The 12 Golden Rules of Crypto Trading
I have collected the best wisdom from countless books on trading, sifted them through the strainer and used them to bake the 12 golden rules.
1. There is no win-win situation
Think back to the seesaw on the schoolyard. Two children rock up and down. There are two states. Either one child is up and the other is down. Or they balance themselves in the middle under a lot of strain. That’s how trading works. Sometimes nothing happens and the courses balance in the middle under a lot of strain. However, every time a trader makes a profit, a different trader takes a loss. The seesaw cannot be up on both sides. Simple physics. The question is: Why do you think you’re better than your counterpart?
2. Trading is war
In organised battles between nations, there is the term “fog of war”. The general can’t see the entire battlefield but only what’s in front of him. He has to make decisions with incomplete information. It’s the same with trading. Some traders are always on the wrong side of the asymmetry. There are so-called whales — they own so much crypto that they can strongly affect the course with a trade. However, only the whale knows when he will make the trade. If a (real or fake) message drives the price, then we usually find out about it too late. The winners in trading are those that have the significant information before the others do.
3. 50 plus 1
Once again the seesaw. There are only two relevant states a course can have: rising or falling. It’s a matter of 50:50. If we let a monkey trade, then the probability of it being right is exactly 50%. Nobody is 100% right. There is no system that can always predict an irrational and repeatedly manipulated market correctly. The goal of every trader is to be right at least 51% of the time. Every trader needs a frustration tolerance for losing money in 49 out of 100 trades.
