Thread by @leviathancrypto

Mistakes beginner traders make 🧵

This is a compilation of some of my older tweets that include useful advices for beginner traders.

Please read it and stay tuned for the next part that’s coming soon.

#crypto #trading #cryptotrading

1. Trading as a source of income

Your real life expenses shouldn’t rely on your trading profits - there is too much pressure. Have a stable source of income and trade with extra money you save up. Trading losses should hurt a little but never affect your day-to-day life.

2. Risk management

Only risk 1-5% of your capital per one trade/idea. That way you can be wrong many times and not wipe out your trading acc. This doesn’t mean your position size needs to be this small. It’s just about how much you are risking if the trade goes wrong.

3. Stop losses

Always have a SL in a place where the reason you entered is no longer valid. It will prevent you from blowing up your acc if the trade goes south. If you’re scared of SL hunts just set alerts and close the position manually (risky).

4. Watchlist

Instead of frantically going over 100s of coins searching for the next 2x set up, focus on just 1-10 assets and MASTER them. Use the charts to go back in time and see how they act and back-test your strategy over and over again.

5. Don’t get married to a coin

You’re not here to be a dumb shitcoin moonboy. You’re here to make money. Know when to exit and don’t feel bad about selling. You can still buy back later if you want. Also, good fundamentals don’t necessarily mean good returns!

6. Adding to a losing position

Set your invalidation level and exit the trade as soon as it’s reached. Don’t keep on adding to your position. Even if you were right about the trade -“The market can stay irrational longer than you can stay solvent”

7. Revenge trading

After several losses in a row, you will feel tempted to try to win back everything you lost, possibly in one trade with a big position size.

Don’t do this! Go away from charts and spend the day doing something else. Come back after you clear your head.

8. Thinking it’s easy

Trading crypto is a game where you play against whales, algos, AI, irrational retail traders and people 100x smarter than you. Do you have what it takes play against that? Study, put in the effort and find your edge or big losses are inevitable.

9. FOMO

You might get lucky a few times when longing pumps or shorting dumps and longing unconfirmed bottoms or shorting unconfirmed tops. But at the end you will get rekt. It’s better to miss out on a few % gains and wait for a good entry.

10. Lack of patience

This is my weak point too. Sometimes markets are slow or act a bit differently than you expected so you might get scared/impatient and exit too early or enter too soon. Stay true to the reason of your entry as long as it’s not invalidated.

11. Going all in

Avoid putting all the eggs in one basket. It’s great if you’re right but it hurts much more if you’re wrong.
If your capital is too small to get any solid gains, just calculate your position size and use appropriate leverage. I made a lesson about this.

12. Over studying

Beginners often study countless different strategies and spend months looking for the holy grail of trading knowledge. It doesn’t exist. Learn a few concepts, observe the charts, backtest your strategies and start trading asap. Experience is the best teacher.

13. Attachment to your trading capital

Don’t look at the trading capital as money in your wallet/bank account. Think of it as a tool you need to make money. Otherwise you won’t be able to handle the PNL swings or losses.

14. When to trade

If your mind isn’t fully focused, don’t trade! Take a break and come back when you’re better.
Trading when tired, drunk, sad, desperate, depressed, etc will make you take stupid decisions.

15. Proper education & strategy

I’m sorry to break it to you but learning some generic candlestick pattern cheat sheets or indicators won’t make you a profitable trader. The market is too complex for that to be enough.

16. Trading plan

If you don’t have a trading plan, you’re gambling. Pick your strategies, back-test them and stick to them. Plan your trades beforehand (what to enter, why to enter, when to enter, where is the invalidation, where to take profit…)

17. Relying on others

Don’t make your entries based on influencer’s calls. And don’t blame them if you get rekt doing it. Only use that info as an idea and study the setup on your own. It’s completely your fault if you blindly follow other people and lose your money.

18. Being naive

If it looks too good to be true, it probably is. Don’t fall for magic indicators, insane APYs, paid groups, pump and dumps, giveaways or any other things that appear to offer an easy way to earn a lot of money.