reasons for bad trading
reasons for bad trading
many times while trading we let our goals down and get greedy or fearsome. the problem are the reason behind, mostly psychological reasons.
two scenarios
a. price went +20% up, we dont sell.
reasons
we dont need the money now
we anticipate more gains (greed, market sentiment)
we see others with more gains (greed, jealousy)
we dream of million (greed, new life vision)
b. price went -25% down, we sell.
reasons
we need the money now
we are fearing it will crash more (fear, market sentiment)
we doubt our initial decision to buy (judgement by single point of time)
we see others leaving the investment (fear, mass psychology, group)
we see other investment that are not -25% (fear)
thats why many books advice to trade in smaller steps. dont go with a gut feeling, set a goal and stick to it.
the biggest impacts to our psychology? maybe the media, the news, the rumors.
we read something and anticipate that it will move ‘others’ and so we act on our own.
we do it, but we have no idea what it should mean. what should a musk tweet mean to a price? 3%? 10%? what should india banning crypto mean?
Yeah, those are the pretty close feelings or emotions for any trader. I think whether it small investor or bigger whale they will shake their hands when market is going up and down with that much fold. Small investors troublesome because they have less money to trade and are always afraid to loos even that much. On the other hand whales would shake because they have huge amount of money invested and small up and down in the market makes mega change in their investments.
So yeah like you said, planning and execution of goals is very important here. It would be always advisable to learn technical analysis chapters, self control and how much to invest.