Easy 10x trades…
Sounds awesome, I’m finally gonna be rich.
Let me call my local Lambo — dealer.
Mooooon ! Hellyes!
I rather tell you this now the hard and unpleasant way than beautifully worded with no meaning behind it.
It’s a lie !
There is no such thing as easy in trading
and whoever tells you otherwise just wants to make money off of you. The market is a c*nt and will try anything to shake you out of your positions but your worst enemy is not gonna be the evil algos and “manipulating” market makers but only you.
You probably have seen countless charts of dozens of traders on crypto-twitter doing leveraged trading and their insane amounts of PnL and you think you can do and want to do the same?
The short and painful answer to a beginner is:
NO, you can’t — at least not at the very beginning.
You probably ask yourself why should I even read this ? He obviously clickbaited me into reading this nonsense!
I don’t need this, just tell me which strategy you use and I can do this on my own — k/thx/bye
My main focus in this article is to elaborate the difficulties a new trader will likely encounter when starting off.
But what makes me entitled to talk about this and even educate you about this matter ?
Because I have been there myself and since I haven’t had a mentor or anyone helping me I had to go through all the good and bad experiences myself and still experience everything I talk about to this very day.
What does this mean ?
Trading most of the time is a mental game. Understanding the basics of technical analysis is not the issue here, you can learn most of the things within six months depending on how much time you’re willing to invest. Applying your analysis, refining your strategy and trading the analysis you do is where the hard part comes in.
Trading is not only psychologically exhausting but also physically:
The more stress you have while trading the more your body is going to react to the exposed factors. You are going to have nightmares, suffer from sleep deprivation, anxiety attacks, anger but also experience joy and excitement after winning trades.
Trading itself can be very stressful and can put a lot of stress on your body and on your mind.
But it doesn’t and shouldn’t be this way!
If you have decided to start trading to get rich quick or at least quickly make up for the losses you have taken after bitcoin’s 2017 bullrun trading is NOT for you. On the contrary, you will burn your money away quicker than you can say “liquidation“.
Why is that, you ask ?
Because you are always going to feel the need to be trading. Trading with the sole purpose of making up the losses you have taken. You’re always going to feel the obligation to be in a position without taking a break, because the one missed opportunity could have brought you closer and faster towards your goal of achieving financial freedom.
It’s a longterm game
Yes, it’s a game and you are playing against thousands of other players, people who are smarter than you and algorithms who don’t care about your feelings and how hard you have earned your money.
“The market is a c*nt and will devour you, spit you out and digest you over and over again until there is nothing left of you”
I know, it’s a very vivid depiction, but that’s how reality is.
But what is the right mindset Sir ?
Easily put — Small compounding gains over fast big results
As I have already said at the beginning, there is no easy way. There is no strategy that will render you a 100% strikerate and only winning trades.
“This is a game about minimizing your risk and maximizing your profits”
You may have already taken some positions and even had some profitable trades. It was very much exciting, right ?
The adrenalline rushing through your body when you hit the buy button and observed the candles how they turned green and you looked upon your position and the potential unrealized gains how they turned bigger and bigger. And when you finally hit the sell button your wallet balance was bigger than before — Pure joy. You certainly wanted to repeat the same thing immediately after? No, you shall not !
Easy come, easy go
Assuming your first trade was a winner, you certainly should not enter a new position immediately after! You probably don’t have any kind of trading rules established at this point and your mere focus is on winning fast. The danger that comes with this is immense: Fueled by the excitement of making “easy“ money and the expectation of repeating this will lead you into commiting mistakes and take unnecessary risks by rushing into positions you haven’t completely thought through or even worse you raised your position size because you could “win“ more money faster this way.
Back to the hypothetical situation this being your first trade ever:
Once you have closed your position and enjoyed the view upon your newly earned gains I urge you to step away from your screen. Do something completely different. Do some workout, go out, meet friends but take a break. Once some time has passed you can come back to the chart, preferably the next day not only to be confronted with a fresh new situation in front of you but also a fresh new mind.
What’s important is you need to establish a healthy reactionary behaviour after having a winner or a loser. Chasing the market either way will get you burned very quickly.
In case of having a losing trade, step away and let your emotions calm down. Losing money is never fun but you need to get emotionally disconnected in order to re-evaluate the situation and learn from your mistakes.
I know it’s tempting to watch the charts all day long and wait for the next big move, but I can tell you this: You can still participate in the big moves without being glued to your screen. And in case you missed a breakout, guess what: It’s ok to miss something or enter later on. There is always going to be another and sometimes even better opportunity next time — let the market come to you. Easier said than done, but here comes another key component into play:
A lot of times you will be confronted with low volatility situations when price is consolidating for an extended period of time. I get it, it’s annoying and boring as hell, but there is nothing you can do about it and forcing yourself into a position without any clear confirmation of new directional movement is a good way to getting rid of your money in a very unpleasant and fast way.
It’s called chopping for a reason because people get chopped up into pieces before something is even going to happen. Now here comes the thing into play what I was mentioning earlier: Trading is not meant to be used to get rich quick. You have to be patient under all circumstances in order to make proficiently and consistently money.
But Sir, how can I accomplish that ?
How can I become profitable if nothing is going on ?
First, use a higher timeframe. There is absolutely no need to be watching the chart all the time in periods of consolidation. Ever heard the expression: Consolidation before expansion ?
“You can’t change the market by observing it”
All you can do is set alerts and step away and do something more productive. I hear you, you want to stick around and don’t want to miss the next big move because you want to make money. But even if you missed the initial breakout you can still get on board later on.
“Don’t force yourself into trades if you can’t find any setups”
What have we learned so far?
- Be patient
- Take breaks: Give your mind and body chance to relax and re-focus
- Don’t chase the market: It’s ok to miss a move. If I miss a move I usually step away from the screen and come back later to re-evaluate the situation because in the very moment when I see something unexpected happen I tend to make emotionally driven decisions which ultimately lead me into doing mistakes.
You definitely heard of the expression FOMO — The Fear of missing out:
You have to fight the urge of getting onboard immediately after something took place. More often than once price likely comes back to the initial breakout structure for a retest. You probably have to wait a little longer but in the end you won’t be buying the top like others who fear this might be it — the big move which leaves everyone behind and there is no chance getting on-board ever again.
If something doesn’t go the way you wanted it to go, remain calm. Don’t let your emotions dictate your trades.
Emotional and mental stability is something you have to practice over and over again. Remember the aspiring marathon runner, he can’t run a whole marathon without exercising towards his goal of actually running all 26 miles at once.
These are key components if you want to succeed in the longterm plus actual conviction in yourself and your abilities. Very often you will be confronted with situations where other people take the opposite side of a trade and you will question yourself whether it’s the right thing to do because this guy on the internet with 10k followers is doing the opposite of what I’m doing. Trust your analysis, even if you end up being wrong. There is even value in a losing trade if you are willing to invest time to evaluate what you have done wrong.
You can discuss topics with friends, colleagues and cryptofluenzas but in the end it gonna has to be you who pulls the trigger and more often than once you will find yourself on the opposite side of trades than others. Especially on CT where bias-switching occurs on a hourly basis you have to stay true to youself and trust your abilities. Don’t let a social platform or discord ruin a possible good trade. If you have taken a position there must have been a reason why you took it. You (hopefully) have a stoploss in place and other than that let the market proof you wrong, not an anonymous avatar on the internet.
Back to my initial example with the marathon runner:
Nobody will ever claim they can become one overnight. The same thing applies to trading. You can’t become a successful trader overnight. It takes perseverance and self-confidence to achieve your goals.
You have to exercise certain things and have to have clear goals set in front of you. There are gonna be setbacks, but it’s ok because if you are willing to learn you can disect your mistakes and avoid them next time. Same with running: Maybe you initially started running too fast and were out of breath quite quickly. Your breathing technique was out of sync with your steps and maybe you wanted to run for 2 hours straight but in the end it you could only accomplish 20 minutes of running straight without taking a break.
What does this mean Sir ?
Exercise certain things daily and if things don’t go your way accept them the way they are. You can only learn and grow if you analyze your failures
You can only run for 20 minutes straight ? That’s allright — try again two days later and extend your run-time to 22 minutes.
Set a couple of minor goals to achieve one major goal
Accept failure and accept the fact not every trade you are going to take will be a winner.
Don’t revenge trade — Pay attention to what your mind does. If you experienced a loss don’t try to make up for it immediately after. You are still emotionally driven, hence biased in a way by forcing yourself into a position which ends up being counterproductive if your goal is to multiply your account balance.
Control yourself and recognize your emotional behaviour when taking a position.
What is your trade based upon ? Hope/Fear or actual probabilistic facts?
- Have I really thought everything through ?
- Did I check all timeframes ?
- What is the market doing ?
Often people end up being afraid of taking a position because they are afraid of losing money which could be a result of using a too big of a positionsize. You certainly have heard about the saying:
“Invest only what you can afford to lose“
You can’t make money with trading without actually taking the risk. Your task is to evaluate the market and calculate your risk based upon your analysis, hence reduce the factor of being overexposed to incalculable and unaccountable risks.
If you can only afford 100$ for trading don’t take 500$ in your hand or even worse take a loan.
Work with what you have and consider the money you have designated for trading lost.
Yes, you heard me right — The money you have wired to the exchange is lost.
Consider this — Everytime you take a position the money you have placed is gone as long as you don’t close your position and ultimately hold the money you gained from trading in your hand again.
Learning the basics isn’t the issue when it comes to trading. Controling your emotions is what makes it hard. There are dozens of different factors which can affect it. Becoming a trader also means getting to know yourself better and the emotions that drive you. Evaluate not only the market situation but also yourself. Be aware of what you are doing in a pro-active manner and I promise you, this way you can avoid a lot of things which prevent a lot of aspiring traders from being profitable. Knowing your weaknesses and strenghts is what gives you an edge in trading.
If you have built up a solid groundlayer of mental stability the only thing standing between you and being profitable is exercise. Remember the marathon runner, he can’t be allowed to be out of breath after the first mile. He must work with his ressources till the end to achieve the higher goal of actually running all the 26 miles without taking a break.
Exercise not only your mind but also your body. Sitting in a chair all day long and eating junk food will have effects on your mind as well as sleep deprivation. Don’t allow set-backs prevent you from going forward but most importantly:
I know it’s been quite a long read therefore thank you for your time.
Retweet and share this article if you enjoyed it — it’s very much appreciated.
Feel free to follow me on Twitter
I invested in crypto in mid 2017 through the recommendation of a friend but knew nothing about TA at this time nor about market cycles. I was fortunate enough to sell in December 2017 based on a gut feeling. It was this time around when I discovered Crypto Twitter and started following all the big accounts based on their following-count. As time passed by I noticed big discrepancies between what was going on on the chart and what people were predicting.
As a newbie to TA and without a mentor I was forced but I’d rather say I motivated myself to learn technical analysis. I tested dozens of different indicators and strategies until I discovered price action trading for myself as my go-to tool for trading. It was a long and painful journey and I try to educate myself on that matter almost everyday ever since.
I also noticed that alot of big accounts on CT pretty much have no idea about technical analysis and somehow I can’t shake the feeling that the information they provide misleads people.
The longer I’m in this game the more I see people on CT being scammed, misled or they are just given false hope. As the days go by I learn and try to share the information I acquire and maybe it helps someone not committing the same mistakes I did when I knew nothing about this space and TA.
The Daily Chain – Inform. Educate. Succeed.