Common mistakes in technical analysis and how to avoid them

September 22, 2023
Last Update December 07, 2023

All traders, even the most experienced ones, make mistakes. If you are a newbie learning new things constantly, it is unavoidable. However, there are some trivial mistakes that you can avoid and minimize your losses if you know them and understand how to handle them. 

Not limiting your losses

Even in the most lucrative conditions, always make sure you know your limits. If you see that your losses exceed the set limit, stop trading. While it is hard to accept, sometimes, insisting on recovering your funds, by all means, leads to more losses.

Some exchanges, such as Binance, offer a test net where you can test your trading strategies without risking real money. Use this opportunity before you start trading with real funds.

Setting a stop-loss is the surest thing you can do. All your trades shall have a point at which you just accept your losses and admit that, at this specific time, your trade idea was not the right one. 


Some traders believe they always have to be trading. However, trading activities, especially in crypto, need a lot of analysis and patience. That’s why don’t hurry; take your time to understand what is going on in the market, analyze the indicators you are using, and only then, make your trading decisions. There are traders that make some trades per year but get significant returns, and there are those that place trades constantly and lose.

Following your emotions

If you are earning constantly, you may believe that it is your lucky day, and you have to use it by all means. If you miss an important signal of a market reversal, you may lose all you’ve earned. That’s why always make sure the conditions are favorable before placing a new trade.

The same applies to losses. It is normal to want to recover your losses after a series of unsuccessful trades. But the best option is to stop, analyze the market, find the reason for the losses, and place a new trade only when the conditions become favorable. This is why some traders just stop trading after suffering a big loss: to recover and start their activities with a cold mind.

Lacking flexibility

The world of crypto is constantly changing. To be successful when trading crypto, you need to adjust and change your strategies all the time. A strategy that worked perfectly just some months ago may be completely useless in new conditions.

The same applies to picking a “favorite” coin and being attached to it all the time. No coin will grow forever. That’s why it is important to diversify your trading portfolio. 

Not considering extreme market conditions

There are times when technical indicators don’t work as they shall. Black swan events or other extreme conditions can cause sudden collapses, and it impacts crypto drastically. It is important to understand that when something like this happens, you may need to change your strategy completely and immediately.

Bottom line

Never forget that trading is a game of probabilities. There are perfect signals, charts, and indicators. Only if you are flexible, use your common sense, and don’t follow your emotions when trading, you can count on earnings.