Quote from: magneto on February 20, 2018, 10:23:28 PM

Quote from: Canis Majoris on February 20, 2018, 09:50:28 AM

An active day trader myself (sort of), I often think about common mistakes people make in trading. And it seems that I have traced back most if not all such mistakes to their root cause. In a nutshell, it all comes down to being unable to back out if something goes wrong. For example, you buy a few bitcoins at a December high and expect the price to continue rising, which is kind of obvious. Instead, the price starts crashing down and you find yourself in a situation that you didn't envisage or consider beforehand. So your best option would be to bring things back where they were as fast as possible even if it means some loss.

It is not so much about placing dumb stop-loss orders or other trading techniques aimed at minimizing losses as about your mental disposition or general attitude to immediately get out of what can be loosely called a decision limbo when you basically don't know what to do. In other words, search for the exit where the entrance is and do that fast.

The most common mistake would be panic selling and weak hands, honestly.

If you invest in bitcoin then you are probably going to have to prepare for the long term. Trading bitcoin short term will mess up your entire trading psychology because you'll keep on trying to go for just that little more profits.

If you are trading bitcoin short term, make sure that you have a stop loss level in mind, and a target where you sell your coins. Otherwise, you'll always fall into the hole of selling low and buying high.

You make a fair point. Positions are there to be liquidated, you don't always have to close a position with a profit. You win some, you lose some. But you need to be mentally prepared for anything before you invest.

It may of course be the most common mistake but I'm trying to trace this and other mistakes to their root cause in this topic. I'm not defending short-term trading vs long-term holding because these approaches to trading (investing) have their cons and pros. And frankly, I don't feel like my trading psychology is messed up or even fucked up. As per OP, it is not so much about closing a losing position, it is more about your whole mental outlook you have in trading as well as in other activities. For example, you buy at the top but you expect the price to plunge and decide beforehand that you won't get out even if Bitcoin goes down to zero. Then you won't be liquidating and that's okay because you know what you are doing.