Human beings are emotional creatures with a lot of emotions like love, fear, hate, happiness, etc. But when it comes to bitcoin trading, these emotions can prove fatal. Experts say that if you are looking for success in bitcoin trading, you have to keep your emotions aside. Making use of intelligence instead of emotions can help you win the race of bitcoin trading. The key difference between making success and failure in trading is good control over emotions.
The most common mistake emotional traders make
Some of the common mistakes an emotional trader makes are over-trading, impulsive trading, trading from revenge, trading from FOMO, going behind the market trend, being late to adopt the changes, going behind premature profits, too close, or too far from the market, breaking rules, etc.
Most beginner traders anticipate that bitcoin trading can fetch them profits so they do not want to look for any other income source. They put in a lot of effort to study the market and to find the perfect time for their next trade. When traders look at bitcoin trading as an active, full-time job, they will fall for the trades that do not fit their strategies and plans. As they are not professionals, there are high chances of losses in this case. Most of the losses come from FOMO trading. They also withdraw their profits quickly fearing if the market value may turn against them all of a sudden which would hinder their opportunity to earn money. All these emotional dramas that happen in the mind of a beginner can lose their money.
Understand the difference between fear and greed
The two most common emotions that will attack a trader are greed and fear. These are the emotions that force the traders to make crucial decisions without using their intelligence. When traders use bigger sizes to trade, fear will be generated and there are more chances of making bad decisions. When traders find themselves to be in a large position, it is likely that they make mistakes.
Another reason where fear emerges is when a trader trades with little idea of the market. The trader may understand that he/she is in the wrong trading, but do not know the way out. Here fear makes decisions on behalf of the trader, that can lead to huge losses.
Some amount of greed is essential in bitcoin trading as it will encourage the trader to look for ways to succeed. The negative aspect of greed in trading is that the trader goes behind FOMO or chases the trading market that would finally lead them to bad positions. Greed also encourages the trader to hold onto a position that is beyond their target which will restrict them from exiting the trade at the perfect time.
Have a good planning
Make sure you have a plan before you trade and pay attention to sticking to it. Develop criteria to find the perfect time to enter the trade as well as to exit. Making use of only the best opportunities may not give you massive profits, but it will lead you to losses. Write down all the rules you have to follow and ensure that your actions are based on your rules.