THESE TECHNICAL ANALYSIS ERRORS ARE COSTING YOU MONEY!
I've made these T.A mistakes myself; so I know they exist! I really wish someone told me earlier.
The scope of technical analysis is very wide, and certainly cannot be covered in one article. Just technical analysis errors alone might have you creating a comprehensive 20-page report. However, the point of this article is to point out some errors traders who already make use of some technical analysis indicators make.
Before I begin, I’d love to point out that there’s no “single perfect way” to do T.A. Quite often, you’d come across different analysts showing off their set-ups on Twitter and other platforms. This can bring a lot of confusion to newbies. However, you’d only become better with the right information at your disposal, and most importantly, a lot of practice, patience, and persistence.
Technical analysis is hard! Learning it as a beginner requires a lot of concentration. It’s even more daunting considering that its implementation is not a pinpoint guarantee of a profitable trade; this is because there are a lot of factors controlling the volatile cryptocurrency market.
Now, let’s delve into some of these common errors:
Ignoring bigger time-frames
A lot of traders want to get into trades quickly, so they tend to use just smaller timeframes like 1hr and below. A few wins might come, but that won’t give you much confidence in your set-up. You’d be better off starting with the daily or even weekly timeframes just to get an idea of price history and current trend of the asset you plan to trade, and then zoom out eventually.
With higher timeframes, you’d easily spot long-term trendlines, which helps you plan your trade as you zoom out. Using solely lower timeframes will only leave you with a subway vision of the market.
Using support and resistance as sure entry/exits
If you’ve been trading long enough, you’d have noticed frequent long wicks that go beyond seemingly established support/resistance points. Whales and market makers often push the price beyond these points just to trigger your stop-loss and move the price right back up. I’m telling you how this is because I’ve seen it play out over and over in the market.
Be observant when prices begin to play around your lines; it’s not fun falling victim to these market makers. Your support and resistance lines should not be taken as guaranteed entry/exit points.
Forcing Trades
Having the discipline to stay away from trades is a winning mentality on its own. You don’t have to trade every moment you spend time on the screen. On some days, you’ll spend a lot of screen time only to discover that nothing tallies with your set up. Keep off! Most traders lose money by going against their strategy (if they have a good one).
Your ability to identify trades will become better the more you spend time on the charts.
Nobody has ever lost money by not being in a trade! It’s better to stay away and not make money than to force the trade and lose money.
I’m certain I have not exhausted this list, but these tips above will surely help you become a better trader!
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