Zen and the art of day trading

Trading cryptocurrency or any commodity, is a learning curve, and in the early days one can learn the technical analysis required to read a chart but there is always that most important element in trading that can’t be so easily learned on paper, namely the psychological factor.

Trading, according to billionaire investor Howard Marks, is a psychological game. You are dealing with your own mind and instincts in the moment on the day. The mind can vary in its outlook or interpretation of a chart from day to day. Also the mind can be defensive or bearish on one day, and aggressive or bullish on the next, regardless of the price of an asset.
So it takes years of experience to really master not only the technicals of the price charts but more importantly your own mind.

Great traders tell us to keep our emotions out of our trading. They get in the way and they also cause us more problems that necessary. All traders, even experts, are going to make mistakes along the way and be obliged to take a few losses. The secret is to make sure your losses are smaller than your gains. In that way you come out on top overall. And when we make those trades that miss the golden opportunities by minutes, then there is no value in hankering or lamenting.

Hankering comes from longing for something yet to be attained, and lamenting comes from missing out on something from which we could have benefited. We need to be active in pursuing our goals, but not attached to the goals themselves, because attachment is what brings suffering in the form of misery in loss. There are going to be losses sometimes so a good trader gets used to feeling uncomfortable apparently. S/he factors in the potential loss by not investing everything all at once, or keeping cool by only investing small amounts at a time.

Also the popular refrain is not to invest more than you can afford to lose. Not that anyone can afford to lose too much, but the idea is not to wager your monthly expense money, because if you lose that month, you will be in trouble. And take a small profit with appreciation, instead of criticizing yourself for missing the bigger profit overall. Nobody can call the tops and the bottoms of price movements with full certainty, so grab the bulk of the move and be content with that.

The saying in many industries is “safety first” and this applies to protecting your assets in trading too. Before attempting to risk anything on making a potential profit, the most important thing is to protect what you already have. Wealth preservation is as important as wealth creation. Sometimes doing nothing is the best move on the day, rather than constantly trying to chase any opportunity, regardless of risk and reward ratio. So it’s defense before attack in this battlefield against the price action.

The power of psychological influences must never be underestimated. Greed and fear are the two instincts that need to be tamed in trading, which becomes like a meditation and a purification process. You see all your shadow qualities coming out and you are forced to confront them and refine them, lest they cause you to lose your money. No one is immune to the animalistic instinct to chase for more when it is dangled alluringly before our eyes in the price charts of the cryptocurrencies all day long.

So don’t be hard on yourself either, when you see the mind fall victim to unwanted traits. Recognize them for what they are, become the observer of the mind. By doing that you immediately distance yourself from the mental activity. As the observer it is easier to see the thoughts as just that, passing thoughts, and the habits as something learned, not actually “you” the observer. By objectifying the mental constructs, we can distance ourselves from them, and then see that we are not them. By being conscious of them, we can neutralize their influence over us. We are not the mind, with its fleeting emotions and passions, but rather we are the observer of the mind.

In this way one practices “Zen and the art of crypto trading”, and finds the trading exchange to be the meditation chamber, where one meets the mind and senses, as well as ultimately the self beyond the mind.

So may you be guided by your intelligence, which is based on learning from the masters as well as personal experience, in whatever path you walk, for all of our paths lead us to ourselves, all can bring our spiritual lessons on the way. Life is the great teacher, and from our mistakes we learn the secrets of the universe. May you learn from the mistakes and wisdom of the past and from others, so as not to have to make the same mistakes yourself.