Neosify - Buy, Stake & Earn Crypto
Neosify - Buy, Stake & Earn Crypto
Neosify - Buy, Stake & Earn Crypto

Crypto Trading : Are You as Good as You Think You Are ?

By sjbeachy64 | SteveBeachy | 5 Feb 2023


It’s a well known reality that the pain of losing is much greater than the joy of winning. The vast majority of people would experience more pain by losing a $ 100 than the pleasure experienced by winning a $ 100.

The irony in this scenario is that we as investors are predisposed to take a nostalgic view of past winning trades and tend to forget about past losing trades. We naturally tend to have stronger memories for positives outcomes versus negative outcomes. Any trader putting three winning trades together in succession is going to begin to feel pretty good about their trading strategy. This may be a good thing for our mental well being and ego but it will also lead to overconfidence bias.

Overconfidence bias is the tendency to hold a false assessment of our skills or trading strategies. It’s the egotistical belief that we are actually better than we are.

We all know that person that supposedly has a great sense of direction and refuses to use GPS or asks for directions and inevitably ends up getting lost.

How many boxers have stepped into the ring with Mike Tyson thinking that they were the greatest boxer until they experienced a “ lights out “ right uppercut that Tyson was famous for ?

So What ?

Realize that the majority of people ( probably including you ) think that they are above average compared to their peers whether it’s related to driving , work skills or investing. Be honest with yourself about your trading skills and ability.

Have a demo account or keep a trading journal to refer to. If you don’t have an accurate view of the data you will tend to have an inflated sense of your skills or abilities as a trader.

Losing profit is better than seeing losses. Learn how to use stop — loss , stop — limit and trailing stops to limit losses and remove emotion from your trading activity. Made a winning trade ? Celebrate a victory and don’t dwell on money you could have made by holding another day or week.

Avoid high frequency trading. The more trading a retail investor does the less likely they are to be successful. With bots , algos and professional traders the average investor is being front run and at a definite disadvantage.

Reflect on your mistakes. We all make mistakes every day. Successful people identify them and learn not to repeat them.

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