{"id":8251,"date":"2022-06-15T19:05:04","date_gmt":"2022-06-16T00:05:04","guid":{"rendered":"http:\/\/blog.jlbn.net\/?p=8251"},"modified":"2022-06-19T14:35:54","modified_gmt":"2022-06-19T19:35:54","slug":"15-ways-to-stay-sane-while-trading-crypto","status":"publish","type":"post","link":"http:\/\/blog.jlbn.net\/?p=8251","title":{"rendered":"15 Ways to Stay Sane While Trading Crypto"},"content":{"rendered":"\n

24\/7 markets. Big price swings. Hacks. Trading crypto can be tough on the nervous system. Here, based on interviews with leading traders, are tips for maintaining equilibrium.<\/em><\/strong><\/p>\n\n\n\n

This is not a guide of how to trade crypto. This is not about how to make money, how to invest or where to find alpha.<\/p>\n\n\n\n

But if you\u2019ve dabbled in crypto trading? Then you know this one thing: It can be all-consuming<\/em>. When your money is on the line, suddenly you\u2019re checking the prices more than you check social media, you obsess about the charts, and even your dreams are filled with candlesticks and Elliot Waves<\/a>.<\/p>\n\n\n\n

Oh, and there\u2019s never a break. Stock day-traders might be Red Bull-pounding stress-monsters from 9:30 a.m. to 4 p.m. on Monday to Friday, but they are then forced to relax when the market closes. Crypto is always on. Trades beckon. If you\u2019re asleep at 2am? Maybe you just missed a 10X opportunity. Spent Sunday morning at brunch? Maybe you failed to avoid a -40% bloodbath. So it\u2019s easy to stare at the screens \u2013 and stare and stare and stare.<\/p>\n\n\n\n

\u201cThe casino never closes,\u201d says Scott Melker, a trader who goes by the alias The Wolf of All Streets<\/a> (and one of The Men Who Stare at Charts<\/a>). \u201cIt\u2019s just very, very difficult to detach. It\u2019s a forced skill.\u201d<\/p>\n\n\n\n

So how do you cultivate that skill? More broadly, how do you protect your mental health while investing or trading in cryptocurrency? We spoke with Kevin Zhou, head trader of Galois Capital<\/a>; Bobby Cho, partner at CMS Holdings and Melker to get some insight on best practices.<\/p>\n\n\n\n

Each trader stressed \u2013 repeatedly \u2013 that this is not financial advice. Instead these are tips, strategies and guidance for how to stay sane.<\/p>\n\n\n\n

1. Set trading hours.<\/h2>\n\n\n\n

Sure, the exchanges are open 24\/7, but that doesn\u2019t mean you need to be. \u201cI treat it like a business,\u201d says Melker, who only trades between 9 a.m. and 5 p.m., and then he has dinner, puts his kids to bed and lives like a normal person.<\/p>\n\n\n\n

2. Make a plan. Stick to it.<\/h2>\n\n\n\n

Each trader emphasized mental discipline. \u201cDo your homework in terms of why you found a trade interesting, and what you intend to do with it,\u201d says Cho. \u201cI tend to take a lot of notes, like, \u2018What\u2019s the risk\/reward profile of what I\u2019m doing? What am I willing to make on the trade, and what can I stand to lose?\u2019\u201d Cho says that once you\u2019ve \u201ccapped\u201d your potential losses and gains, then you\u2019re less likely to impulsively act on emotion.<\/p>\n\n\n\n

Melker agrees, noting, \u201cA lot of people stare at the charts, willing it [the price] to go up or down.\u201d He doesn\u2019t do this. Instead, Melker plans his trades in advance, creates his entry and exit points, and then he ignores the chart, as it\u2019s \u201cin the hands of the Trading Gods.\u201d He steps away and goes about his life. \u201cThe biggest mistake people make is emotionally changing their plan, mid-trade,\u201d says Melker. \u201cMoving your stop-loss down because you think it\u2019s about to bounce 100x right after you got stopped-out.\u201d<\/p>\n\n\n\n

3. Tame the greed, manage the fear.<\/h2>\n\n\n\n

Zhou says the biggest problems in trading are hubris, fear and greed. Keep the emotions neutral. Focus on the methodology, the framework of the trade, the cold logic of the percentages. \u201cYou shouldn\u2019t feel too good about the wins that you have, and you shouldn\u2019t feel too bad about the losses,\u201d says Zhou. But okay, real talk? That\u2019s easier said than done. How do you cope with the losses? (Because there will be losses.)<\/p>\n\n\n\n

4. Treat losses as an opportunity to learn.<\/h2>\n\n\n\n

Every loss, says Zhou, can teach you something about trading. Reframe the loss. Don\u2019t let it be a trigger for anger, despair, or self-flagellation. Let it be a trigger for learning. \u201cJust analyze the situation,\u201d says Zhou. \u201cThe first question is, did you take that loss because you came in with a positive edge \u2013 more than 50% \u2013 and then you got unlucky? And don\u2019t lie to yourself.\u201d If you simply got unlucky, well then just roll with it, as that happens and you need to focus on the long-term.<\/p>\n\n\n\n

The second question Zhou says you should ask: \u201cIf that\u2019s not the case, if you actually made the wrong decision, then try to figure out what led you to that wrong decision. Was the logic unsound? Or was the logic sound but your assumptions unsound?\u201d Cold analysis can temper hot anxiety.<\/p>\n\n\n\n

5. Exercise.<\/h2>\n\n\n\n

Obvious? Maybe. But also overlooked. \u201cIt\u2019s essential that you go to the gym, or exercise somehow, to clear your head,\u201d says Melker.<\/p>\n\n\n\n

6. Compartmentalize.<\/h2>\n\n\n\n

Especially in the early days of crypto trading, it\u2019s natural to obsess about the prices, positions and possibilities throughout the day no matter what you\u2019re doing \u2013 in the shower, on a date, even playing with your kids. Cho checks this impulse by compartmentalizing his different activities in life, and then lasering his attention on whatever he\u2019s doing. \u201cOn Saturday morning, my kids are going to wake up around 7:30 or 8, and I\u2019m going to spend the morning with them,\u201d he says, and in that time he doesn\u2019t check the charts or think about crypto. His priority is the kids.<\/p>\n\n\n\n

Conversely, on Monday morning when he\u2019s in trading mode, that gets his full attention. \u201cIf you don\u2019t have these priorities,\u201d says Cho, \u201cthen your focus is all over the place, and you\u2019re half-assing everything.\u201d<\/p>\n\n\n\n

7. Don\u2019t put too much financial pressure on trading.<\/h2>\n\n\n\n

The trades become harder to stomach when your livelihood depends on the outcome. It\u2019s harder to think rationally. It\u2019s easy to get swallowed up by anxiety, which might nudge you to chase losses or gains. \u201cTake the pressure off with multiple income streams,\u201d says Melker. \u201cIt\u2019s helpful if you don\u2019t need to make $1,000 a day trading.\u201d<\/p>\n\n\n\n

8. Strip away the emotions.<\/h2>\n\n\n\n

This one\u2019s critical enough to warrant a bit of repetition. \u201cIt\u2019s extremely important to have emotional control while you\u2019re trading,\u201d says Zhou \u2013 important for both mental sanity and financial performance. The best way to develop that emotional control? Practice. Repetition. Time on task.<\/p>\n\n\n\n

\u201cWhen you start out trading, it\u2019s very normal that when things go well you feel like a genius, like you\u2019re on top of the world. And when things go badly you feel like an idiot, and you get depressed,\u201d says Zhou. Then you keep trading. You keep learning. \u201cOver time, as you do it more and more, you get used to it, and it doesn\u2019t affect your day-to-day,” he says. “It\u2019s really important to get to that point, because you definitely don\u2019t want emotions affecting you.\u201d<\/p>\n\n\n\n

9. Take breaks.<\/h2>\n\n\n\n

Cho frequently steps away from the phone, laptop, charts, crypto Twitter. He says this is necessary for balance and sanity. \u201cUltimately, there\u2019s a whole world outside of crypto,\u201d says Cho, and then laughs a bit. \u201cAlthough some would say there isn\u2019t.\u201d<\/p>\n\n\n\n

10. Think of yourself as ‘the house.’<\/h2>\n\n\n\n

In casinos they say the house always wins, because over the long haul, once you tune out the noise of flukey players who do well at blackjack, the house enjoys the percentage edge. If you have a 52% chance of winning, you will rack up many Ls, and maybe you might even lose three or five or ten times in a row. But when the sample size gets to be 10,000, you will win around 52% of the time. Melker says that if you\u2019re trading with the right mindset, that\u2019s how you view each trade, and let the losses roll off you. \u201cIt\u2019s almost like this long-term mathematical formula,\u201d says Melker. \u201cIf you execute, and you do it long enough, you just win a little more than you lose.\u201d Melker says that at this point, individual losses \u201cdon\u2019t affect me at all.\u201d<\/p>\n\n\n\n

11. Cultivate other priorities.<\/h2>\n\n\n\n

Or as Melker puts it, Get a life<\/em>. This helps keep balance and can curb the obsession. \u201cI have two children, and I have a wife,\u201d he says. \u201cIt\u2019s important to me not to be an absentee father or a slave to my iPhone.\u201d Along those lines\u2026<\/p>\n\n\n\n

12. Practice good time management.<\/h2>\n\n\n\n

\u201cTime management is a key feature in everything I do,\u201d says Cho. \u201cIn any given hour I ask, what is my priority? And understanding that list of priorities is very important.\u201d If his priority for the hour is to research Company X, then he will focus on that, and only that, and he won\u2019t obsess about crypto prices. Conversely, if the focus of the hour is to trade, then that commands his attention and he won\u2019t worry about Company X. \u201cObviously you\u2019re not agnostic about what\u2019s happening in the market,\u201d says Cho, \u201cbut establishing priorities helps.\u201d<\/p>\n\n\n\n

13. Schedule time for content consumption.<\/h2>\n\n\n\n

Crypto trading and investing, for many, is more than just price action: It\u2019s also about understanding the tech, the philosophy and the constant changes to this fascinating new world. That can be a lot to keep up with. Instead of getting distracted by every tweet and every crypto article \u2013 which can add anxiety, fuel ADD and take you away from your current area of focus \u2013 Cho simply dumps new content in what is essentially a \u201cto read later\u201d bucket and then catches up when he\u2019s ready to focus on that and only that.<\/p>\n\n\n\n

14. Ditch the phone.<\/h2>\n\n\n\n

In the old universe where people went out to restaurants for dinner, pre-COVID, Melker and his wife had a deal: \u201cIf we were out, I would leave my phone in the car,\u201d he says. \u201cWhen the phone\u2019s in the car, I\u2019m not going to think about it.\u201d<\/p>\n\n\n\n

Alternatively, in a dissenting opinion, here\u2019s a different perspective entirely:<\/p>\n\n\n\n

Contrarian Take: Accept that there is no such thing as work\/life balance.<\/h2>\n\n\n\n

\u201cI\u2019m a little contrarian here,\u201d Zhou says, acknowledging that this cuts against the grain of the Maintain Balance<\/em> ethos. \u201cFor people who really want to get good at something, there\u2019s no such thing as workplace balance.\u201d He adds, \u201cSometimes you lose sleep. Sometimes you lose friends.\u201d Zhou admits this can take a toll, and maybe it means your social life takes a hit. \u201cBut there\u2019s a lot of opportunity here,\u201d he says. \u201cWe can rest while we\u2019re dead.\u201d<\/p>\n\n\n\n

15. Know that crypto obsession will never truly go away.<\/h2>\n\n\n\n

Even the most seasoned, well-balanced traders say that, at times, they can still surrender to compulsive price-checking impulse. \u201cIt still remains a challenge at times,\u201d says Melker. \u201cYou can\u2019t predict when bitcoin is going to strap you into the roller coaster.\u201d<\/p>\n\n\n\n

And finally, a bonus consideration:<\/p>\n\n\n\n

Value your time over money.<\/h2>\n\n\n\n

This is less a specific hack and more of a general principle. In essence, the concept is this: Don\u2019t forget what really matters<\/em>. \u201cThe most valuable lesson you learn is that the point of your money is to buy free time,\u201d says Melker. \u201cIt\u2019s not so you can spend more time trying to make money. Trading should be one of those rare opportunities where, if you\u2019re successful, you\u2019re not slaving away to make someone else wealthy.\u201d<\/p>\n\n\n\n

In other words, if you\u2019re spending 24\/7 staring at crypto charts, and never doing anything else with your life, have you really beaten the system? Have you really won the game? \u201cIf your money is not buying you more time,\u201d says Melker, \u201cYou\u2019re doing it wrong.\u201d<\/p>\n\n\n\n

<\/p>\n","protected":false},"excerpt":{"rendered":"

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