By Augusto Novoa, Finanflix.
Before going to war, one should prepare. I see the crypto markets, especially futures, as a psychological battleground. Anyone can make money in bull markets, but to keep going in bear markets with their high volatility, inflated stop losses, and random price action requires a different kind of preparation.
Trading is not about winning every time with every decision you make and making money like the majority thinks. It’s all about getting the money you’ve earned and cutting losses as much as possible with the right money management techniques.
This requires a high level of mental stability, which one should develop if the urge to trade crypto futures is stronger than oneself.
The ability to make quick decisions based on random price movements is an art in itself. An art that takes time to master. An art where determination takes the lead. You must be able to lose your notion of “losing” when the trading plan has been executed correctly. Each trading plan has different amounts of expected losses (win rate). The amount of wins or losses in a strategy has nothing to do with the amount of money one can make trading the markets. You can have a low win rate, like myself (20%), and still be able to make money. But getting used to losing and waiting patiently for the winner isn’t for everyone.
So it seems that as a trader you need to develop the right mindset in order to get used to losing without this natural aspect of trading ruining your day, your date, your self-esteem and your confidence. Just because you’ll need them for tomorrow’s fight. That tiny gap between a losing streak and getting it done correctly is filled by developing mental discipline.
Woody Allen says that 80% of success shows itself. I agree. It’s difficult to show up the next day unless you’ve developed an inner strength bigger than any bullet the futures market can throw at you. I think that’s one reason there are so few who succeed in this business, or at least find a way to make a living from it. Emerge is an ability in itself. Showing up after defeat inherently requires a kind of specific persistence that is required to overcome that natural mental block created by our ingrained perception of losing. This perception of losing must be adjusted in order to survive by taking a probable standpoint.
“A trader knows his numbers”. He should know pretty well how much he can handle.
Therefore, many traders use different types of techniques. If you want to survive the roller coaster ride, you have to study yourself and write down what’s going on in your mind and body from the first trade you make. I teach my soldiers (trading students) not to focus on profits for the first 6 months of their trading career, but to focus on proper execution and the impact of losses and profits on their lives and the next trade. We need to rewire our brains.
There are some specific skills to acquire, including the mental ability to overcome any obstacle the market throws at you. Hence the strength of not exposing yourself to these dangers in order to make quick profits or the thrill of a trade. Sensation seeking is another thing that a futures trader needs to get inside his own head to avoid becoming addicted to.
Once the trader has the right mindset, the right technical weapons that suit him, and the true meaning of money management techniques, it is important for him to maintain the mental standards with the right belief system to make the next trade right to execute. This could be achieved through self-hypnosis techniques, NLP, repeating the thoughts that are useful to him in trading while consciously ignoring the thoughts that are not. Entering the crypto futures markets enters a highly skilled mental battleground of metahumans, where you must realize that you must upgrade every weakness you find. To me, this unique psychological challenge is what makes trading a business of self-mastery.
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