Trading – Avoiding The Temptations & Common Pitfalls

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10 Jul 2024

The Beauty Of A Volatile Market
The majority of Crypto enthusiasts love seeing the market appreciate. Very few enjoy the volatility that is part and parcel of this particular financial market. However, it remains one of the most viable opportunities within the space, provided you have access to adequate capital and the skillset to pull it off. Even in a bull market, heavy liquidations are a frequent occurrence.
Speculation is still the predominant driving force, and even though there are those operating outside of speculation, it remains the primary source of income for those involved in the Crypto space. I have often written about the various pitfalls that tend to outsmart and defeat the average trader. However, one of the most important disciplines to master is to stick with a particular strategy.
I have also discussed and unpacked several trading strategies over the years. Many of these are my own creations and lend themselves to particular market conditions, ideas, and objectives. A strategy remains a strategy only if it is adhered to. Mixing and matching strategies to try and suit the market is equally unprofitable as not having a strategy at all, perhaps, even worse. An effective strategy needs to go beyond “buy low sell high”.
What Makes A Trading Strategy?
This is the fundamental dynamic undergirding an effective long strategy and not the actual strategy. This is where many fall short. They see the foundational principle as the strategy, whereas in reality, a strategy harnesses this principle through creative and technical application. I guess one could compare this dynamic to that of a mechanic. We are all aware of the fact that a vehicle operates on fuel.
A mechanic, on the other hand, understands the deeper and more intricate workings of a vehicle. It’s the mechanic who can repair your vehicle. In the same light, understanding the idea of buying low and selling high won’t help you much. However, an intricate understanding of market dynamics, charts, and macroeconomics will! This is the number one reason for the horrific statistics of retail traders.
An effective strategy will incorporate scenarios that oppose its “ideal” outworking… that’s what makes it a strategy. Strategies incorporate multiple scenarios and are usually effective due to this preplanned structuring. One of the simplest strategies is to buy strong corrections. Traders can deploy 60% to 70% of their allocated capital, reserving 30% to 40% in case the market edges lower.
A simple yet effective strategy. However, it needs to be applied during the appropriate market conditions. Many will utilize such a strategy but then deviate from the plan. In other words, they will buy during random and insignificant dips. What often tends to follow is a “real” dip, which now puts them out of the game. Depending on the asset in question, time will eventually lift such a trader back into profitable territory.
This is an unnecessary waste of time and profitability due to deviating from the strategic path. Trading strategies require strict and rigid execution. Choose to soften in this area and you will most likely pay the price. However, strong discipline, effective risk management, and skillful capital deployment will position the odds in your favor, especially if you can keep the emotional aspect at bay.

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Final Thoughts
An effective trader often steps back from a trade and begins to observe it objectively. Examining its potential weaknesses and overall market sentiment. The majority of traders are too emotional… too eager to bank profits, and as a result, often shipwreck an excellent trading opportunity due to impatience and other bad habits that tend to avoid the abovementioned principles by nature.
The market is beginning to look a lot more bullish, regarding the next couple of months. Traders who bought Bitcoin’s significant drop to $54K would now be in a relatively strong position regarding a decent swing trade. This includes altcoin traders. I addressed Trump memecoins a few days ago. STRUMP is up 22% today and is looking like a great trade. Anyway, all the best! See you next time!

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Disclaimer
First of all, I am not a financial advisor. All information provided on this website is strictly my own opinion and not financial advice. I do make use of affiliate links. Purchasing or interacting with any third-party company could result in me receiving a commission. In some instances, utilizing an affiliate link can also result in a bonus or discount.
This article was first published on Sapphire Crypto.