Last updated on April 17th, 2024 at 09:58 am
However tough it would be to acknowledge, the technical basis is not a door to trading. A great deal of success in this thrilling realm stands for the mindset. Discipline, emotional control, and risk management are inevitably faced to be the essence. The sad point is that this harsh clue is often gotten amidst the losses.
To learn more about the right mindset for effective trading, we asked RunnerXBT – a reputable trader – to share bits and pieces of his experience. Below: an expert perspective on loss management, thinking structure, and bull run.
Source: X (Twitter)
Let’s kick into high gear!
– First and foremost question – how did you start your trading career? Was that “love at first sight”?
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To be honest, I started “trading” a long time before crypto, for me it started with sneaker reselling, so the whole “supply/demand mechanics” or buying low and selling higher applied there too.
Specifically, with markets, it started as “where do I put my money for them to appreciate” more from an investment perspective.
About FOMO, Trading Behaviour, and Losses Acceptance
– Are there any “universal” rules or laws of behavior that transcend your strategies?
Every trade must have a thesis behind it, a reason why I’m taking it, even if it’s as simple as “this person recommended it”. A thesis gives me confidence in the setup, the more “preparation” I put in, the more comfortable I am sizing up properly as well.
– Is your relationship with wins different from your relationship with losses?
I think yes, everybody has losses. I think everybody learns that eventually no matter how hot a streak a trader is on.
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– Is trading for everyone?
Absolutely no.
– How to emotionally accept big losses?
Taking a long break is step one. Everyone tilts after a big loss or bad streak of bad trades. Take a break, and man up. It’s going to be ok. There are levels of losses.
– Do you use a journal to structure your thinking? If not, what is your self-assessment form?
Yes, I religiously use CMM (Coin Market Manager) but also paper and pen for my “research” – thesis planning. Highly recommend everybody to journal their emotions too. “How did I feel being stuck in that trade which went against me?”
– FOMO – does it affect trading, or is it just a buzzword?
It affects people for sure/ I’d personally think it affects more newcomers or people who don’t have their edge or system. People who rely on others to hold their hands and feed them setups. It’s definitely not a buzzword, but if you can’t control it, what the f*ck are you doing.
– Three emotional mistakes you made throughout your trading path. How did you correct them?
1. Thinking I’m the king of the world after a series of big wins. Corrected by the market putting my ego in check for me (smiles). It always does.
2. Blaming bad trades on others. Corrected it by manning the f*ck up and making my financial decisions on my own, and taking full responsibility.
(RunnerXBT did not mention the third option)
Blitz: About Bitcoin and Bullrun
– Bitcoin or Ethereum?
As of today, Ether (ETH).
– Long-term trading or short-term one?
Short-term.
– Did Bull Run begin?
I think so.
Conclusion: A Message to Newcomers
– Which piece of advice could you give to beginners, who are deeply concerned about losses?
Risk management – by default, losses are going to happen, but you can’t be losing massive chunks of trading account/net worth on one single trade. Losses become easier to digest with time. It’s like being rejected by a girl – first few stings, then it’s easy.
Trading and this whole journey should be a long one. Stop trying to retire with every single trade, have fun with it.
Checklist: Five Mental Tips to Maintain Efficient Trading
RunnerXBT cited valuable insights on the mental aspect of trading that can’t (and mustn’t) be neglected. To make it more comfortable for you, we prepared a nutshell of tips and methods to stay emotionally strong while trading. Grab a pen, or hit the keys!
1. Embrace the Power of Patience
Patience is indeed the key to everything, and crypto investment is not an exclusion. Especially, while the potential profits are more promising.
Whichever your trading decision is, it should not be taken emotionally and without a solid base. Be rational and insightful, but foremostly – embrace patience, as the best results often come to those who display one, waiting for the most opportune moments to enter or exit a trade.
2. Recognize Fear and Greed, But Don’t Let Them Steer
Fear and Greed is one of the pivotal and common issues for investment behavior. A crucial drawback of it is that the metric impacts the industry overall if it achieves the status of trend, but not only individuals.
Given that, it is lifesaving to resist Fear and Greed as a cognitive issue, and as a prevailing tendency as well. The clue to leveling it – strategic thinking, flexibility, and sticking to analytical data. Sounds simple, yet is not.
3. Set Concrete Limits – And Stick to Them
The crypto market can be turbulent. Any abrupt fluctuation may spur severe turmoil within your trading activity. To avoid unpleasant risks, mitigate the potential threats of being drifted too far astray from your trading strategy. Given that, it is vital to establish a set risk-reward ratio, determine stop losses, and decide on take-profit points.
4. Celebrate Wins, Learn from Losses
It is not surprising that trading is unpredictable, which is, actually, its rewarding characteristic of it. But the thing truly crucial is the reaction to the outcomes.
Depending on the results, some traders may triumph, and others may turn somber. However, the essence of advanced traders lies not in emotions, but in overarching their market path. Every outcome should be considered as a motivation for altering the strategy.
The most precious knowledge is received through direct experience, hence it is important not to forget about it, but to learn from it. Savour your wins, yet spend equal time analyzing your losses and adapting your beneficial tactics.
To achieve such kind of behavior, it is also important to stay in touch with the community and educate yourself. Do not hesitate to drop a question, or boast of a certain achievement in the chats. At the same time, do not forget to dive into the most relevant knowledge on trading mentality. Whitebase trading, Investopedia, Stanford online – there is a great bunch of the most cutting-edge sources on the Web to pick up.
5. Regularly Unplug and Recharge
Despite a painfully common misconception, hard work is not a magic pill for crypto. Your mental and physical capacity, alas, tends to deplete. If you wear it off, the likelihood of decreased quality of trading will be greatly increased, and the focus will be washed out.
It is pivotal to refill your resources. Regularly distance yourself from the charts, take breaks, and engage in activities that rejuvenate your mental state. A refreshed mind is far more adept at navigating the intricacies of trading.
Remember: 90% of trading success stands for your emotional state. Keep learning the theory, but never forget about sharpening your mentality.
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Paul Osadchuk
I am a crypto-enthusiast with 5-year experience in copywriting. Worked for web3 companies and cryptocurrency exchange, which drove my keen interest towards the industry. Been writing for different publications on cryptocurrency, technology, economics and politics.