Inside The Mind Of Crypto Traders
A couple of months ago I came over a site called "Alpha Illustrated" where they interview some of the best crypto traders.
In this newsletter, I wanted to share some of my favorite snippets and takeaways from these interviews.
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Inside The Mind Of Crypto Traders
Starting out with trading
A common answer among the traders is that they wanted to earn money. They saw trading as an opportunity to be free from the 9-5, to be their own boss, and to not have a cap on their income potential.
Trading is in a way very honest work. Your PnL never lies. If you choose the wrong side, you lose money. If you're consistently wrong you won't survive long-term. Only those willing to adapt will survive.
Trading is one of the few careers that allow you to have complete control of your time.
It’s you vs. the market.
Another common theme among the crypto traders is that they originally were poker players, or already were involved in some form of money speculation like stocks, forex, odds betting, casino games, etc, and saw crypto as an inefficient market that it was possible to take advantage of.
The average day as a trader
When most people think of traders they think about a glorious lifestyle with lots of free time, champagne, girls and travel.
However, most traders actually spend lots of time in front of the screen.
The well-known trader @HighStakesCap says this was how he lived his life for several years:
"Wake up, check the price, 15 minutes of cardio, breakfast, check Twitter and the market, talk with friends about the market, lunch, check the market and my positions, go to the gym or go out, restaurant and then check the market at the end of the day".
Also, check out this tweet from AlgodTrading below:
Algod's point here is that the flashy life with cars and party every day isn't true (at least for 99% of traders), but instead, it's grinding in your mother's dark basement, no sunlight for days, constantly browsing TG/Discord/Twitter/staring at charts, not participating in "a normal" life etc.
About motivation and making it in crypto
What may seem surprising to normies is that most traders actually don't think of trading as work. This is what they want to do. There is no end game. This is a competitive sport. The day you start thinking that you've made it is the day the game is over.
One of the traders, @Cubantobacco, wrote this that really resonated with me:
"I believe making it means having the wealth to live as a perpetual traveler, being able to subscribe to flag theory and experience life through a series of global adventures. The idea that we should be bound to one room, one role, one town, and one life, is in my opinion, one of the cruelest tricks played on society. Making it, to me, is transcending that lie and having the means to live extraordinarily".
I found this section interesting because I feel that it is very relatable to me.
Btw, the Flag Theory is the idea that you should go where you are treated the best.
The goal is to diversify your personal and financial affairs so that no one government has control over you or your money.
Every time you base a part of your life in a new country, you plant a “flag” and diversify according to factors of geography, finances, law, lifestyle, taxes, business, health, politics, investment, and more.
I also tweeted about this a while back:
Some good trading advice from the interviews
Money is made in the middle, don't obsess over tops and bottoms. Too many people try to time the market, but the truth is that there's money to be made all the time.
Almost no one has ever made and kept meaningful wealth by being a bear.
Forget your ATH account balance, get back on the horse, and trade with your new balance rather than holding on to what could have been.
Anecdotally, if you start sending fellow traders screenshots of your PNL, it’s probably time to take profit.
I feel like everyone needs to find a way of trading that makes sense to them personally.
Important traits to have as a trader
There are a few, but important ones are probabilistic thinking, common sense, self-awareness, resilience, patience.and the ability to delay gratification.
Most people that play the markets are short-term thinkers. It makes sense - they were likely attracted to this game by the allure of making a lot of money. Short-term thinkers tend to be more emotional. They are the people who get bearish at support and bullish at resistance. People who can play the long game are the ones who tend to perform best.
Hard work, screentime, conviction, and self-restraint are ingredients to make it.
Also having an obsessive-compulsive personality or mildly autistic traits are probably not a disadvantage.
You should have an endurance mindset and be willing to spend far more time on crypto than 99% of people.
Fortune is made by big wins, not by compounding small ones. Patience to bet big is critical. Most traders constantly change their view on the market under the pull of their emotions which is disastrous when combined with leverage. It takes a strong mind to handle the pressure and deal correctly with significant losses.
Trading can be just as intuitive as logical, but as traders, we tend to overcompensate with our minds and neglect our intuition. You either have that level of intuition, or you don't. It sounds harsh, but most people aren't cut out for this life and will eventually be net-negative on their lifetime PNL.
Your mindset and control of your emotions are more important than charts. Most traders know it, but very few work on it.
Find a close group of friends you can learn with, share alpha with, and learn the painful lessons with. Having a close support group in this space is invaluable. Trading can bring tears of happiness, but it can also bring tears of panic. Both ends of that spectrum are better as a group experience.
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All the interviews can be found here: https://www.alphaillustrated.com/interviews
Some Last Thoughts
A Book I'm Reading
I'm currently reading "The Network State" by Balaji.
Highly interesting book and you can read it for free here:
https://book.thenetworkstate.com/tns.pdf
One passage that stuck with me:
"The key idea is to populate the land from the cloud, and do so all over the earth.
Unlike an ideologically disaligned and geographically centralized legacy state, which packs millions of disputants in one place, a network state is ideologically aligned but
geographically decentralized. The people are spread around the world in clusters of varying size, but their hearts are in one place".
In other words, a country that is ideologically aligned but geographically decentralized.
Sounds beautiful, right?