Following Other Crypto Traders: A Good Idea Or A Recipe For Disaster?

Published on: October 26, 2022
Last Updated: October 26, 2022

Following Other Crypto Traders: A Good Idea Or A Recipe For Disaster?

Published on: October 26, 2022
Last Updated: October 26, 2022

As human beings, we are prone to get jealous of others who become successful. And that leads to us thinking that we must also do what they do to be in a similar situation.

Although it sounds reasonable, is that way of thinking correct? Is following other crypto traders a good idea or a recipe for disaster? To answer these, let us look at the qualities of successful traders in the crypto industry.

Successful Traders Are Intuitive and Creative

According to investopedia, one needs to develop quantitative and aesthetic aspects of the brain to thrive in trading over the long term. In other words, successful traders use their intuition.

It indicates that they do not depend on others but instead focus on bettering themselves, especially their mental capabilities.

Creativity in trading entails designing a trading strategy that fits your personality, objectives, and risk tolerance. Create your trading strategy rather than copying one already in use.

Easier said than done. Is it possible? How do others do that? In-depth research of the market comes into the picture. The more familiar you are with the market, the more flexible you can be in decision-making.

With practice, the knowledge you get from research solidifies, as applying theoretical concepts is an effective strategy to remember what you study.

For instance, if you are trying to improve your math’s skills, you may look at sample scenarios with sample numbers, observe how the explainer does the computation, change the given variables, and calculate it.

Thinking about real numbers and relating them to your personal crypto trading experience could also help.

Once you are confident with math’s, you might want to try improving your performance with some yoga poses, meditation, or a peaceful stroll around the park.

These activities could help you think better or be more creative. Studying how others did in the past teaches us that sticking to traditional trading strategies does not pay off.

You must keep on updating because the market is ever-changing. It is not necessary to follow other crypto traders.

Instead, we should learn from their experiences. You have to strive to be creative and intuitive on your own.

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Successful Traders Rely On Themselves Using Their Technical Analysis Skills

Successful traders do not rely on self-proclaimed experts rampant on the internet or social media platforms. Well, some traders believe these so-called experts because they are insecure about their skills.

Dependent traders feel more confident with their strategy when they follow an “expert” who backs up the same technique and explains it using highly technical terms. 

However, not all you see and hear over the internet are reliable sources.

Before you listen to any self-proclaimed experts on the internet, double-check their credentials, background, history, and the like.

You risk developing a false sense of security if you keep listening to these folks.

Because they spend so much time learning about technical analysis, successful traders tend to be more independent in this area. It is not an easy task for most beginners, but it is doable.

Remember that a skill like this takes time as you gradually develop it through research and application. Knowing some of the principles of technical analysis is a good point to get started with. 

Successful Traders Can Resist the Influence Of The Crowd Or The Bandwagon Effect

One of the most typical characteristics of a person is to follow the crowd. The bandwagon effect occurs when a person follows the majority opinion rather than their own.

Even though their decision is better, they choose to follow the majority. This behavior occurs in many areas of life, including politics, social interactions, and economics.

However, these traits are way detrimental in the business sector. An excellent example of this is the 2017 bitcoin boom. Many people invested money in it without even understanding what it was. They are only aware that numerous individuals are gambling in it.

They do not want to be the last to benefit from it. People make decisions based on what others think, also known as Fear of Missing Out (FOMO). In the end, many of them lost money.

Smart traders know how to differentiate between uneducated and educated guesses. Most often than not, the uneducated guess comes from the crowd, and the educated guess comes from a few individuals, such as the real experts. Wise traders do not let uneducated guesses from the public affect them.

They do not listen to it. Instead, they choose to go to reliable and regulated brokers to help them with their decision-making related to crypto trading. These brokers are accessible through trader-broker connecting platforms, such as Bitcoin Profit.

This move is wise because you consult with people with real experience in the market and not just a bunch of random people who love to speak more than to think. As the saying goes, losers are the last bandwagon to reach the top.

Successful Traders Do Not Stick With The First Impressions They Get From Others.

An individual inclination to make decisions based on first impressions or initial perception of something unclear is known as the anchoring effect. When making judgments, we sometimes depend too strongly on the initial information, also called the anchor.

If you are susceptible to this effect, you might easily stick to the first impression you hear from the people around you, like your friends, family, coworkers, netizens, and others.

This type of prejudice is frequent in our daily lives. Let us pretend you are surfing the internet to look for emerging crypto where you can invest. You came across the crypto, let’s say Cosmos Atom. Your friend saw you and asked if you were interested in investing in that coin.

You said yes, and suddenly, he reacted unfavorably to your decision. Since you trust that friend, you stopped investigating the mentioned crypto, feeling it is not trustworthy. Days passed, and you encountered an article about the Cosmos Atom again.

Instead of reading it, you stick to the initial impression instilled by your friend in your mind. What if the crypto is legitimate?

Not only will you miss the opportunity, but also you might get in a worse direction. Thus, stay objective when learning about different cryptocurrencies. Research and do not rely on what others say without concrete evidence.

Final Thoughts

Although it sounds reasonable, imitating other crypto traders is not a good idea if we look at the traits of successful traders. Successful traders tend to handle their crypto trading situation independently and objectively.

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Written by Allison Langstone

Allison produces content for a business SAAS but also contributes to EarthWeb frequently, using her knowledge of both business and technology to bring a unique angle to the site.