“A lot of people with high IQs are terrible investors because they’ve got terrible temperaments. And that is why we say that having a certain kind of temperament is more important than brains. You need to keep raw irrational emotion under control. You need patience and discipline and an ability to take losses and adversity without going crazy. You need an ability to not be driven crazy by extreme success.” Charles Munger
Impulsive Bi-Polar Trading Disorder - A trader that is long one moment, short the next, and trading all of the above daily! Irrational Impulsive Bi-Polar Trading Disorder - Same as above but with 26 open trades! Schizophrenic Irrational Impulsive Bi-Polar Trading Disorder - Same as all of the above, but get upset, blaming whales and market manipulators for failed trades!
If you have more than 2-3 trades going on simultaneously you are gambling not trading. Good traders focus on 1 or 2 trade instruments a week not 28. Especially when the entire market is trending correlated around Bitcoin'. Why do you need to trade ETH' LTC' NEO' XRP' and Bitcoin'? They are moving together, not trending independently!
I see over and over now that the hype has withered down, the tendencies of many to chase after unicorns that poop gold' coated rainbows. They are driven by the extremes of last year and now reality has set in. Since the beginning of the year we have maintained a long term target of 20-25k. Unfortunately some think that this should happen in a month or less. Those days are gone and unlikely to return. Enter the new era of Bitcoin' becoming normalized.
Starting with 10k you only need to make 48 10% trades to be a millionaire. Hey if you are making 1 trade a week for 5% you should be there shortly. Unfortunately as simple as the math is, execution is not so simple. Impulsive natures to be in the market daily lead to losses, second guessing yourself leads to more. One 25% loss requires a 33% gain just to get back to even. A 50% draw down of your capital requires 100% profit to get back to even. This is where traders lose their asses. I know there are the guys leveraged to hell with 100 bucks on a forex and account, nailing it. This is not reality, this is playing with chump change. Would you make the same trades with 20k?
Like playing poker you often sit for hours throwing away hands. Even the cards you play do not pan out. This is the time for being conservative and focusing on capital preservation. Money is not made in playing every hand, but waiting for the right hand and having the capital to play. What good is getting a double up hand if your stack has eroded 50%? The same goes with trading and investing.
The past 9 months have been rough. One day 80% of bitcoin' analysts are bullish were headed for 20k, the next day there is a flying wedge with angular momentum and we are headed to 3k. This is the impulsive nature of being a bi-polar trader. This is why we have taken the position that long term we move higher. We have never changed that since a year ago. In fairness we have a couple buys that are in the red, but we are not flipping in and out of the market compounding losses. Eventually our thought is the market will recover and position trades for the long term will pay off. Goes to zero, so be it.
With that said we may be seeing a change in trend (brown dotted line). Since late May early June the market has been consolidating. This is not a bear market as we are not continuing to make new lows. (A bear market is defined as a 20% lower low in the course of 2 months) Quite the contrary we are making higher lows. The key here is the lower trend line appears to have changed. Three weeks after the initial selloff the market is holding up. We would have expected to see weakness but this is not what we are seeing.
Actually long signals are starting to show up and though there is the potential for a pullback, this is increasing the probability of an initial impulse wave. Now coins like ETH' and LTC' are still considered bear markets, but Bitcoin' is not.
I added back on the chart the green impulse wave and a break of 7400 over the next couple weeks provides additional evidence we are moving higher in the mid term. Now this does not mean we are going to be 20k by the end of the month, maybe not by the end of the year. It is providing evidence that in the near term we can look to start adding to our longer term positions. However we must remain patient. This is why we trade other markets. Hot markets are simply the ones you want to trade, and cryptos are not hot.
Again we still lean towards a retest of 6k in the near term, but a break of 7100 and subsequently 7400 makes this less and less probable. Regardless patience and the discipline to stick to a plan in lieu of forcing trades is the key to success. What good is getting pocket aces if you only have $25 left to go all in with?
If you look at your portfolio, and you have 4-8-10-50 open trades, are positioning daily, you likely have Irrational Impulsive Bi_polar Trading Disorder and I recommend calling 1-800-gambling to resolve this issue. You are not trading, your not investing, you simply have a gambling problem!
Good summary about trading. May I add one of my favorite quotes
“After spending many years in Wall Street and after making and losing millions of dollars I want to tell you this: it never was my thinking that made the big money for me. It was always my sitting. Got that? My sitting tight!"
yeah. spread some hopium. sound great. that's what most bulltards are doing now @ twitter.
Unfortunately, lacking a real and meaningful catalyst this market will drift lower.
See you @ 5500 soon.
relaw
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@niceryders, in your drims :)
relaw
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@relawiszcze, dreams*
Darkside999
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@niceryders, so if you are wrong are you just a noob? I do agree with your chart though
KhessonDalef
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Thanks goldbug! Always plenty of food for thought. I am one of the typical retail traders you usually talk about, jumped in during the 2017 euphoria with cryptos left from old days of silkroad shopping, trading a rather small account, has zero background in finance or economics etc. However, I read all your posts in the last one year and I started to think of you as the senior colleague I would have if I would be a floor trader. By carefully listening to yours and Mike's advice, I managed to avoid the typical mistakes you list and it preserved my capital nicely, it has actually grown (not much though, no luxury watch collection lol). Also, it is easy for me to relate to your examples as I cooked in restaurant kitchens a lot during uni (political science) and I also played texas holdem for years when I used to have time sitting around in casinos and my pc for long-long hours calculating expected values, probabilities and reading others etc. Technically, I owe you the money I did not lose because listening to you. I cannot understand the ones being nasty to you here in the comments, but I suppose they are the source of your profit. Thanks m8!
@KhessonDalef, You are more than welcome to donate a few bucks to a charity! I would rather see the money go there!
znog
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This post is great. I wish I read something like this a year ago. Fortunately enough, I started back then with a few hundred bucks just to learn how this worked. I learned with time... and I see confirmation on your posts. But this one is spot on.
“After spending many years in Wall Street and after making and losing millions of dollars I want to tell you this: it never was my thinking that made the big money for me. It was always my sitting. Got that? My sitting tight!"