1. Avoid revenge trading
When a trade closes, whether in profit or loss, it is essential to steadfastly adhere to the rules. After executing a stop loss, try not to look at it again within 24 hours. This can effectively avoid revenge trading; opening a position with a vengeful mindset can likely exacerbate losses. Some believe that one should get up where one fell, but it is more important to calmly observe before new entry conditions are triggered. Since traders look at charts for several hours daily, it is difficult to resist the temptation to re-enter the market to recover after a stop loss. When using leverage for swing trading, it is especially necessary to avoid a vengeful mentality.
2. Avoid trading on weekends as much as possible
Every weekend, the volatility of cryptocurrency prices increases, and trading volume decreases. This makes it difficult to predict short-term price movements. The reason is simple: weekend buy and sell orders are usually smaller, market liquidity is lower, and whales can more easily manipulate short-term prices, making retail traders' disadvantages more pronounced. Additionally, as the cryptocurrency market operates 24/7, trading intensity is much higher than in the stock market, and weekends are a good time to decompress and rest; after all, life is greater than trading.
3. Maintain trading at specific times
As mentioned earlier, the cryptocurrency market operates 24/7, never stopping. Even full-time traders cannot watch the market continuously. To maintain a clear mind, one can set fixed trading times. Once a position is opened during trading hours, set profit and stop loss levels, and then one can do other things. This eliminates the impulse to constantly check the phone or study candlesticks, allowing trading to not affect normal life.
4. Do not develop feelings for a specific asset
If you fall in love with the asset you are trading, it can easily lead to poor decision-making. Excellent traders make money through efficiency and rules, giving themselves an edge, as most people's trading behavior is governed by emotions. "Be an emotionless trading machine" can ensure decisiveness and principle in trading. A significant reason many traders incur heavy losses is their emotional attachment to certain altcoins, teams, or projects. This may be acceptable for medium to long-term investors but poses a potential disaster for short-term traders.
5. Keep trading rules simple
Traders often combine various indicators, news, and candlestick patterns in an attempt to find suitable convergence points for trading. This is fine in itself, but one must be cautious to avoid over-analyzing, which complicates matters. In fact, when a candlestick pattern that fits one's own system appears on the chart, trading can commence. At the same time, it is crucial to set stop-loss levels and control positions.
6. Trade only with the correct mindset
When you feel angry, tired, or stressed about something, do not trade; your mindset will affect your judgment. The key to maintaining a good mindset is having other daily activities outside of trading. For example, fitness, reading, and spending time with family and friends all help cultivate the right trading philosophy.
7. Keep a trading journal
Keeping a trading journal may be tedious, but it is very meaningful because it can help you avoid making the same mistakes. There are specific reasons behind both profitable and losing trades; recording trading details is a way to learn and can help you grow quickly.
8. Do not attempt to catch flying knives
"Catching flying knives" refers to traders attempting to buy assets at the bottom during a sharp decline. The motivation to catch the bottom is usually to lower the cost price and compensate for losses caused by significant drops. Attempting to precisely catch the bottom during a crash is unwise. Waiting for stabilization and a rebound, with resistance levels turning into support levels before entering, is a more prudent approach.
9. Do not ignore extreme market conditions
While referencing technical analysis indicators, one must not overlook black swan events or other extreme market conditions. Ultimately, the market is driven by supply and demand, and sometimes the market is extremely unbalanced.
Trading is a long-term practice; to make a living from trading, one must follow the rules and build their own trading system!
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