This is Why Beginner Traders Lose Their Capital – 1. No Strategy
Updated
Dear friends, before my last education post, I have to say it has been a long time since I was very active. I have been busy and a bit unmotivated to post on TradingView. The place changed much, and very few times good strong analysts come up on top. People I look up to, analysts and traders with strong years of experience and good trading strategies are buried down with few views. It's just a pity because there is little respect for logic and good strategies left over here.
Still, I get messages often that sound like this: "I bought X coins and made 500% profit but then I did not take profit, I changed X for Y coins and Z coins and then changed back to X and then again to Y and then it fell and now I am 30% (20%, 10%?") from where I started. Help me get it back!" - Same story again and again.
I wish new traders would play this scenario in their head before starting trading with 0 knowledge. Also, I think it would be smarter to not start giving trading advice after they only traded for a short period. It creates a false impression of expertise, which will hurt them badly when the markets start falling. And worse, other people follow their advice and the effect multiplies. I have traded for 11 years, and in some areas I am a beginner myself. Plus, I read and follow traders with 30+ years of experience I look up to, and I feel like an ant compared to them. That is the reality.
You know, if trading would be easy, everyone would be riding Lambos, and to me, it seems that too many people are riding the bus after the past months.
These stories like the one from the message are sad, and every one living it feels they are in the greatest pain. It gave me the idea for this series of posts. Why do people keep losing? Especially beginners, as they make up the mass of the hype on the posts in TradingView.
I owe a lot to this community, it’s the place where we made so many good trades together and shared our ideas for a long time, and I think it will be good for the new people who joined the platform to get a chance to learn good practices.
As I said, I will post a series of tips and solutions to beginner mistakes. Here is tip #1:
If you are losing a lot you might not know how trading strategies work and you are not using a strategy
This problem, I see a lot! I said it before but it sounds boring – why to use a strategy when you it looks so easy to win a ton of money in a short time?
People! Strategies are cool!
Strategies help you eliminate emotions from trading and they provide you with the confidence that if you follow your plan you will profit in the long run. When you know you profit in the long run you will stop feeling terrible if you make one mistake or if a few trades are lost. It is part of pro trading and all strategies take into account losses, not only profits.
People are afraid of the red color and the “-“ sign.
Many beginners are afraid to see their trade on red, and I just want to assure you – it’s ok. If you are working with a tested method, created and validated in years by a professional trader, you should not have stress. You will know when to take profit and you will know to get out when the stop is reached and wait for a better trading opportunity. You will understand why staying in bad trade is bad and why HODL in hope it will go back up is a very naive strategy. You should not hope for anything in trading, you should just have strategy.
Still, I get messages often that sound like this: "I bought X coins and made 500% profit but then I did not take profit, I changed X for Y coins and Z coins and then changed back to X and then again to Y and then it fell and now I am 30% (20%, 10%?") from where I started. Help me get it back!" - Same story again and again.
I wish new traders would play this scenario in their head before starting trading with 0 knowledge. Also, I think it would be smarter to not start giving trading advice after they only traded for a short period. It creates a false impression of expertise, which will hurt them badly when the markets start falling. And worse, other people follow their advice and the effect multiplies. I have traded for 11 years, and in some areas I am a beginner myself. Plus, I read and follow traders with 30+ years of experience I look up to, and I feel like an ant compared to them. That is the reality.
You know, if trading would be easy, everyone would be riding Lambos, and to me, it seems that too many people are riding the bus after the past months.
These stories like the one from the message are sad, and every one living it feels they are in the greatest pain. It gave me the idea for this series of posts. Why do people keep losing? Especially beginners, as they make up the mass of the hype on the posts in TradingView.
I owe a lot to this community, it’s the place where we made so many good trades together and shared our ideas for a long time, and I think it will be good for the new people who joined the platform to get a chance to learn good practices.
As I said, I will post a series of tips and solutions to beginner mistakes. Here is tip #1:
If you are losing a lot you might not know how trading strategies work and you are not using a strategy
This problem, I see a lot! I said it before but it sounds boring – why to use a strategy when you it looks so easy to win a ton of money in a short time?
People! Strategies are cool!
Strategies help you eliminate emotions from trading and they provide you with the confidence that if you follow your plan you will profit in the long run. When you know you profit in the long run you will stop feeling terrible if you make one mistake or if a few trades are lost. It is part of pro trading and all strategies take into account losses, not only profits.
People are afraid of the red color and the “-“ sign.
Many beginners are afraid to see their trade on red, and I just want to assure you – it’s ok. If you are working with a tested method, created and validated in years by a professional trader, you should not have stress. You will know when to take profit and you will know to get out when the stop is reached and wait for a better trading opportunity. You will understand why staying in bad trade is bad and why HODL in hope it will go back up is a very naive strategy. You should not hope for anything in trading, you should just have strategy.
Note
I will come back to HODL in another post, but just a note on this strategy and how it is used to take advantage of your inexperience, especially on shitcoins: I observed some pump groups – I dislike a lot pumpers, you know that. Pump and dump is just stealing from people who trust in you. They create the hype on a shit coin (that they already bought). After that they push you and you naively buy in a small volume coins and pump it to huge gains. At this point the pumpers sell and you see it dropping. By the time they say “sell”, you are already under value so they tell you: “if you did not sell on time just HODL”. Oh really? Just hodl a coin of a not so strong project and hope to get your capital back? What else to do when you lost so much? You can just hope there will be another pump and it will fill your sell over somewhere between now and a few years or never.
Back to strategies – they are a lot of work. So where do you get them from, if you are new?
If you have time and you are motivated enough – you make them yourself slowly, and test them. If you have the opportunity, take them from professionals, from books or courses and learn to apply them correctly. When you become experimented enough, you will be able to modify them to fit your style better.
Note
Key takeaways: Using strategies you eliminate the FUD and FOMO from your trades, and you are able to trade with confidence by following the rules of your strategy, because you will understand that in the long run, it just works.When using a strategy, you sometimes can have losing trades, or trades which are temporarily on red. Both cases are ok. Just be consistent with your strategy.
Another great benefit of using and trusting a strategy is that you don’t need to look with obsession on the charts every minute. You have your entry and exit levels defined, and you just follow them accordingly. That gives you your life back, or more time to use as you please.
That’s it for today!I have at quite a number of tips in mind that I would like to share with you. But without your likes and comments I have no way to know if you are interested and I should spend my time differently. I like to teach, so I hope you are interested to learn more!
Note
Dear friends! I want to thank every one for your kind words in comments and interest to this post! It's important for me to understand that knowledge and experience still have value in TradingView community. I hope that my work will help you to find the right direction in trading in the financial markets. Thank you very much for all your words and great feedback! YOU ARE THE BESTt!!!P.S. I read all your comments and I will try to reply on your questions within several days. The new post will be ready within this week.
Note
Dear friends, I read all your comments here and in my second post you can find the reply on the most popular questions. Please, read it here 
Related publications
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.