Cryptocurrency Trading Psychology: How to Trade Crypto Without Emotions

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Human beings are naturally emotional. We express a variety of feelings, and oftentimes we question our own decisions. These are things we have to battle to be successful in trading. While this is normal human behavior, learning how to approach trading from more of a stoic perspective will help us to achieve greater results, especially when it comes to trading crypto.

The ability to know when and how to control these emotions will determine the result of Bitcoin trading, or trading of any asset. Having a calm and clear mind is a major factor in separating the winners from the losers, when it comes to being a successful trader.

Emotional Traders Make Predictable Mistakes

You might have heard of terms describing the behaviors of emotional traders, including: revenge trading, over trading, impulsive trading, being hesitant, market chasing, withdrawal of premature profits, and missing good trades.

When most people begin professional trading, their goal is to make a living without alternative income sources. They spend hours reviewing data, analyzed price actions and eventually, they begin to trade with real money..

Here’s a little-known secret: professional traders often suffer bigger losses than hobbyists. Sometimes this is caused by moving stop losses when FOMO’ing into the next big move. Some traders also withdraw profits too early because they are afraid that price would drop, only to find that they missed out on healthy gains more often than not.

All of these are emotional decisions, and the result is lost profits. Fortunately for you, there are great lessons to be learned when it comes to trading crypto.

Greed vs. Fear in Trading Crypto

Many poor trading decisions that result in huge losses are due to greed and fear.

Fear comes from trades that are bigger than the maximum amount you’re willing to lose. It is also experienced when a trader takes little conviction with trades. We tend to make bad decisions in trading as a result of this negative emotion, and end up selling when we should hold, and holding poor performers when we should sell.

The disadvantage of greed is that it makes traders chase the market. A perfect example would be buying right after a huge sudden move higher even if the market is overbought already and the demand is decreasing.

Greed also makes traders hold a position even if it is past their objective, which makes them lose the chance to exit at the right time before the price goes down. These are emotions that create losses for traders, emotions that traders would have to battle to be successful.

Overcoming Negative Emotions When Trading Cryptocurrencies

Developing a system that works and sticking to it often leads to a successful trade. Having a particular basis for entering trades and exiting as well. Always trade what you have planned. Map your entry, stop loss and withdraw profit in advance. Once you are in a trade, never change anything in your plan.

You must be patient and wait for the right moment before entering a major trade. Entering into average trades will gain average results. If you wait patiently for the best chances to come, you’ll only have to trade less but will garner greater profits. Take notes and write down your specific rules, don’t do anything unless everything on your list is satisfied.

Trade Crypto as if Your Livelihood Depends On It

You need to look at trading as a business, especially when you get to the point of becoming a full-time trader. Create business plans and update them on a regular basis. Keep a journal for documenting any mistakes you’ve made in the past. Make sure to have rules for taking profit to cover your expenses and to pay your bills. Set feasible goals and have your daily activities incorporated in them to keep control of your emotions. Getting into good habits will help you develop a high degree of self-discipline, and the outcome might be that you become far more profitable. Like any business, sometimes less is more, so you may find that starting out with just one crypto trading platform is better than having your funds diversified across numerous platforms.

Be Patient

The final outcome is the only thing that matters. Your trade is going to fluctuate in value, so unless you’re a daytrader, there’s no reason to check your trade status and portfolio every five minutes. When you make a trade, let it run its course. When you keep looking at what’s happening with your trade, you are more likely to make an emotional decision that could make you move your stop loss or make an exit that is too early.

Trade During Favorable Market Conditions

The cryptocurrency market is highly volatile. This is great for day-traders, but if you’re reading this article, you’re likely to be interested in longer-term investments. Trade when the market is doing well, and you’ll lower your risk.

You know yourself better than anyone. Only trade when you’re in the right mindset. Don’t rely on the market to help you make your decision. If you think you are not up to trading yet, the easiest way is to simply walk away.

Trade What You’re Willing to Lose

A trade with too much size creates more fear than anything. Just start small and as you move up, your comfort level and as well as your portfolio will also grow within the market. Scale in and out of positions to lessen the emotional drain caused by exiting too early.

Maintain a Trade/Life Balance

You have to spend quality time with friends and your family and maintain healthy lifestyle habits. When you do these things, try to avoid checking your trades repeatedly. Set the time and duration for trading hours and never trade during your personal time. No one can trade 24 hours a day 7 days a week since it leads to mental fatigue and bad decisions.

There are a lot of techniques that traders can use to detach emotions from decision making. Find out which works for you and practice it. Controlling your feelings while trading will help you in becoming a successful trader.

Looking for stock-trading tips? Watch the video below:

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