Crypto trader – Pro’s vs Amateurs

Crypto trader – the pro vs the amateur

Let’s analyse what exactly makes the professional traders perform so much better than amateurs.  The psychological factor is as important as trading skills. 

During the bull market, new traders emerge like mushrooms after a rainy day.  There are thousands of them populating the nethers of cyberspace, showing charts, technical analysis and common trading setups.  Sometimes these new traders make a killing in the market.  This creates a false impression that trading is easy, fun and always profitable.  Nothing can be further from the truth.  We will discuss what makes a professional trader so much different from an amateur and what common pitfalls new traders make.  Knowing this is vitally important when you’re contemplating taking a dive into crypto. 

Mastering emotions

Most people who get bitten by the crypto bug get extremely excited at the prospect of easy gains and the ever rising market.  We get all “fired up” and want to jump in the water with nothing more than a naked ass and absolutely zero experience.  What usually happens is that we end up becoming overly confident, reckless and arrogant.  This inevitably leads us to huge losses down the road. 

Professional traders on the other hand know that the market is a massive invisible power that can either help your small trading ship to float to new heights or completely swallow you to the bottom of the red ocean.  It’s all a matter of perspective.  This is why keeping an open mind is crucial to your success. 

Amateurs think that the “market owes them their profits”.  Professionals know that the market doesn’t owe them anything.  The market is just the market.  It’s a living, breathing entity that will be here long after we have exited our positions and even after we die.  The market will always be here, because it’s a part of human nature. 

The most dangerous mistake a new trader can make is by becoming successful too fast.  Emotions, arrogance and false confidence take over and cloud all the logic and reason.  

In trading, we have to manage risks and probabilities.  Professional traders lock up their emotions into a mental “safety deposit box” and focus on the real data; price action, market sentiment, patterns, technical analysis, indicators and much more.  They don’t care how the market makes them feel.  If you remember one thing from this article, remember this: 

  • The market doesn’t owe you anything

Amateur traders usually understand this simple fact after they have exposed themselves to an unnecessary amount of risk due to their own recklessness and overconfidence.  They make many expensive mistakes.  But not you.  You now know that the market doesn’t owe you anything right? So don’t expect it to make you rich overnight.  That’s just not how it all works.  The longer an emotionless trader remains in the market, the wiser he/she becomes.  Now let’s take a look at strategy. 

The power of strategy 

Now you rid yourself of any emotions and can objectively look at the market, let’s analyse another very important part that makes a professional trader consistently profitable.  

Literally ANY form of strategy that a trader uses ( might it be a simple rule ) will consistently outperform the amateur traders who simply “follow their gut feeling”.

Katie has been in the crypto market for 4 years now.  She already keeps her emotions in check and always keeps an open mind when venturing into the unlimited ocean of the market.  Yes, she experiences occasional setbacks, but overall her consistent performance is good.  Why exactly?  Simply because she follows a set of very simple rules that consistently help her overcome any mental hesitations: 

  • She has a HODL position of coins that makes up 80% of her total crypto assets.  Only 20% is used for trading.  Her rule is: she never touches her HODL position whenever she makes a losing trade. Ever!  On the other hand, the profits from her trades are used to grow her HODL position even larger. 
  • She only trades the spot market. Her second rule is: She never uses leverage. 
  • She cuts losses at just 3%.  She never “hopes” that a losing trade will recover. If she sees a loss, her stop-loss is already set up to ensure she sticks to her percentage and doesn’t slide deeper into red. 
  • She never sells 100% of her open position.  If her trade is profitable, she takes out her initial capital and leaves a tiny “moon bag” in the market.  Now she has more than 140 different altcoins spread across 5 exchanges, while having her initial money constantly working in new trades. 

New traders can be overwhelmed by all the possibilities that the market offers us.  We tend to cling to hope that the “price will keep rising” or that our “losing trade will recover”.  Professional traders will have none of that! 

They live by a set of simple, but very strict rules that they follow religiously.  If Katies open trade ( of 100 usd ) nets her a 45% profit, she will not “hope” that the price will rise even further. Instead she will use her rule and do the following: 

  • Take out her initial capital ( 100 usd ) 
  • Bag a small profit  ( 10 usd ) 
  • Leave a “moon bag” ( of 35 usd ) in the market after she took out 100% of her initial money

Always remember that a strategy ( even the most simple one ) is what makes a trader a “Pro”.  They know how deceptive the market can be and they never “hope” for a desired outcome.  How does a trader make these rules though? Everything comes with experience. 

Skills forged by time  

In the good old days if someone wanted to become a skilled carpenter, they had to follow an apprenticeship program and learn from the best carpenters in town. 

This apprenticeship took many years, damaged fingers, frustration, even tears to complete.  Why do you think trading is different?  You see, it’s not the amount of money you earn through trading that makes all the difference.  It’s the time you spend in the market, absorbing all the wisdom like a sponge. 

Amateur traders don’t even read books about trading, let alone follow an apprenticeship program looking over the shoulder of a professional trader.  This mental laziness results in financial losses every damn time.  Ask an amateur about the Wyckoff distribution or who Jesse Livermore was and you’ll immediately understand this point. 

Professional traders also make losses, but they know that becoming consistently profitable only comes with time.  They actually “expect” occasional losses and they welcome them as nothing more than an opportunity to learn and develop their skills further.  They live and breathe “trading” and don’t let themselves get discouraged by occasional setbacks.  Every mistake becomes a learning opportunity that will eventually result in a rule that the trader will follow in the future just to avoid this same mistake. 

The people who want to trade, but simply have no time to follow long apprenticeship programs are more than welcome to register at and profit from the wisdom and strategy of professional traders.  The simple and straightforward API connection allows literally anyone to follow ( in real time ) any professional trader they chose and immediately copy their strategy.  The funds always remain in the custody of the follower and can never be accessed by Tycoon.  This is something non negotiable. 

Tycoon allows people from all walks of life to have access and exposure to the amazing crypto community.  People are welcome to learn and develop their trading skills while already BEING in the market.  Now let’s see another often overlooked personal trait of professional traders that amateurs always tend to forget. 

Positive expectation 

A professional trader always expects to be successful and profitable.  But why?  It all comes down to our relationship with money and how we use it. 

Chances are big that the expression “Money is the root of all evil” is not foreign to you.  Our parents usually don’t teach us enough about money.  Schools fail at this task abysmally.  How could they succeed when the teachers are underpaid and often only seek the teaching profession due to job security and the promise of a comfortable pension.  

When we graduate school, chances are high that we have a negative view about money.  It takes years to reprogram ourselves from this misconception. 

On the other hand, professional traders see money for what it is: It’s just a tool and a part of an amazingly fun game.  Money is not an object of fear, desire or stress to them.  It’s just money.  Professional traders don’t measure their success in dollars, euro’s or yuan.  Trading is just a fun game and every single day presents an opportunity to learn something new and insightful.  The more they play it, the more they expect to win.  Perhaps that mythical law of attractions works well in this case.  

Chances are big that you have an emotional attachment to money.  We all do to a certain extent.  The realisation that money is just a tool brings instant clarity into our rigidly programmed brain.  The endless brainwashing by parents, school teachers and television instantly melts down into the ether.  For professional traders money is like a hammer drill, screwdriver, scalpel or frying pan.  It’s just a tool for achieving a certain outcome. Might it be more free time to spend with family,  a new car,  vacation or a new coffee maker.  Whatever it may be, money is simply a tool and not an object of desire.

Knowing this, professional traders avoid any emotional attachment to money.  They are here for the game.  They expect to win and their time in the market, experience and tenacity greatly increases their chances.  They are not professionals because they want to earn a ton of money.  They are professionals because they love the game of trading. 

Yes the market will slap you around a few times. Your balance will get beaten and bruised now and again.  But the more time you spend in the market learning, growing and developing, the more consistently successful you will become.  Having simple rules and strategies will help tremendously, but in the end, it’s all about our ability to back into this amazing game after any setback that the wild force of the market can sling in our faces.  We are here for the game, so let’s win.


Risk Note: Trading cryptocurrencies is subject to high risks and may result in the loss of your capital. Please make sure you fully understand the risks associated with trading cryptocurrencies and only invest as much as you can afford to lose. Be clear about your investment objectives and experience, and seek advice from an independent financial advisor if necessary. It is your responsibility to determine whether you are permitted to use Tycoons’s services under the laws of your country of residence. Investments in cryptocurrencies are not protected by a Financial Services Compensation Scheme.