advice The Many Ways to Stay Sane While Trading in Crypto

[kyoukage01 3181]

This article may prove to be very useful especially for beginners who want to start trading cryptocurrencies. It may not be a guide for getting rich in crypto, but it will help in staying calm and keeping control of oneself if things go wrong. And knowing the volatile nature of cryptocurrencies, things going wrong can happen quite often for the inexperienced.

 

Spoiler

15 Ways to Stay Sane While Trading Crypto

Jeff Wilser

 

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. 

But if you’ve dabbled in crypto trading? Then you know this one thing: It can be all-consuming. When your money is on the line, suddenly you’re 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.  

Oh, and there’s 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’re 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’s easy to stare at the screens – and stare and stare and stare.

“The casino never closes,” says Scott Melker, a trader who goes by the alias The Wolf of All Streets (and one of The Men Who Stare at Charts). “It’s just very, very difficult to detach. It’s a forced skill.” 

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; Bobby Cho, partner at CMS Holdings, and Melker to get some insight on best practices. 

Each trader stressed – repeatedly – that this is not financial advice. Instead these are tips, strategies, and guidance for how to stay sane.  

1. Set trading hours.

Sure, the exchanges are open 24/7, but that doesn’t mean you need to be. “I treat it like a business,” 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. 

2. Make a plan. Stick to it.

Each trader emphasized mental discipline. “Do your homework in terms of why you found a trade interesting, and what you intend to do with it,” says Cho. “I tend to take a lot of notes, like, ‘What’s the risk/reward profile of what I’m doing? What am I willing to make on the trade, and what can I stand to lose?’” Cho says that once you’ve “capped” your potential losses and gains, then you’re less likely to impulsively act on emotion.

Melker agrees, noting, “A lot of people stare at the charts, willing it [the price] to go up or down.” He doesn’t do this. Instead, Melker plans his trades in advance, creates his entry and exit points, and then he ignores the chart, as it’s “in the hands of the Trading Gods.” He steps away and goes about his life. “The biggest mistake people make is emotionally changing their plan, mid-trade,” says Melker. “Moving your stop-loss down because you think it’s about to bounce 100x right after you got stopped-out.” 

3. Tame the greed.

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. “You shouldn’t feel too good about the wins that you have, and you shouldn’t feel too bad about the losses,” says Zhou. But okay, real talk? That’s easier said than done. How do you cope with the losses? (Because there will be losses.) 

4. Treat losses as an opportunity to learn.

Every loss, says Zhou, can teach you something about trading. Reframe the loss. Don’t let it be a trigger for anger, despair, or self-flagellation. Let it be a trigger for learning. “Just analyze the situation,” says Zhou. “The first question is, did you take that loss because you came in with a positive edge – more than 50% – and then you got unlucky? And don’t lie to yourself.” If you simply got unlucky, well then just roll with it, as that happens and you need to focus on the long-term.

The second question Zhou says you should ask: “If that’s 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?” Cold analysis can temper hot anxiety.

5. Exercise.

Obvious? Maybe. But also overlooked. “It’s essential that you go to the gym, or exercise somehow, to clear your head,” says Melker. 

6. Compartmentalize.

Especially in the early days of crypto trading, it’s natural to obsess about the prices, positions and possibilities throughout the day no matter what you’re doing – 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’s doing. “On Saturday morning, my kids are going to wake up around 7:30 or 8, and I’m going to spend the morning with them,” he says, and in that time he doesn’t check the charts or think about crypto. His priority is the kids.

Conversely, on Monday morning when he’s in trading mode, that gets his full attention. “If you don’t have these priorities,” says Cho, “then your focus is all over the place, and you’re half-assing everything.” 

7. Don’t put too much financial pressure on trading.

The trades become harder to stomach when your livelihood depends on the outcome. It’s harder to think rationally. It’s easy to get swallowed up by anxiety, which might nudge you to chase losses or gains. “Take the pressure off with multiple income streams,” says Melker. “It’s helpful if you don’t need to make $1,000 a day trading.” 

8. Strip away the emotions.

This one’s critical enough to warrant a bit of repetition. “It’s extremely important to have emotional control while you’re trading,” says Zhou – important for both mental sanity and financial performance. The best way to develop that emotional control? Practice. Repetition. Time on task.

“When you start out trading, it’s very normal that when things go well you feel like a genius, like you’re on top of the world. And when things go badly you feel like an idiot, and you get depressed,” says Zhou. Then you keep trading. You keep learning. “Over time, as you do it more and more, you get used to it, and it doesn’t affect your day-to-day,” he says. “It’s really important to get to that point, because you definitely don’t want emotions affecting you.”

9. Take breaks.

Cho frequently steps away from the phone, laptop, charts, crypto Twitter. He says this is necessary for balance and sanity. “Ultimately, there’s a whole world outside of crypto,” says Cho, and then laughs a bit. “Although some would say there isn’t.” 

10. Think of yourself as 'the house.'

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’re trading with the right mindset, that’s how you view each trade, and let the losses roll off you. “It’s almost like this long-term mathematical formula,” says Melker. “If you execute, and you do it long enough, you just win a little more than you lose.” Melker says that at this point, individual losses “don’t affect me at all.”

11. Cultivate other priorities.

Or as Melker puts it, Get a life.  This helps keep balance and can curb the obsession. “I have two children, and I have a wife,” he says. “It’s important to me not to be an absentee father or a slave to my iPhone.” Along those lines…

12. Practice good time management.

“Time management is a key feature in everything I do,” says Cho.  “In any given hour I ask, what is my priority? And understanding that list of priorities is very important.” If his priority for the hour is to research Company X, then he will focus on that, and only that, and he won’t obsess about crypto prices. Conversely, if the focus of the hour is to trade, then that commands his attention and he won’t worry about Company X. “Obviously you’re not agnostic about what’s happening in the market,” says Cho, “but establishing priorities helps.”  

13. Schedule time for content consumption.

Crypto trading and investing, for many, is more than just price action: It’s 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 – which can add anxiety, fuel ADD and take you away from your current area of focus – Cho simply dumps new content in what is essentially a “to read later” bucket and then catches up when he’s ready to focus on that and only that.

14. Ditch the phone.

In the old universe where people went out to restaurants for dinner, pre-COVID, Melker and his wife had a deal: “If we were out, I would leave my phone in the car,” he says. “When the phone’s in the car, I’m not going to think about it.” 

Alternatively, in a dissenting opinion, here’s a different perspective entirely:

Contrarian Take: Accept that there is no such thing as work/life balance.

“I’m a little contrarian here,” Zhou says, acknowledging that this cuts against the grain of the Maintain Balance ethos. “For people who really want to get good at something, there’s no such thing as workplace balance.” He adds, “Sometimes you lose sleep. Sometimes you lose friends.” Zhou admits this can take a toll, and maybe it means your social life takes a hit. “But there’s a lot of opportunity here,” he says. “We can rest while we’re dead.”

15. Know that crypto obsession will never truly go away.

Even the most seasoned, well-balanced traders say that, at times, they can still surrender to compulsive price-checking impulse. “It still remains a challenge at times,” says Melker. “You can’t predict when bitcoin is going to strap you into the roller coaster.” 

And finally, a bonus consideration: 

Value your time over money.

This is less a specific hack and more of a general principle. In essence, the concept is this: Don’t forget what really matters. “The most valuable lesson you learn is that the point of your money is to buy free time,” says Melker. “It’s not so you can spend more time trying to make money. Trading should be one of those rare opportunities where, if you’re successful, you’re not slaving away to make someone else wealthy.”

In other words, if you’re 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? “If your money is not buying you more time,” says Melker, “You’re doing it wrong.” 

source: https://www.coindesk.com/15-ways-to-stay-sane-while-trading-crypto

 

Taking from the article, here are those tips I will try to summarize and simplify:

1. Set trading hours - There is more to life than sticking in front of the screen 24/7 looking at movements on trading exchanges.
2. Make a plan and stick to it - If you set up a plan only to panic buy/sell everytime, then there is no point to making it.
3. Don't be too greedy - If you are raking profits in trades, calm yourself first and reanalyze the market situation before making the next move.
4. Treat losses as a learning opportunity - Learn from your mistakes so that you will be less likely to make it again.
5. Exercise - This will help you in calming down. But if you don't like to exercise for whatever reason, any activity that will help you calm down should suffice.

6. Compartmentalize - Focus on whatever activities you are in right now. You can think about crypto trading later when you are on it.

7. Don’t put too much financial pressure on trading - Unless you are an trading expert, just stick to investing what you are most comfortable with financially.

8. Strip away emotions - Keeping emotions such as fear and panic in check will help in making logical decisions.

9. Take a break - If you are under too much pressure, taking a break will help you calm down and give time to think up a rational approach to a problem.

10. Think of yourself as 'the house' - If you plan to trade often, you will be able to discern patterns and situations that will help you win more in trades.

11. Have other priorities - Related to tip #1. Try to use your non-trading time on activities that will benefit others and yourself.

12. Practice good time management - Related to tip #1 and #6. Try managing your time well if you can.

13. Schedule time for content consumption - "Content" refers to information from any sources. Try setting aside time for reading crypto-related news, etc.

14. Ditch the phone - Related to tip #1. Any crypto-related activities on your phone should be set aside on your private time.

15. Know that crypto obsession will never truly go away - Even if you get hooked to crypto trading, try controlling your obsession instead of vice-versa.

16. EXTRA: Value your time over money - A summary of most of the tips in the article.

If you want to comment or add a few more tips into the discussion, just post below.

 

Edited September 18, 2020 by kyoukage01

[Whited35 15285]

On 8/18/2020 at 8:10 AM, kyoukage01 said:

Treat losses as a learning opportunity - Learn from your mistakes so that you will be less likely to make it again.

I wish, I learned these facts before I dived into crypto trading field. Quoted point has a significance in my life.  Due to a huge loss in a day trading, next time I again repeated the same mistake(Selling pressure) due to excessive FOMO. Now, I have learnt so many things to minimize the risks while performing the cryptocurrency tradings. 

[benalmoh88 1500]

sometimes i'm trade with stress and this stress is bad for my health, you are right about all those points, now i decide to prepare a trading plan, by choosing good coins to trade on it, multiply my capital, and choose good time to open exchange and trade.

[Raqeebzy 6456]

I think every trader needs to see this, it is detailed and spot on. No one can be perfect with all these but mastering up to an extent will produce much effective result coupled with the technical knowledge. Every trader needs to find the perfect time to trade, wrong timing most of the time is the cause of failure for most crypto enthusiast, it isn't a must to bag profits any simple day. Some day you chill, some day you trade.

[kyoukage01 3181]

On 8/20/2020 at 9:52 PM, Raqeebzy said:

I think every trader needs to see this, it is detailed and spot on. No one can be perfect with all these but mastering up to an extent will produce much effective result coupled with the technical knowledge. Every trader needs to find the perfect time to trade, wrong timing most of the time is the cause of failure for most crypto enthusiast, it isn't a must to bag profits any simple day. Some day you chill, some day you trade.

Every new crypto enthusiast can benefit from the topic, especially newbie members who have collected TALK tokens and are waiting for trading these to open. Myself, the TALK token trading will be my first attempt at active trading. I will need to apply the knowledge I have learned so far coupled with the points made in the article. #3 is definitely something I should especially watch out for!

 

[Brushless4500KV 4214]

I found most of the article informative but setting hours for trading is almost impossible because the market can (may) change at any moment. Since we are dealing with an international trading market, it is not based on any timing zone. Therefore, a big movement of price may happen at midnight in your area or in the morning at other places. To avoid this problem, it is better to set buying and selling orders. You should determine your target price in advance before starting your position. However, this doesn't mean that you should set an order and sleep! Even after you have chosen your selling point, you should still check prices frequently because sometimes better opportunities may happen for you.

[Raqeebzy 6456]

11 hours ago, kyoukage01 said:

Every new crypto enthusiast can benefit from the topic, especially newbie members who have collected TALK tokens and are waiting for trading these to open. Myself, the TALK token trading will be my first attempt at active trading. I will need to apply the knowledge I have learned so far coupled with the points made in the article. #3 is definitely something I should especially watch out for!

 

I have no idea you had no experience with practical trading; surely a top member do not mean a top crypto trading expert; there are lots of ways in crypto. 

However, you have a very good plan for trading of talk token. A lots of newbies here with little or no trading experience don't think that, they just want to dump in the market, make few profits and run to the forum to mine more. You already have the knowledge as I have clearly see from your article but the practical experience promised to be a different experience. Wait for it!

[kyoukage01 3181]

On 9/12/2020 at 9:09 PM, Brushless4500KV said:

I found most of the article informative but setting hours for trading is almost impossible because the market can (may) change at any moment. Since we are dealing with an international trading market, it is not based on any timing zone. Therefore, a big movement of price may happen at midnight in your area or in the morning at other places. To avoid this problem, it is better to set buying and selling orders. You should determine your target price in advance before starting your position.

Good point there. There is also the option of using trading bots. But some crypto users might not like using automated methods of trading and would like to do things manually. And if they can't manage their time properly, that is where the stress will come in. Maybe it would help if they refrain from dealing with exchanges located on the other side of the globe as much as possible and deal more with their local exchanges if there are any. And also, keep the quantity of exchanges they deal with at a more manageable level.

 

On 9/12/2020 at 10:24 PM, Raqeebzy said:

I have no idea you had no experience with practical trading; surely a top member do not mean a top crypto trading expert; there are lots of ways in crypto. 

Yes, that's right. I make no secret of the fact that the birth of this forum approximately coincides with my first in-depth learning experience of cryptocurrencies. And I do not think highly of myself as a top member. Old member by this forum's standards, maybe yes. But definitely not at the top, as I even have yet to reach my 1000th post 😄 .

 

On 9/12/2020 at 10:24 PM, Raqeebzy said:

However, you have a very good plan for trading of talk token. A lots of newbies here with little or no trading experience don't think that, they just want to dump in the market, make few profits and run to the forum to mine more.

Some newbie members might be that unscrupulous indeed, although some of them isn't totally to blame. They might be hoping that the tokens will fetch a good enough price to help alleviate their expenses if they happen to be in heavily COVID-19 stricken areas. In crisis-free times this might be a different story though.

 

Speaking of the pandemic, the crisis today would also add a healthy chunk of stress to some individuals who may be earning barely enough from crypto at this point. Any fatal mistake they make at this point would be lethal for their livelihood, so let's hope they can find the time to calm down and think clearly before making action. Especially now that BTC crashed by more than ~$1,000 compared to last month.

 

On 9/12/2020 at 10:24 PM, Raqeebzy said:

You already have the knowledge as I have clearly see from your article but the practical experience promised to be a different experience. Wait for it!

Thanks for reminding. What I have learned so far will definitely be tested with what I will experience.

 

[BitcryptoHan 2557]

On 8/19/2020 at 7:33 PM, Whited35 said:

I wish, I learned these facts before I dived into crypto trading field. Quoted point has a significance in my life.  Due to a huge loss in a day trading, next time I again repeated the same mistake(Selling pressure) due to excessive FOMO. Now, I have learnt so many things to minimize the risks while performing the cryptocurrency tradings. 

To tell you the truth, people will always pose trading to be good, with patience it can be good but with what I have known, one of the easiest ways to lose funds is to day trade cryptocurrencies. Many traders do not want to accept the fact that swing trading is bother best that traders gain from. Over 70% of day traders often lose. Which mean it is worthy of knowing that some trading is not good at all. 

[Whited35 15285]

4 hours ago, BitcryptoHan said:

To tell you the truth, people will always pose trading to be good, with patience it can be good but with what I have known, one of the easiest ways to lose funds is to day trade cryptocurrencies. Many traders do not want to accept the fact that swing trading is bother best that traders gain from. Over 70% of day traders often lose. Which mean it is worthy of knowing that some trading is not good at all. 

@BitcryptoHan I prefer day trading only when I see a high price volatility of Bitcoin and some altcoins. I do not get profits all the time but I become ready to face the risks. It's been already a long, I have been preferring p2p trading platforms to purchase Bitcoin which is actually risk free for me. 

[Raqeebzy 6456]

10 hours ago, kyoukage01 said:

Yes, that's right. I make no secret of the fact that the birth of this forum approximately coincides with my first in-depth learning experience of cryptocurrencies. And I do not think highly of myself as a top member. Old member by this forum's standards, maybe yes. But definitely not at the top, as I even have yet to reach my 1000th post 😄 .

It doesn't really matter the number of posts to know a top number, I know you know. And yeah, there isn't any reason being so secretive on trading experience or level. I have been trading before I joined CryptoTalk but it was more of a trial and error and waiting for signals from acquittances; as far as trading is concerned, I have learned a lot in the section as well as the Russian section (mostly). There were moments I thought I should have had some patience but all in all, experience is the best teacher.

Good luck on your trading experience.

[BitcryptoHan 2557]

19 hours ago, Whited35 said:

I have been preferring p2p trading platforms to purchase Bitcoin which is actually risk free for me. 

P2p can be a good means of trading, but most people use it to trade cryptocurrencies for fiat, but while trading cryptocurrencies to cryptocurrencies, people prefer to use normal trading platform for ease. This was my experience, I do not know about your though. 

 

About trading, I agree with you to trade bitcoin during high volatility, I took have tried such before. But at times, with trading mindset, I got a gist my rules and I lose. 

 

 

[Zaino34 0]

There are many things that must be learned before starting any field in the fields of encryption, especially trading, and the most important of all is to strive to gain good experience in this field, benefit from the experiences of others, learn from our mistakes and strive to avoid them and choose good platforms and currencies for trading.

[Whited35 15285]

5 minutes ago, BitcryptoHan said:

P2p can be a good means of trading, but most people use it to trade cryptocurrencies for fiat

@BitcryptoHanWell, they use P2P for PayPal or Skrill money by selling Bitcoin but I always use P2P platform like Paxful just to buy Bitcoin. Honestly, I have never sold BTC on P2P platforms like Paxful.Also, there are already so many good trading platforms if traders really want to trade crypto against fiat like Payeer.

[BitcryptoHan 2557]

25 minutes ago, Whited35 said:

@BitcryptoHanWell, they use P2P for PayPal or Skrill money by selling Bitcoin but I always use P2P platform like Paxful just to buy Bitcoin. Honestly, I have never sold BTC on P2P platforms like Paxful.Also, there are already so many good trading platforms if traders really want to trade crypto against fiat like Payeer.

Also on p2p exchanges, we still need to be careful, some people make use of such exchanges like paxful to scam. Although, they may be rated down but they would have scammed some people. I make sure I see the fist sent in my balance before I release any money from escrow. I know many people that were scammed this way because they release bitcoin too early. 

[Syedbesharat 5423]

I started forex because of my friends who invested their years and learn it. They helped my out and guided. Without their guidelines I don't think I would hold candle. I wasn't aware of anything they trained me and shared all their knowledge. These are all the points which I learned but honestly I don't think I have become pro. I considered my self as newbie and cautious about mh every trade and don't leave until I made profit. Because market made jump in split of second. Always alert and don't put your shoulders down. 

[Abdalrazig 1865]

Thanks very much for the information you provided, really helpful, In my opinion knowing the volatile of Crypto currencies will help you to calm yourself and act sanely, cryoto market may act aggressively and controlling your emotions can help to make it safe.

[Brushless4500KV 4214]

To maintain your wisdom and common sense during trading, you have to make everything clear before start. This is where the importance of having a plan comes to mind. Review all stages of trading from start to finish in your mind to see if a particular position worth joining or not. Don't waste your time by joining the market out of nowhere. Calculate your margin of error to know in advance how much you will likely to lose if anything goes wrong. This is how you can trade with complete consciousness and calmness.

[Razan alikac 1899]

Keeping a record of your trades and evaluating your trading techniques from time to time is essential
 Calculate the size of your risk accurately and place a logical stop loss to reduce the size of the possible loss, and you should know that the size of your risk should not conflict with the size of the expected profit.

[Abdulrahman3 1252]

You actually summed up the benefit of the post in the last addition. There are many who spend their time on screens waiting for a certain currency to rise or fall, and do not know that if they learned something at this time, they would become professionals in it.

[kyoukage01 3181]

On 12/2/2020 at 11:19 PM, Abdulrahman3 said:

You actually summed up the benefit of the post in the last addition. There are many who spend their time on screens waiting for a certain currency to rise or fall, and do not know that if they learned something at this time, they would become professionals in it.

This topic's advice should be of great use to traders, especially more than ever with Bitcoin's price almost hitting $20,000 for a few times already these past few days. Short-term traders now are most especially prone to stress, nervous about current price charts, market behavior, etc. possibly changing at the drop of a hat. And with stress, the mistake of placing a trading order at the wrong time (assuming he is not relying on any trading bots) can rise dramatically.

 

Edited December 7, 2020 by kyoukage01

[Smallingcane012 344]

The many ways to stay scene when trading in crypto talk is for you to have ampe or gather enough of knowledge about it before starting it.

[Arslan Ch 2163]

Very useful amd handy tips to start our journey at trading and it is very very important to have proper knowledge and information about trading and the market before doing any kind of trading as it is a risky task and a person without knowledge will suffer a lot so give your time to learn about it and to acquire the skills to do better analysis nefore trading.

[afez420 20]

Very true. It's important to keep your sanity when you want to trade and keep your emotions out of your trades. Thank you for the post

[Ayeshamalik 165]

Before  starting  any work we will learn about it and gain the experience  about it we must  learn the with others .when we gain knowledge about it we must learn from mistakes. So stay sane while  doing  trading.