There are many things that we must learn when operating and investing in the markets (regardless of whether we are talking about cryptocurrencies, or any other class of assets), but definitely, every time I observe the movements and fluctuations so erratic that are They produce sometimes in the prices of the markets, it makes me think that people never (or rarely) learn from their mistakes.
And I repeat.
People don't learn from their mistakes
I say this because it is very easy to notice it day after day in the markets, when we see that many people start buying just when the price of assets is in a developed trend. Something totally counterproductive; and then they are stumped when the price slows down and just then starts to pull back.
Then people begin to think that it is as if the market was observing them, due that just at the moment they enter to operate or invest, the price revert and cause them losses.
What they don't understand
Every trend o the market (either up or down) it has a series of phases that we could qualify as the beginning, the middle, and the close. Now, when there is a trend movement in the price of an asset, it is true no one can say exactly how long it will last, or where it will end, so to get an idea about this, the most experienced traders look at indicators like the ADX to see the force that brings the trend. But even using this indicator, we are not fully certain of how far the exact duration of the trend will go, so we are very careful in the markets.
But novice traders goes around without north
They just see the price of an asset that has been going up continuously for several days in a row, and they say "Hey, I'm going to buy now, it's a good time to do it." And it turns out that they enter the market at the worst time they can, because, as I already explained, although no one knows exactly how long a trend will last when it occurs, the more days a trend has been occurring, the more probably that said trend is about to end.
In other words, when you enter a trend whose usual development is well advanced, then there is a greater risk that the trend will reverse at any time.
But people do not understand this, instead they are impressed by the market and are guided by the emotions or impressions they feel in the moment and buy at the worst moments.
And the worst thing about not understanding it is the fact that they repeat this same mistake over and over and over again in the markets.
Sometimes they are lucky and the trend continues for a long time, but generally they will see that it does not happen like that, and that as soon as they enter to trade (or shortly after entering) the market turns and they begin to take losses, and end in losses.
What we all have to understand very well
What we must understand very well in this regard is that there are no infinite trends, but rather, markets are cyclical. Markets do not go up or down indefinitely, no matter how good the projects are, they always go up and down, because this is part of the normal fluctuations that occur in the markets.
In trading one cannot, to say the least, buy a cryptocurrency that has been rising in price for days and wait for it to continue rising indefinitely; if that were so, we would all be rich by now, don't you think? In trading what you have to do is get a good entry point, based on a clearly defined strategy, knowing how to set the take profit and stop loss levels properly, and voila, easily enter.
Even if we are not trading but investing, entering a highly developed trend is not the best of ideas. It is best to enter a good point, and only in those best moments to buy.
In addition, it must be taken into account that both in trading and in investments, the markets work based on cycles of accumulation, reaccumulation, distribution and redistribution; and the best of the best times to buy in this regard are accumulation points. If the market is in trend, and it has been like this for a long time, it is not worth the risk of entering to trade or invest and that it can reverse (although the risk of doing so when investing is much lower than in case of trading, due to because the investments are long-term).
Having caught the trend from the beginning, it may be a good idea to stay in the market (depending on the case), but this is something different from what was previously explained, due it mean that you managed to make the entry at the correct time, just at the beginning of the movement trend. However, you must still be very careful so that you make your take profit on time and you will not be caught by the market reversal the moment it occurs, because it is truly true that at some point it will occur, like this that you must be prepared.
Understanding all these things that I have just explained are essential so as not to make the same mistakes over and over again in the markets. We need to remember it!
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