Articles: trading mistakes, automation and psychology

Five common mistakes in trading

4 min readEducational

Many people new to the market get stuck in similar places. Most of these mistakes come not from lack of knowledge but from haste and emotional decisions. Below are the five most common, each with one practical counter-measure.

1. Starting with an amount you cannot afford to lose

Investing with rent, debt or emergency savings turns every swing into a fear and lowers the quality of decisions. The rule is simple: start with an amount that, if lost, would not disturb the order of your life.

2. Not setting a loss limit

"Let me wait a bit, it will come back" is the most common way a small loss turns into a big one. Write down the loss you will accept before you start and get out at that level.

3. Chasing news and social media

By the time the price reacts to news, most of the move has often already happened. "Sure winner" tips on social media are, more often than not, someone else's exit strategy.

4. Tying everything to one asset

The fall of one asset shakes the whole portfolio. Spreading across several assets and moments reduces risk, though it does not remove it.

5. Using a strategy you do not understand

A bot or ready-made strategy is a black box as long as you do not understand what it does. Ask your personal manager to explain, with examples, under which conditions the strategy opens and closes trades.

What these five mistakes share is that no plan was made in advance. A plan covers how much risk you will take, under which condition you will exit and when you will assess results. A written plan gives you a reference, independent of your feelings, at the moment the market moves sharply. No plan prevents loss completely, but it makes loss controllable and something you can learn from.

Manual and automated trading: what is the difference?

5 min readEducational

In manual trading you make and place the decisions yourself; in automated trading predefined rules and algorithms carry them out. Each has strengths and weaknesses.

Automation reduces tiredness and emotional decisions, but it can be wrong when the assumptions a model relies on break down. That is why even with an automated system you need to follow the reports and review the strategy. For this reason LiraX is offered together with a personal manager.

Which you choose depends on your time, experience and need for control. Someone with time to watch the market during the day who wants to make every decision personally may prefer the manual route. Someone with limited time, or who wants to avoid emotional decisions, may find the automated approach more suitable. Many users combine the two: they choose the strategy themselves, leave the trades to the system and review the settings against the reports.

Trader psychology: managing your emotions

4 min readEducational

Much of success in trading is about behaviour rather than knowledge. Of two people with the same information, one can stay calm and stick to the plan, while the other drifts from it through fear or greed.

The two emotions seen most often are fear and greed. Fear pushes you to sell early as the price falls and to miss the recovery. Greed pushes you to raise risk after a gain and to stretch the loss limit. A third trap is the urge to win a loss back: opening a bigger, riskier trade to recover quickly often enlarges the loss.

• Write your plan before a trade: entry, exit and loss limit.
• Put a ceiling on the number of trades per day or week.
• Do not decide after a loss; take a break and look at the reports the next day.
• Judge results by records, not by feelings.

Automated tools can take on part of this discipline for you, but setting the limits and accepting the scope is still your job.

Finally, try to judge each trade not as a win or a loss but as a process. A good decision sometimes has a bad outcome, and a bad decision sometimes wins by luck. What matters is how faithful you stay to your plan over the long run; the plan itself is improved over time by looking at your records.