I look at a much longer timeframe and there’s a good saying “if in doubt, zoom out.” If you zoom out and get some perspective, you’ll see what’s happening beyond the noise. People focus on too short a timeframe.
Second, if you hold one thing like Bitcoin, Apple stock, or Facebook, that one thing means everything to your success right now. But if that starts going against you, that will hurt and it will be stressful. If you have a same set of rules that you’re following that allow you to trade a portfolio of cryptos, stocks, or forex but they’re getting in and out at different times because they all move a little bit differently. For example, I have a system that holds 20 other stocks or 20 different crypto tokens. If one of them goes against me, I wouldn’t care because in that 20, something else will be doing well. And so, the whole game becomes a game of numbers.
If you have a set of rules that makes money, I’ll tell you how to confirm that it makes money in a second. Let’s assume we have a set of rules that works, it doesn’t work every time because nothing works every time. But if you apply it many times in a diversified portfolio, there’ll be enough winners to offset the losers. If you allow the winners to be big and keep the losers small, you can make a lot of money.
If you’re wrong 70% of the time out of ten trades, and you lose $1 per trade. But when you’re right, you make $5 on each trade. Those seven losses will feel hard, but you only lose seven bucks. And then, on the other three trades, you make 15. Overall, you make good money and actually gained.
You’ve got to get past the idea that you need to be right all the time. And this is where most people struggle because we were taught at school to be always right and get the correct answer. But in investing while trading, that’s not correct; you need to be able to be wrong. I’ve been wrong way more than most people, which is why I can trade well. Because out of thousands of trades that I’ve made over the last 20 years I’ve been doing this. On average, I’d say 60% of them have been losers. You would think that I must be dumb. No, I have a high tolerance for losses, but I keep my losses small. And I allow my winners to be huge so that I make money overall when the math works out.