Making money while lying down is one of the slogans that traders and exchange service providers often echo. It is undeniable that the successful profile of traders is based on the profit margin of their trading activities, but we must not close our eyes also about people who lost their property due to trading.
Crypto is one of the most popular investment asset choices today. Technological sophistication, security, global ownership and easy, straightforward regulations make crypto a promising investment.
Entering the world of cryptocurrency trading is like entering a world of fantasy. Beautiful dreams are in our minds. Fast margin, success, can have income without having to go anywhere, etc. But unfortunately these beautiful images are not an easy thing to achieve. When we enter the real world of trading and start buying and selling, we will begin to understand that there are risk factors that we must manage as well as possible. Doing over trading and pursuing profits blindly will be a boomerang that makes our trading account experience a margin call.
Managing emotions and risk management when trading are the most important things a novice trader like me should have. Greed can lure a trader to improve trading position without strong analysis and also ignore risk management, even though there are always factors that we cannot take into account even in analysis. For example, when the price moves against a position, losses will occur. This is where risk management is needed to avoid large losses.
How Psychology Affects Our Trading Activities
Our mistakes as novice traders are often chasing big profits continuously even though maintaining capital is the main thing. I personally and maybe others are often faced with having to cut losses when the price drops 5% from the initial purchase, but procrastinating does not do it in the hope that prices will get better again. But what happens, the psychological effect makes it uneasy and the effect of fear is excessive, checking back and forth on the exchange, so that when the price gets further above 15%, then we cut losses. Potential losses are not only in the loss of profits from previous trading activities but part of the capital is also lost. And as a result, I am afraid to start trading activities again. Overtrading in the hope of maximizing profits, but unfortunately everything turned around and eventually our account was hit by a margin call and our psychology was disturbed.
The fear of re-entry trading activity will arise after we experience successive losses. Indeed, fear does not reduce our trading funds, but it will hinder our chances of getting profit back. Excessive fear will also make it difficult for us to make decisions when trading, such as when we have to open an initial entry position and close a position as quickly as possible even though the price still has the potential to move in an uptrend.
Self-control when trading and also patience are important psychological sessions so that our trading activities remain healthy and can also achieve profit goals every month. Fostering self-discipline in trading is an implementation of risk management, this will help us to always follow the trading plan and risk management that has been made.
Trading is a long term investment, it is a mistake to think that trading will make us rich. It's not just that we go into an exchange, buy assets then sell them and we will get profits continuously. We forget that buying and selling is always a potential loss. One year of investing will not change our life to be successful. Building a portfolio is important, we will learn a lot about risks and rewards in every transaction we make. Greetings profit traders.
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