Are you stuck in a losing streak from trading and don’t know how to get out? The problem is most likely your state of mind. Here are some words of wisdom to keep you consistent from someone who’s been there.
1. Don’t worry about making money, focus on making good technical trades.
This idea may seem ludicrous because you trade to make money but the art of technical analysis and the process of buying low and selling high is of upmost importance. Once these concepts are mastered, the profits will naturally follow along.
What happens when you focus on the money is your expectations and imagination blind you from what technical indicators are actually showing you.
2. Trading is not a game of what you make, rather a game of what you can keep.
You can lose money much faster in the market than you can make it. Nobody ever went broke taking profit. Don’t be afraid to take out your initial investment and play with house money.
3. Unless there is an asteroid heading to Earth, media never matters.
Even when the news does matter, whales know before everyone else and price it in anyway. As the saying goes, they buy the rumor and sell the news. Price moves due to the buying and selling by whales.
Fundamentals and developments of the underlying technology is only important in the long-term. In the short-term they jerk the price however they please, whatever causes the most greed and fear (emotions). This how the whales can extract money from the market in either direction, through accumulation and distribution.
4. Don’t idealize the market, play a conservative game.
You can never predict what’s going to happen in the market, which makes it very easy to see things that aren’t there. This goes back to focusing on good trades. You must be pessimistic when trading. Sure, you may get lucky once and call the top, but odds are you can’t do it twice.
Idealizing the market means having unrealistic expectations about what the market will do instead of seeing what charts are telling you. Play a conservative game, you don’t need to buy the absolute bottom and sell the absolute top of every trend. Don’t try and devour every trade, just take a chunk from the meat of the curve and move to the next one.
5. Expect to lose more trades than you win, there is no shame in getting stopped out.
Trading is a game of probabilities and averaging, you risk very small amounts of equity for the potential for major gains. Don’t move your stop loss because you think you know the market is going to bounce back (you don’t) and don’t move your sell order up because you want the trend to continue.
6. Have a plan and stick to it.
You must have a well thought out plan in place before you make a trade. Set your orders ahead of time and walk away, if you miss the target and get stopped out, so be it. Wait for the candle close on high timeframes before making a trade, these candles may change form rapidly over time, depending on volume.
7. Use your body as a trading signal.
Whenever you feel anxiety, fear, greed or adrenaline course through your body that is your signal to immediately stop what you are doing and have a third look at the decision your are about to make.
You must take the emotion out of trading to be consistent, if you get some kind of high from trading you will eventually drain your account. This holds true whether you win or lose: a winning high breeds self confidence that eventually leads to larger than normal position sizes and larger than normal losses.
Extreme negative emotions resulting from a loss will only increase your chances of losing more. The bottom line is that emotions cloud your judgment. You may find that this hold true in more areas of your life than just trading.
When you feel the adrenaline rush that could mean you are about to FOMO into something. Take 30 seconds to re-evaluate your decisions before you place an order, triple check your TA and find at least 3 reasons to make the trade.
8. Understand your unit of measure, are you trading for crypto gains or fiat gains?
When you trade BTC pairs, you are trading against two different instruments moving at the same time. If you are in the game for fiat gains, you must use fiat charts.
Sometimes you can be making BTC while losing fiat if you’re trading an alt coin that is going up in satoshi value but the value of bitcoin is dropping. If you are looking to stack BTC, use BTC pair charts. When you are looking to make money and cash out, use fiat charts.
9. Trading should not be fun, it should be logical and boring.
Sad thing to say but this is why trading bots exist and they make money. Consistent gains require playing a boring, conservative game, which robots are good at. You won’t get the same rush (or “high”) you get from jumping into a position and moving your stops and sells and the market moves. You must avoid the roller coaster ride at all costs. Be a robot.
10. Don’t play with significant amounts of money until you master these concepts.
Unless you have some kind of natural talent for technical trading, it will take at least a year to become proficient enough to make money consistently without formal training. Don’t play with large amounts of money while you are learning and making mistakes.
If you are new to trading and find yourself in a winning streak saying, “people don’t know what they’re talking about, I’m killing it” then you may be getting overconfident. Remember, overconfidence means your emotions are beginning to take over, which will lead to greed and cloud your judgment. When you get greedy, you lose money.