I am a firm believer in the idea that protecting your downside is more important than chasing ridiculously massive gains. But this can be quite hard in a very volatile market. One day you might incur joyful gains while the next moment your portfolio might drop back lower than where you started.

While they say the best teacher is experienced, you don’t necessarily need to go through one to learn from it. People all around you can be a source of valuable information based on their experience. As learning from experience might hit you hard, the cheapest way to learn is through the experience of others. I’ve made a list of common investing mistakes people make. If you’re a day trader, some of these might not go hand-in-hand with what you believe, but being aware of this might do you some good. So let’s get started!

1) Trading too much and too often

It’s common to say “The more the merrier”, but in investing, it’s not that quite helpful. I have experienced this several times now. I looked up a coin and laid out my plans: checked for good entry points, checked what could be possible downsides, set my exit points, and generally bought some coins. Things went well for some time until it didn’t. While contemplating where I went wrong, I saw some coin shooting to the moon! The next thing I knew, I sold at a loss, and bought the new coin only to find out I was too late. To add that, the following day the first coin I bought and sold reached my target price. Out of the frying pan, into the fire.

Make a plan, follow the plan! It takes time for investments to grow. If you planned from the start to hold the coin, go and HODL!

2) Letting emotions get in the way

This can be frustrating. Emotions can be really dangerous. In the story I told about Mistake #1, my emotions got the better of me making me sell and throw away my plan. Trading should be more objective than subjective. You don’t buy a coin just because you feel it would shoot to the moon. You buy a coin because you have done your research and you can identify reasons why the price of the coin will shoot up!

3) Trying to time the market

Timing the market is a very, very hard task. It is possible, don’t get me wrong, but it’s quite tricky, especially for amateurs. Market timing is the act of moving in and out of a position based on market predictions. In general, people who try to time the market underperform those who stay invested.

To be able to pull this off, you should be able to have at least 7 out of 10 trades done successfully.

4) Earning big money in the short run

“Oh I made a good trade and I gained 60% in a single trade. Damn I’m good at this”. But are you really that good? You might be doing well in a month or two, but how do you fare in the market? Did you beat the market?

Earning big gains in a short amount of time builds up your confidence that you are a genius in choosing coins until you overextend and lose a chunk of your portfolio. Consistent gains are what matters. Focus on your performance based on a long-term perspective.

5) I’m a genius, but a loss is not my fault

This is one of the consequences of mistake #4. Attributing that you are good at trading but neglecting to take responsibility for losses is also deadly to your portfolio. There are limitless variables that can affect the market. Don’t go blaming the market for your loss. It’s your responsibility to evaluate the risks and have plans when things don’t go well.

You might have been looking at 2 or 3 indicators and trading with these successfully. Now displays a “buy” signal and so you bought. But the next thing you knew, it just went haywire and dropped a couple more levels. You then blame the market or some other things for why it didn’t go as planned. But what you should have done is to learn from your mistakes and look at them from different perspectives.

6) Ignoring relevant variables

In trading, it is beneficial to have an open mindset. Looking at a coin that you want to buy, you generally see things that tell you “why you should buy”, but barely searching for why it wouldn’t go well is a no-no. Be objective and evaluate if the positives outweigh the negatives.

It is impossible to quantify every factor which can affect your investment but try to control what you can. Always do your due diligence and protect your downside.