the effectiveness of a strategy and their emotional strength during market downturns.

Searching for Solutions

Every trader will inevitably face these challenges and more. Trading is not just a battle with the market; the main battleground is one’s own emotions, which need to be mastered. The first thing to understand is that failures in the market happen. Negative “red” days happen too, and not just days but entire periods. One cannot draw global conclusions about their competence in the markets or the ability to profit from them based solely on this. The minimum period of emotionally stable work after which conclusions can be drawn about the effectiveness of a strategy is one month.

In the case of tilt symptoms, it is crucial to cease trading at that moment. Simply understanding that any subsequent decision, other than stopping, will be considered incorrect and will lead to unpredictable results. Afterward, preferably after some time has passed, conduct a detailed analysis of the situation that triggered this moment – whether it was caused by an independent factor or resulted from an error. Establish a subsequent instruction for avoiding this situation.

Keeping a daily trading journal is highly advisable. It should cover both positive and negative days. Create so-called daily reports in the journal. Reviewing it at certain points in your trading career allows you to look at your trading from a different perspective and the height of your experience, making adjustments. It is also crucial during periods of failure. Reading reports on successful days makes it psychologically easy to shift focus to the idea that any failures are temporary.

As an alternative to manual day trading, one of the main aspects of which is a trader’s psychology, algorithmic trading comes into play. Represented by our product, Burvix Traders, it is defined as an ideal choice for those seeking an alternative to manual day trading. Our Burvix.io platform, ensuring 24/7 efficiency and absolute adherence to trading algorithms, is created to simplify and make the management of cryptocurrency assets more efficient.

Conclusions

Psychological resilience is an indispensable component of a successful trader. The balance between emotions and analytical ability makes decisions thoughtful and effective. It is crucial to remember that trading is a discipline that needs constant improvement, learning from both experienced and unsuccessful moments. Building a psychological foundation allows traders to avoid tilt, control emotions, and increase the likelihood of success in cryptocurrency markets.

The content of this article is intended to provide a general guide to the subject matter, not to be considered as a legal consultation.