This article must be read word for word by everyone in the cryptocurrency circle.
You must make a trading plan before making a trade!
I have had many instances where I clearly analyzed the situation and had accurate expectations, but when it came to execution, it all fell apart. You will find that many analysts do a really good job most of the time, but when it comes to executing trades, they falter..
This is because when you are analyzing and making plans, you do not have the psychological biases that come from having a position. At that moment, a person is in a relatively objective state, and the conclusions drawn naturally align with the facts;
However, once you have a position, the human aspect will inevitably influence your judgment. Note that I say inevitably, meaning there will always be biases towards the market; this phenomenon is something no one can completely eliminate;
Once biases form in your subconscious, your actions will inevitably deviate from the original plan, and then you just need to wait for some bad luck, and losses will begin;
Making a trading plan and sticking to it may seem simple, but it is indeed very difficult..
For those who are usually very confident in their daily lives, opening a position represents the formation of bias;
And for those who are generally unwilling to admit mistakes in life, being trapped is the beginning of bias formation;
Essentially, we are all reluctant to admit mistakes because in trading, admitting a mistake means self-denial. The higher the self-esteem, the harder it is to do so. Even if the trading plan clearly states when to take profits or cut losses, these actions all represent a denial of oneself, making it very difficult to execute;
So my current solution is to either rely entirely on quantitative methods without manual intervention, or to create a trading plan and let others execute it.
The most sensible saying in the trading circle is "Plan your trade, trade your plan"!
But in reality, those seemingly simple truths are precisely the hardest to achieve...