Can I Make A Living Trading
When people ask me can I trade for a living, my answer is it depends. When they ask me how they can get started and I begin to explain all that they have to learn, they quickly lose interest.
Most people become intrigued with trading cryptocurrency as a get rich quick scheme. They heard about “Bitcoin” in the news, how it’s worth $2k and was once worth only $7. “Imagine how rich I’d be today if I had bought Bitcoin then.” People don’t realize that, that was 8 years ago. It has taken Bitcoin 8 years of rallies, corrections and reversals (some lasting years) to be where it is today. Had they bought in 8 years ago would they have held or would they have sold? How would they have fared when they read the stories, “Bitcoin is dead”. How would they handle the emotions driving the price of crypto assets, and the hype/fud surrounding altcoins.
People hear the fancy stories of how those who bought in last year are now rich this year. They see an easy way for them an average joe to get money quick if they choose the right lottery number or the right coin. In their mind Trading is a form gambling. You place your bets and sometimes, sometimes you get to win the lottery. What an easy way to get rich quick. A way to get back all the money they lost or need to buy a new house, get a new car, or live independent and free. They don’t view it as a business or a job, and even the traders I meet who see it as a job, only think what can make them a profit yesterday. Most people are very short-sighted in this regard and react impulsively.
90% of Traders, that’s 2 out of 3, exit at a loss. New Traders fall prey to:
- Traders of varying levels of experience calling themselves Masters and Gurus
- Pyramid schemes
- Scam Organizations and companies offering ICOs (Initial Coin Offerings).
- Hype and Fud in forums, chat rooms
- The fake news often written by owners of the coin
- A community divided between the merciless and the ‘merciful’
- Empty promises that prey on dreams of escaping poverty and/or the middle-class on a quick way to become rich
- And more
Behind Every Trade Is a Person, That Person Is You
When I see charts I don’t see arbitrary numbers and candlesticks. I see human beings driving the value of the market based on their hopes and fears. I see a struggle between buyers and sellers, bulls and bears.
In this way behind every trade is a person. Charts are monitors. They track the actions of you and me, people on a global scale. They are real-time vital signs, monitoring emotions. The charts tell a story using candlesticks and volume, all measuring how many people are buying or selling. It’s this process of buying and selling that determines the actual price, the value of what something is worth. It’s this Value Creation that determines the price of everything in our world. Getting good at reading the stories of these charts is a matter of getting good at understanding ourselves and the people beyond us.
Jumping From One Frying Pan To Another
Many people look at trading cryptocurrency as a way to make a lot of money. They jump in without realistic expectations. Trading will allow me to escape poverty. And so individuals merely shift their burdens from one frying pan to another frying pan. The reality of the market is that it moves at the whims of fickle people who are motivated by greed on a day to day basis. Yesterday the market was rallying, prices soaring carried only on the backs of speculation. Today those high emotions exhaust themselves, having nothing substantial to hold onto the price crashes and corrects itself to reflect its true value. The quicker and higher the prices rise, the deeper and harder the prices will crash. Prices return to a more predictable, less volatile trading range representing buyers and sellers who have equal strength and control. There are a few pumps and a few dumps here and there; but ultimately the true value of the coin continues its slow steady growth upwards. If you’re not prepared for how you’ll enter and how you’ll exit, how you’ll hedge, the highs and the lows, how you’ll manage the risk that comes with this emotional volatility; then you open yourself up to the same set of issues you would have had when you were working the 9 to 5 job you thought cryptocurrency would help you escape. Only worse because for some people this may be your entire life.
Gambling instead of Risk Management
Imagine this scenario.
“Yesterday the market was rallying, prices soaring carried only on the backs of speculation. Today those high emotions exhaust themselves, having nothing substantial to hold onto the price crashes and corrects itself to reflect its true value. The quicker and higher the prices rise, the deeper and harder the prices will crash. Prices return to a more predictable, less volatile trading range representing buyers and sellers who have equal strength and control. There are a few pumps and a few dumps here and there; but ultimately the true value of the coin continues its slow steady growth upwards”
If you’re not prepared for how you’ll enter and how you’ll exit, how you’ll manage the risk that comes with this emotional volatility. Then you open yourself up to the same set of issues you would have had when you were working the 9 to 5 job you thought cryptocurrency would help you escape. Only worse because for some people this may be your entire life.
To trade you must know yourself. Your weaknesses, strengths, desires. Trading is a job, it’s a ‘trade’, a business. Like any business you have to learn is this job right for you? Or are you best suited for something else?
Trading is best suited for people who:
- Are Able to Practice Patience & Self-Discipline
- Can See long-term over short-term
- Take time to Research
- Seek opportunities
- Manage Risk
- Have a Good Wealth Formula in Place
- Trade because they are passionate about the market
- Can self-assess honestly and accurately
Trading is not suited for people who:
- Are living paycheck to paycheck
- Like to gamble and take lots of risks
- Are unable to delay gratification
- Need to be handfed information
- Believe everything they read in the news
- Have a lot of Debt
- Live outside their means
- Are controlled by greed and fear
- Have a tendency towards panic and anxiety without controls
- Only trade because they feel they have to
- Are impulsive with no means of regulating those impulses
While not impossible, it’s difficult to be calm and trade with a rational mind when you are worried day to day if you can even pay your bills. It’s hard to focus on learning something new when you’re focused on where you’ll get your next meal. It’s a good way to earn a living if this is what you are good at, but it’s not a great way to earn a living when you’re already stressed out.
Who are You and Why Do You Trade?
- Why are you trading?
- What are your goals?
- What’s your personality?
- Are you introverted or extroverted?
- Or you rebellious or a conformist?
- What’s your risk tolerance?
- How well can you handle delayed gratification?
- Do you chase the market?
- What is your relationship to money?
- Have you practiced any paper or virtual trading simulations before entering?
Market Psych Test is a free test that will help you better understand your saving and trading habits. If you tend to be someone who is overly emotional, but still feel passionate about trading the trick would be to find the trading style that best caters to your personality.
If you know that you need to eat healthy but buy cookies every time you go grocery shopping you’re setting yourself up to fail. But if you know that you struggle with delaying gratification and resisting temptation then you need to set up your trading style so that it works with you not against you.
Who are You and What Are you passionate about?
- What are you naturally good at?
- What are your strengths and passions?
- What do you enjoy doing?
- What would you be doing if you didn’t have to trade?
- What are your values?
- What is your Purpose or Mission Statement?
- What would you be doing if you could do it for free?
- How do you measure success and failure?
Is Independence for you?
- Can you handle unpredictable income streams?
- Can you afford to step back when things get tough?
- Do you enjoy working with people or prefer to work solo?
- Can you start and finish tasks independently?
- Can you manage money wisely?
- Are you able to set up schedules and routines?
- Are you able to set up and achieve your own realistic S.M.A.R.T., short and long term goals?
- Are you able to focus on your M.I.T. tasks?
Assess your current strengths and weaknesses with these free tools:
Once you figure out what you’re passionate about you then have to figure out how to bring in cashflow that makes sense to you.
As an example: I enjoy writing, trading and helping people learn. I can write about trading all day long, and find it helps me connect with people. I don’t enjoy socializing or participating in day to day chit chat. Since I am both passionate about trading and good at it what I do here has become an option for me.
Know Thy Business
When you start a new business do you dive head first without doing your research? It’s wise to ask questions related to the environment you are about to enter.
A Good Trader asks questions related to the environment they are about to enter.
- They look to understand their competition (other traders),
- how do they think, what are they buying,
- who are the big players in the games,
- what are the best and worst performing crypto assets
- what common mistakes do new traders make,
- how do people fail and succeed;
- what do I need to do in order to avoid losing and actually gain a profit.
- How do I need to think.
Striking out on your own means that your income is going to be unpredictable until you can find a steady rhythm. These are a few but not all questions that someone new to the community might ask.
- What type of crypto assets do I want to trade?
- What exchanges are available to me to trade?
- What problems do these exchanges have?
- What does it take to bring in “predictable” income streams?
- How do I get started trading cryptocurrency?
- What do I need to know to do this?
- How can I protect myself, prepare, or handle the volatility in the crypto-world?
There are many ways to determine if Trading is for you. The best way to answer that question is to approach Trading for what is, just another job. Some people say passion is overrated. I believe passion is necessary because it helps keep us motivated and committed when things get hard. If we’re passionate about trading it will push us to increase our performance. If we view trading as an extension of our mind and lifestyle we can use it to help us improve our mind, self-discipline, self-mastery, and growth.
A Few Resources: