We are living through an interesting transformation of the global economy brought about by Blockchain. In the past, trading was something specialized people in banks or large financial institutions did for a living. Even if they were a large percentage of independent trading houses. these were regularly owned by traders which came from the world of investment banking. It was a world reserved for the wealthy and well connected. In this article we cover Mistakes Nigerian Traders Make in their journey.
This was doubly so for people from a country like Nigeria outside the developed world. Financial markets were and still are, concentrated in the wealthy countries of the planet and those regions of the world. Citizens of developing nations, in continents not connected to these rich places, were completely cut off trading centers.
This entire picture has changed with the introduction of Bitcoin. Even if you did not intend to, anytime you bought a cryptocurrency you have entered the crypto market and begun your path as a trader.
This is because most people cannot use crypto directly to buy goods and services.
This may seem like little, but even at this low level, participating in the crypto economy has given you a more profound understanding of money markets. In a way, you are already on the path to becoming a trader. For a guide on how to continue the journey read How to Begin Cryptocurrency Trading in 2020.
In this article, we will review some of the most common mistakes made by rookie traders.
Choosing the wrong unit of account
Trading has a lot to do with psychology. At the moment of trading, a base unit of account is used. This is the currency used to buy the assets, convert the gains, take the losses, etc. This base unit of account plays a large role in psychology. This is because people do not think of money objectively, in fact, that would be impossible. Money is mainly a means of exchange, so when thinking about it people generally picture what to buy.
This plays an important role when trading since a trader already thinks of money as related to other things. So, a beginner trader using as a base unit of account a foreign currency is complicating things unnecessarily. This is because on top of calculating losses, gains, and using indicators it has to convert the results to money. The a trader will become naturally averse to taking risks.
The best way to begin trading is to use your local money as a base unit of account. This is because you already know what is too much risk if you see the numbers in naira and don't have to calculate the exchange rate. An easy way to use naira when trading crypto is to create an account in Remitano. It has a web wallet that already integrates the local currency of Nigeria, and can be used to instantly trade with other crypto coins and tokens.
Start with simulated trading
Above all trading is a skill. This means it is a process that takes a lot of practice, patience, and discipline to become proficient at it. Also, it means that with any skill there are techniques and strategies which can be learned and implemented to have better results more consistently. Here is where simulated trading of paper trading enters.
A Mistakes Nigerian Traders Make is not understanding what the different investment strategies do and when to use them.The best way to implement the different strategies and see their effects is to do it on simulated markets provided by brokers such as e-toro. This way you can trade against the real market without fear of losing money and become knowledgeable with practice.
Trading using market signals from others
We know there are many influencers on YouTube and other platforms that give investment advice. Even if influencers tell you that 'this is not investment advice'. By recommending assets to buy and showing their technical analysis, they are effectively advising you. Whether a person makes money following these channels or not is not the point.
A Mistakes Nigerian Traders Makes Is due diligence and usINGothers as a source or a point of comparison. There are many resources out there that explain the different uses of technical indicators and what are the most useful. So, learn about them, do your research, and then act based on it. At first, it will be difficult, but in time the practice will make you a better trader. So, do not follow the lazy route of just copying the ideas of what some guy on a screen with a Lambo on the background says.
Not logging trades in a journal
A trading journal is a tool that is made to keep track of all positions, gains, losses, and other useful statistics. It is of huge importance not only because it helps to keep track of all your assets in a single place, but as you include a new buy or sell orders, you can reflect on the actions taken and see if there was a better choice. At first, this will be a painful exercise because with more time to think things better, some mistakes will become apparent and you may end the day kicking yourself over a decision. This is normal.
The journal will make you a better trader and a more aware person with time. In the end, this is perhaps the most important tool to help you in your journey and becoming a professional trader.
Trading is not a way of becoming an instant millionaire. This is not the correct way of viewing it and if that is what you expect perhaps it is not for you. It is a hard long journey that in the end can lead to financial independence and wealth. But it will take time and effort. Right now the best place to begin this road is in cryptocurrencies, and the time is now for those willing to spend the hours.
