The world likes getting obsessed with things, and cryptocurrencies are no exception. Why is this happening and how can we prevent it?
The world is obsessed with cryptocurrencies. In some cases, quite literally, as a hospital in rural Scotland, has started treating crypto trading addiction alongside alcohol, drugs, tobacco, and other addictions. This is a risk you take with everything you do and love, and cryptocurrencies aren’t an exception.
Falling into a habit in crypto or stock trading is quite similar to gambling addiction. So what separates the rational trader from a gambler, and how do you avoid becoming one? Mainly the awareness that it’s your money and you should look at it as an investment.
Cryptocurrencies are popular because they allow for a lot more freedom than the existing financial system allows for. Traders can leverage their skills to make profitable trades that they might not be able to do in the traditional financial markets. Cryptos are also not bound by a central bank and are probably the most authentic expression of the free market. Their prices are formed freely, without a central authority to intervene to keep them in a specific value band.
Cryptos are also a great way to make international payments without the usual hassle and fees, making them great for people working abroad with families to support. With cryptocurrencies, you don’t have to worry about transactions getting denied, delayed, or sometimes just plain disappeared due to faulty processing.
In some games of chance, like poker and blackjack, the way to tell the professionals who can make money on it vs. the Average Joe who will most likely get fleeced is by the amount of time and dedication they put into the game. Something similar holds for forex trading. Just about anyone can invest in cryptos these days, but to not be Joe who gets fleeced, you need to strategize, adjust your approaches, and stick to your strategies.
Without a strategy, it is just a gamble. However, outlooks for the future of crypto are diverse, and it should not be relegated to the dustbin of history only as an addictive pastime that people once did.
Mental and time stops are a great way to keep yourself on your strategy and not get mesmerized by the dancing red and green numbers and charts.
Mental stops are values at which to close your position that you have pre-determined for yourself. This means that it doesn’t matter which way the trends are going, the position is closed, and the winnings or losses are taken. This approach requires a lot of discipline to avoid simply jumping on a wagon when you see or think you see a trend, but some of the world’s most prosperous forex traders, like Paul Tudor Jones, have shifted their trading strategies towards mental stops to inform their trades.
Time stops are a similar concept, with the limiting factor being a set amount of time a position will remain open. When the time expires, the trader will close the position, win, draw, or lose. This approach requires perhaps less mental fortitude than mental stops, but it still requires discipline. However, a disciplined trader is one who automatically has the edge over his competitors because they will not make impulsive decisions, but have a clear vision of how to trade and at what value.
All that is gold does not glitter. Not all those who wander are lost. If you don’t want to lose yourself to the pursuit of crypto profits, one needs to create a strategy beforehand, improve on it when there is a need, and not stray from it. With these three basic rules, a trader will already be ahead of the pack and can always visit Scotland as a tourist, rather than seeking treatment.