Trading Should Be Boring
I have a friend who is a crypto day trader. He often regales me with his war stories, which generally end in “I just bought someone a car.” And when he does make some money, he never buys himself a car, he just plows it back into his trading; his home office is filled with giant computer screens besought by charts with lines and notes which I can honestly say I know not the meaning of. With my friend however, everyday’s an adventure, he even calls his office his “command center”.
Sadly however, this lifestyle is getting to my friend, he has massive insomnia, drinks at least 12 espressos per day and has developed a “cardiac condition” which will require surgery within the year. He is not a large man, its just that the stress has finally caught up with him after being an active trader for 10 years. Has he made money? Yes, he most definitely has, those flat screens in his office did not pay for themselves (even if the rest of the house is rather Spartan), I am here to tell you however that there is a better way.
Investing should be boring. If every trade gets your heart rate going, and your livelihood stands in the balance, you are doing it wrong. First, its very hard to make money as a day trader, as you move in and out of a stock you accrue trading fees; the more often you trade a given stock the higher margins you will need to be able to turn a profit. It’s simple math. It also requires a lot of work, day traders put a lot of weight on market “signals” and “first causes” such as interest rate hikes or a competitor’s change in pricing schedule, tracking all this takes monumental effort, all day, every day. Hence my poor friends sleeping troubles, he is scared he will miss out on some news and it will end costing him money.
Compare my poor friend with your average long term investor. Long term investors put in the work up front, You have to determine whether the coin you are looking to invest in meets a few criteria, such as having a talented dev team, a long term development plan, a way to pay for everything, until it goes mainstream, etc. but once you have made your investment, it requires very little oversight. As a passive investor your job is to not be swayed by the daily gyrations of the market, you are making a long term bet on yourself and your ability to spot a long term winner; a day trader on the other hand has the job of identifying high flyers on a daily basis, and chasing these like a dog after a juicy steak. Until the market reverses and you end up with a dry piece of bone instead. A long term investor is naturally uninterested by the day to day gyrations of the market.
There is no benefit to being a day trader past the sexiness of the thing. The slot-machine like interfaces that rule the day traders life, providing second by second feedback on profits and losses, are an addiction best avoided; they have no reason to be. Long term investing is equally if not more successful than active trading, proven by the meteoric rise of passive investment funds in the world markets. I am not advocating market indexing, but after you choose your eggs and put them in your trading portfolio, the same principles apply. Do yourself a favor and save your sanity, this is not a “hack”, you do all the working and sweating and fretting up front, but once your investment is made, it is a done deal; you are likely to live a much healthier lifestyle.