Any successful bitcoin millionaire will likely confess that learning to control emotions while trading is essential. In order to make money, one must be calm and calculating. This is especially true in the highly volatile cryptocurrency market. Even if most of us may not become bitcoin millionaires from trading, we can learn from those who did to achieve our own levels of success. Some of the most common emotions to overcome are impulsiveness, revenge, and hesitation. Emotional traders that chase the market, enter positions too late, take profits prematurely, or trade impulsively will blow up their accounts before coming close to bitcoin millionaire status.
Emotional Traps to Avoid
Trading decisions based on emotional impulses rarely end profitably. Greed, panic, fear, and excitement have a way of completely cancelling out rational thought. Trading what you can’t afford to lose will often cause doubt or greed. You can avoid negative emotions when volatile price movements occur by having and sticking to a trading plan. Intuition is one thing, but panic, fear, greed – those are not to drive your decisions. Euphoria after executing a few successful trades can easily cause one trade too many and the loss of all your gains.
New bitcoin traders often feel overwhelmed by how much information has to be interpreted when trading. Take your time and don’t rush to enter a trade. The market will often enter a no-trade zone while moving sideways. Take this time to learn more and plan your next trade. Overtrading can lead to total loss by many small, poorly timed trades. Experienced bitcoin millionaire traders time their exits and entries to scalp short term profits from price swings – but new traders should not try this approach. Exercise some patience and remember Buffett’s quote for the stock traders can apply equally to bitcoin traders.
“The stock market is a device for transferring money from the impatient to the patient.” – Warren Buffett
Think Like Millionaire Bitcoin Traders
Gaining investment and trading knowledge is key to generating long term returns from your efforts. Understanding the risks being taken with your hard-earned money and take the time to research fundamentals. Most importantly, identify your own risk tolerance level when planning your investment strategy. Knowing your risk tolerance level will help you understand and adjust asset allocation in your portfolio.
When trading your Bitcoin, it is important also to define your goals. Short term goals should be carefully managed to account for volatility and high risk. When market movements take a downtrend, have a reserve fund of cash or liquid investments to avoid selling your BTC at a loss. Develop patience to wait for the market to move favorably and do not make rushed decisions or be overly conservative. Holding too much cash and under-investing will cause you to miss out on compounding gains while paying more taxes.
If you can devote to full-time trading, approach it like a business. Record your mistakes to remind not to repeat them, and have a specific set of rules for taking profit. Take care not to force bad trades with no real direction just because you feel you must be in a trade. Knowing when to trade is half the battle.
Once you develop a winning system, stick to your criteria for entering and exiting trades, or setting your stop loss. Avoid changing your strategy once you are in a trade. Be patient and don’t let emotions drive a decision to exit too early, or move your stop loss. By the same token, don’t let greed make you hold a position past the target you’ve set. It is as hard to call the top as it is to catch a falling knife. Avoid doing either, be patient, wait for your entry, and take your profit.
Bitcoin Traders Need Realistic Expectations
It is important to have personal financial goals defined, and the same is true for bitcoin trading goals. Bitcoin millionaire traders are diligent about setting goals and are generally obsessed with the pursuit of their goals. It is advised to have short, medium, and long-term goals that are specific, measurable, achievable, realistic, and timely.
Developing realistic expectations means investing in your self-education. Instead of spending $100 a week treating themselves, a bitcoin millionaire is more likely to invest in online trading courses or books. Don’t shortchange yourself when it comes to learning.
Rebalance investment portfolios on a regular basis. Bitcoin traders rebalance when the relative weight of a crypto asset deviates from their target allocation based on defined goals. Realize that not all traders are profitable, and for every bitcoin trader that benefits, another loses on the other side. Whales drive the altcoin market and wait patiently for small traders to make mistakes.
Some days bitcoin millionaire traders only keep their profits by not trading at all.
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This article is for informational purposes; and should not be considered financial or investment advice. Consult a financial professional before making significant financial decisions.