Is trading Crypto not like gambling?

up in smoke
You will go up in smoke.
This site started as a simple journal of my ongoing experience. Nothing on this site represents financial advise to visitors or members. Please know that I am no certified financial adviser. I am a simple speculator on a shoestring budget and do not mind sharing with others what I have come to understand.

Well, while playing roulette, a player is at the mercy of chance. While playing poker, a player needs to know when to hold ’em, when to fold ’em, and when to walk away. While playing bitcoin, a player better remembers that Kenny Roger’s song. Yes, it sometimes feels a bit like gambling, although a crypto trader has a lot of control – not over price, but over his or her trade execution.

Still, trading crypto can also be understood as playing Russian roulette instead of rolling dice. Trading crypto is as exhilarating as gambling, and as such perhaps falls under the category of entertainment instead of wealth creation.

I got my start with bitcoin in 2013 on the now defunct Mt.Gox exchange, and restarted my swing trading on Coinbase in Winter of 2017. Coinbase is a simple, easy-to-use spot exchange and fiat on-ramp to buying bitcoin and/or some altcoins.

Made some money, lost some money. Did not get rich by now (April 2020)! So, unless Bitcoin and alts are going ballistic again, retail traders like me will most likely just break even.

Some people are lucky sometimes. They bought Bitcoin just before a parabolic rise or Dead Cat bounce and held for a profitable while. But luck and fate are not operating consistently in people’s lives. Not in mine, and perhaps not in yours. So, be warned.

Technical Indicators, Chart Patterns, & Candlesticks Formations

Do they work? Will they make me money? Which ones are the best? Here is my opinion: yes, they work like a tool. But it is not the tool that builds the house, it is the craftsman. And the craftsman needs to know when to use a hammer and nail and when to use a screw and driver, etc. There is no magic bullet in trading crypto.

If you don’t want to sit in front of a computer for many hours on many days, but just want to “buy and hodl” bitcoin to profit from an uptrend, then buy bitcoin on Coinbase. Coinbase is a simple, easy-to-use spot exchange with a fiat on-ramp to cryptoassets.

Technical indicators, chart patterns, and candlesticks formations are only derivatives of price action. They are a bit like smoke, which is indicative of something burning.

At times it is fog that a trader is looking at, and not even smoke. But if it also smells like smoke (confluence), something might be on fire. Small fires might get larger, or not if it starts raining. So, do not just be binary in your thinking (up or down) and expect to encounter tons of subtleties in your trading.

I might have an inkling as to the level that price will go to, but I never know how it gets there. I might be able to correctly guess price’s temporary destination, but not the exact path it will take to get there.

It’s a psychological Battleground

The digital asset market, like most any other financial asset market, is a psychological battleground.

Seller vs. Buyer
Seller vs. Buyer (Refresh page to see thoughts again.)

Do you have what it takes? What does it take? Patience, patience, patience, some smarts, an analytical mind, and something totally different to balance out the unavoidable stress. A dog, a mate, friends, family, a real hobby. Something.

If you are in it for the long run, you will need to monitor your wishful thinking, your “huntches,” distractions and your trading rythm, and your decision-making process. An unexpected loss can really throw you off, while an unexpected gain will put you into euphoria. We might all be aware to keep emotions under control when trading (if we could). But really it is about understanding how one makes decisions, including trading decisions! Intuitions and the big emotions of fear and greed are only one aspect of this mystery.

And you will eventually encounter your predatory killer instinct, if you have one at all. It’s not going to be there all the time, but once in a while it might show.

Manage Risks to avoid losing Money

You need not be a trading machine to be profitable. It’s OK to be on the sidelines and just watch. It’s OK to be in cash in your trading account, that is in USD or stable coin. It’s OK to wait for an opportune moment and then pounce. It’s OK to only make a handful of trades per year. Golden opportunities are not that plenty, but a few are always coming down the pike.

tom-bike
Cheers!

To start off with, be cautious and do not yet trade long or short on margins, that is with borrowed money. In my first year of trading, I did not buy long with leverage or short the market. It’s OK to let others be heroes, daredevils, and trailblazers.

Do not ever “sell the farm” for crypto; but ease yourself into wealth.

Are you ready?