Markets may indeed be binary in nature but trading is a lot more complex than this simple binary nature that generates profits and incurs losses. Allocation points, lot sizes, and leverage play a significant role in defining a good strategy. Simply buying an asset and waiting for the price to go up is not trading. A good trading strategy is backed by good psychology, hence the term “trading psychology”. It takes time and a lot of hard knocks before anyone can establish a solid grounding and begin enjoying consistent returns. Many who are involved in the trading of Crypto assets have never traded any financial asset prior to Crypto. It is definitely worth the time to gain a grounding before allocating significant capital in this market.
Things Go Well Until They Don’t
Oftentimes a prolonged period of positivity in the market can secure gains on a daily basis. This is great but there is also a downside! Periods like this often preceed a heavy downturn. Let’s say for a moment that you were trading BTC in the 50K zone. A drop into the 40K zone would put you out of the game. Either scenario puts you out of the game! It’s either liquidation or you have to wait for the price to return to its previous range. It is scenarios like this that require counteractions that will defend and protect your position.
Consider The Cost
Sit down and consider every possible scenario. Once you have done that, consider your response and strategy to deal with each situation. Now you are on the right track to establishing a good trading strategy. Obviously, a lot of learning and honing will come as a result of being active and exposed to the market. There is no better teacher than doing! This is unfortunately the part that many are not prepared to endure. After a few failures, they throw in the towel. Trading is however something that can be learned as a discipline. This implies that taking the time to acquire certain knowledge can actually produce an average trader out of almost anyone.
The Emotional aspect of human behavior is oftentimes the undoing of many a trader. Greed, fear, and euphoria often entice many a trader to abandon their “rule” system. This is a key aspect of developing a great trading strategy and psychology. You have to have rules and you have to abide by them. Well-executed disciplines are what separate successful traders from “lucky” or “unlucky” traders.
Great Wealth Builder
As mentioned before, relying on trading as a full-time income source can be rather challenging. However, it is great to utilize as a means to create meaningful wealth over time. Sure, if you are sitting on bags of cash trading can probably be considered a good income generator. A lot of people do not understand the difference between wealth and income. Everything is merely considered “money”. There is a big difference. For starters, an income needs to be generated every 30 days. Building wealth over time is greatly favorable for trading as time is not really a factor. Having the market turn against you in the final week of any given month will ultimately destroy your income for that month. However, given time those losses can be returned as the market edges higher. This is the main aspect that discourages me from relying on trading as an income source.
How Do I View Trading?
I view trading as a way to increase my Crypto holdings, which is in essence wealth creation. I also view trading as a way to complement my income. In other words, although I do not solely rely on trading, I do make use of it to bolster my income. Having clear objectives is very important when it comes to trading. Having realistic expectations is another important factor. Money can be generated very easily, it can be lost even more easily.
How to become a successful trader in my opinion is to follow these basic principles. Firstly, spend time learning the market and technical analysis by practicing on a demo account. One then needs to develop a trading strategy and “style”. This is largely accomplished by defining your own unique “trading rules” and disciplines. This can only take place over time and ultimately excludes those who think they can just begin trading their way to wealth without putting in the time. On the other hand, there is always the option of trading bots but once again finding an effective bot will also require time and research to some degree.
Thanks for stopping by! Let’s look to honing our trading skills in 2022! Join StormGain to mine free Crypto that you can then in turn trade with. Profits from trading can then be withdrawn! There is also a $3 bonus by using this link.
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This article was first published on Sapphire Crypto.
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