When preparing for action it is rare that someone does not look back at the behavior of others. Traders are no exception. Is it worth trusting all the movements of the trading community? Let’s find it out now.
When deciding whether to follow the crowd or not, you should remind yourself of a number of significant points:
First: where one earns — the other loses.
Second, ” owls may not be what they seem, but they serve an important purpose: to remind us to look deeper into the dark.”A simple situation: you observe the trend shaped by traders and use it as a hint. However, during unexpected price spikes, these traders forget about psychological discipline: they have a psychological breakdown and your imaginary “team” is going through a financial collapse. What would help? Follow a reputable trader exactly as long as he acts reasonably – work on your personal emotions, think through your trading plan from any point where you may have to go on your own.
The third rule: do not follow the crowd. Various trading platforms, such as Aurum Trade, offer training zones. For instance, telegram channels and YouTube channels for registered users. It is really safer there, the entry conditions cut off the “unnecessary” and most importantly-allow you to hone your strategies in a unique situation: you are like being driven, but at the same time you have all the rights to act independently. Try a strategy in which assets are sold or bought at key prices against the general flow. Discuss with an expert trader such levels where the price movement can not always be understood correctly. It is there that emotional failures most often occur, which means that a door opens for your earnings if you are psychologically prepared.
Fourth: keep your distance. While the price starts to accelerate, move in the general direction. Enter the market when the price range is quite narrow and watch the setup before the start of a sharp jump – so you will be one step ahead. Do not rush to open a position, wait for a pullback and a decrease in sharp jumps-sometimes you need to make a step back. Buy or sell breakdowns, if there is a discrepancy in volumes on technical indicators and prices – be yourself.
Finally, the fifth is to listen to the experienced traders. William Gunn is one of the greatest traders of the twentieth century. He presented 28 rules that every trader should consider, regardless of the strategy they choose. Three of them will accurately answer your question of whether to follow the opinion of the crowd or not, here they are:
- Use tools that identify a clear trend.
- Do not give in to other people’s advice.
- When closing a position, focus only on your own signals.