The crypto industry differs in its dynamic changes. But do not rely on your luck too much! Critical thinking and analysis work better. One of the crucial instruments for market tracking and prediction is a Technical analysis.
What is Technical Analysis? | The Glimpse of Future
Technical analysis (TA) — is a type of analysis that aims to predict future market behavior based on previous price action and volume data.
❗️Take into consideration:
It is important to accept that even TA might be unreliable. Technical analysis doesn’t deal with absolutes but with probabilities and can’t guarantee you a specific market behavior. For example, there are many times with extreme market conditions, such as black swan, that are driven by emotion and mass psychology. For this reason, Supply and Demand might be fully imbalanced to one side, and TA can’t predict it.
Avoid These Mistakes | Never Again in TA!
Despite the Technical Analysis’s popularity, not everyone can cope with strict and tricky graphs. We want to warn you about common mistakes traders make. Avoid them to decrease risks and painful frustrations.
1. Don’t track many indicators!
There are many indicators in TA. Therefore it is important to choose a few to focus on. One indicator won’t show you a complex picture of the market, but more than three is much. Simplify your crypto chart as much as possible for a clearer vision of the market future!
2. Don’t lose more than you win!
At the beginning of your crypto journey, you must understand one truth! Fails and wins go side by side. It means that it is impossible to avoid losses, but you can decrease them. Moreover, constantly losing is a red flag! If your investments are bigger than returns, it’s a sign to change strategy. So the first goal for crypto beginners — is cutting losses.
3. Don’t break trade-life balance!
Don’t be affected by the market noises. Technical analysis is the opposite of emotional reasoning. Therefore it is important to improve your critical thinking instead of impulsive reactions on each chart change. Successful trading is not only action but also patience. Often traders try to fight back immediately after significant failure. Unfortunately, such an approach usually leads to the following losses. It’s better to wait and start trading with a clear mind at the profitable moment!
4. Don’t be too confident!
As a trader, you should learn to recognize and adapt to market changes. You might be right today but wrong tomorrow. There are many good strategies, but they will work in specific conditions. It means it’s OK to change your mind according to the market changes and switch to another strategy.
5. Don’t be a blind copycat!
At the beginning of trading, it’s typical to base it on someone else’s analysis. But in the long term, blind following other, even reputable, traders might be a trap. It’s better to learn from their experience rather than copy them. May further actions will be driven by understanding.
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