How to achieve good results in trading
For starters, you should read more.
We all have something to learn, and the sooner we do it, the better the results will be. You need to learn something new every day until the end of life.
My favorite book about trading today is the extremely simple “Top 10 Trading Setups: How to Make Money with Them” (Top 10 trading setups: how to find them, how to trade, how to find them earn them). As always with trading books, I prefer the paper version, since it is more convenient to study graph images in it.
This book is concise and accurate. There are no stories in it for the glory of the author or for references to his special top-secret system, access to which you can purchase for an extra thousand dollars. It provides simple, practical advice for many situations on the market. Everyone can make money when the price goes up, but how do you cope with trading in a sideways or downtrend? All this is here.
Although the book is written about traditional markets, most of the rules are easily applicable to cryptocurrencies. The reasons why new traders lose money, which the author cited on the first pages of the book, already fully pay back its cost.
Newbies lose money because they:
* set too large orders;
* trade without a clear system, or, in other words, they approach trading as a game of chance;
* overtrade (conclude too many transactions);
* sell cheap trash assets;
* use excessive leverage.
Trading cryptocurrencies with leverage is like juggling cobras. Never do this unless you are a professional trader. The situation on crypto markets changes too quickly, and you can easily lose all your money.
This brings us to one significant difference between ordinary and cryptographic ones.
Cryptomarkets move with the speed and intensity of video games.
The author of the book says that the development of the situation on the market can take weeks or months, but in the parallel crypto trading universe the same events can occur in a few days. We have already seen how the market collapsed by 40%, after which it was restored in just a couple of days and reached new price highs.
This is one of the reasons why the popular press does not understand cryptocurrency. They regularly report a Bitcoin crash. It is even fun. What is at least this article in 99 Bitcoins. Every day someone writes a regular Bitcoin obituary.
The problem is that the popular press is used to other speeds. It’s as if the good football players in the college went on the field against the professionals and were completely defeated. This is just a completely different level. This is e-sports.
Cryptocurrencies are the stock market of the computer generation.
It is run by young people who have not seen life without the Internet. For them, it is like a tree outside the window – it seemed to always be there. The New York Stock Exchange was created in the days of ink and wood plates. When Forbes or CNN, or Fox, published reports of a bearish period in traditional securities markets, this information was usually relevant for a reasonable period of time. The decline in this market continued for several months. In the world of cryptocurrency, such information may become irrelevant the very next day.
This is insane speed.
In order to stay afloat, you need landmarks. This brings us to the next book:
“Encyclopedia of Chart Patterns” (Encyclopedia of Graphic Patterns).
This is a gigantic work. The book is heavy, dense and filled with information to the eyeballs. After reading it, you will most likely begin to see patterns everywhere, even where there are none. Do not worry. Examine them nonetheless. On Twitter, you will constantly see people drawing random lines on graphs and call it “technical analysis,” but in this book you will find a much more disciplined and serious approach.
Technical analysis (i.e., analysis of graphic patterns) in crypto-trading works damn well. Perhaps the reason for this lies in the fact that most people who trade in cryptocurrencies are geeks, and TA is convenient for people with technical skills. Because of this, TA acquires the power of self-fulfilling prophecy. It also works due to the widespread use of automated trading (trading bots). On the exchanges, you will regularly trade against bots, and they have no other options than to make decisions based on moving averages, work out breakdowns and other indispensable attributes of TA.
Another reason is that TA has a strong psychological background. People want to make a profit and minimize losses. After a period of growth, the price should fall. It`s natural.
Markets are nothing but a projection of our collective unconscious — our hopes, dreams, and fears.
But it should always be remembered that the TA is not a “magic eight.”
It does not always work. Often this is more like fortune telling. It is difficult to make the right decisions, but it is easy to make mistakes and react to all sorts of false signals. And yet, it is a useful tool. The knowledge of TA saved me many times and helped to avoid many unsuccessful decisions.
The last book on my list today is one of my favorites: “One Up on Wall Street” by legendary investor Peter Lynch, published in Russian as “Peter Lynch Method.” Lynch has worked successfully in the markets for 15 years. According to statistics, most traders take off after ten years of work. Many tips in the book – such as buying a home before investing in stocks – are outdated. For today’s young people, buying a home often implies an exorbitant debt burden. But his investment advice is timeless and applicable to all markets.
How did he make his fortune? Like Warren Buffet, he focused on “value investing.” “What is this?” You ask. Great question.
He invested in what he knew and understood well. When his wife or children came home with branded bags from a new store, he studied the company and bought it. He decided that once people choose their stores, this is a good company.
Investing in something that you are familiar with is a great setting. Warren Buffett regularly refuses to invest in well-known and beloved technology companies due to the fact that he does not understand new technologies. And since he does not understand this, he cannot make the right decisions before the others – so he just stands aside. If you do not understand the purpose of creating a particular coin, do not invest in it. You do not need to buy it just because “that-the-ze-mun!” Or some ass in chateau told you that this is a BOMB.
With respect to cryptocurrency, value investing means not to buy a bunch of “smartcoins.” ICOs are constantly being held, and there are many new coins on the market that promise huge profits. Some of them will “shoot out” once, but most of these Coin will go into oblivion in the next few years.
Personally, I am more inclined to invest in “infrastructural” countries or in those who have a chance to become multifunctional and serve to solve many problems. I have experience in creating computer systems since I worked as a system administrator for more than ten years. I’m looking for people who are building the “railways” of tomorrow.
Ethereum, Bitcoin, QTUM and Tezos have many usage scenarios. Pot Coin doesn’t.
Over the years, Peter Lynch, like all good traders, earned 20% of his successful transactions and suffered losses or made insignificant profits from the remaining 80%.
80/20 – really working formula.
You will never achieve a better result, even if you hone your skills over the years. In the end, you will still return to the average. This is statistics, baby. And math is God. She rules the ball here and in other areas.
And, of course, even after reading all these books, try not to forget:
There is no secret ingredient.
Although, in fact, there is.
The secret ingredient is you.
It sounds vulgar, but it’s true.
To become better, you need to play. Nothing can rеplace personal experience. Go players have an old saying:
Attack and defense
“To learn to play Go, first quickly lose 100 games.”
This applies to everything in our lives.
You need to enter the arena. You need to take part in the game – without this you will not learn anything.
It’s one thing to read about something in a book, and quite another to do it yourself.
When you are under pressure from the market, when your emotions are working against you, when you see thousands of dollars evaporate in a matter of minutes, and you pounce on a person close to you with absurd accusations that you lost money because you were not called in time dinner and did not continue to sit, staring at the price chart, like a hawk – then you will understand.
It is not joke.
This is not fiction. It happened to me last week.
But every day I learn.
And I, in fact, was in the black. I got angry because of the lost opportunity to earn more. Then I realized that I need to take a break for the day and relax. I got up late, took a walk, ate a delicious breakfast and apologized to my beautiful girl for my breakdown.
You need to rest. You don’t have to catch every damn price move. Leave the house. Look at the trees, listen to the birds, play with children or pets. In general, do what matters in life. Markets will be waiting for you when you return.
I will repeat it again: you will make mistakes. And you will learn from them. This is the only way.
Terry Roosevelt entered the arena, and so should you.
But if you make this famous quote from the great Teddy Roosevelt your motto in trading and in life (and with some luck), then, probably, in the end, everything will turn out in your favor:
“What are we up to critics? What do we care about those who indicate where the strong stumbled or made a mistake? We respect those who are in the arena, whose face is covered with dust, sweat and blood, who courageously strives for victory, who makes mistakes and stumbles again and again, because there are no efforts without mistakes and failures. Someone who knows great enthusiasm and dedication, who spends their energy on something worthwhile. At best, he will know the triumph of achieving a high goal, at worst he will fail, but thanks to his courage, even his fall will be great, and next to him there will be no place for cold souls and fearful hearts who know neither the joy of victory nor the bitterness of defeat”.
Source: chby.io
