About waves, trains & uncertainty

“I came here from IT.  I would write the program, and it would work. If it works, then it will work forever. If it does not work, then it has errors. I find them, fix them, and the program works forever. With the same input data, I get the same output data. This is my familiar world where everything is interconnected. But on the stock exchange for the same assets, at the same level, with all the same parameters, the result may be different. Because people trade from day to day in different ways. Because they are people. Because there is no common set of rules for them.”

These words were spoken by one of the participants of the “Million Dollar Traders” reality show who could not cope with the psychological burden of trading.

And this is one of the reasons why beginners are often disappointed in trading on the stock exchange. There is no set of rules in the market. The same trading strategy under the same conditions may or may not work.

How to trade cryptocurrency if the market is unpredictable?

What to rely on?

The answer is that you better rely on unpredictability, my friend.  And risk management.

trading

Stable traders and psychotherapists advise to act contrary to what seems natural.

(Hold on! I’m not talking about buying high now!

Please, be patient and read to the end!)

The thing is the market is like an ocean. Have you ever  tried to control the ocean?

And so, it is impossible to catch up with a bull or bear market. Chasing a fleeing prey is so lame. And yet, there are those who still do.

But if you want to get everything from the market, you are gonna have to meet it face to face.

When you feel like grabbing your piece of elusive profit, imagine that you are rushing with your suitcases after the light of the last car of the train. Pull yourself together, go back to the station and wait on the next train.

And in the case of the ocean, if you have not ridden the wave, do not try to catch up with it, because the next one will cover you. Which, by the way, you might have caught it if you hadn’t been so focused on the first one.

When you wait or go against the trend, you get out of the flow of unnecessary bustle and keep the cold look of a hunter sitting in ambush. Therefore, you have time to calm down and aim to shoot without a miss.

The problem for novice traders is not that they have problems (well, who doesn’t?), but that they get fixated on their failures, on the personally customized indicators and familiar strategies. They go way too far in combining drawing tools and sophisticated trading methods.

And at the same time, while in a hurry, the novices make critical mistakes that lead to losses because they:

  • significantly increase the size of the position if the two previous transactions were successful;
  • act by impulse, make decisions under the influence of emotions;
  • delay short-term transactions;
  • fall into short and long squeezes;
  • get into pumps;
  • spend more time analyzing before entering the market instead of analyzing more before exiting it.

Such a race of novices prevents them from correctly assessing the overall situation and, thus, makes them rush past ready-made, but not obvious, solutions.

Unfortunately, I am no psychotherapist Brett Steenbarger, and I cannot fix your head if everything I have mentioned above applies to you. But I can assure you that I’m good at calculating the profit factor and potential risks from any trade. Therefore, I can tell you how not to screw up on emotions. Just trust in me.

May profit, trustworthy provider & common sense be with you!

Your witty buddy, Letit.

Tags: trading,
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