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How to adopt a ‘millionaire mindset’ and make profit trading crypto

In this guide, I discuss the best strategies to get you into the "millionaire mindset" and how to keep your eyes on the prize

Becoming a cryptocurrency millionaire is something most – if not all – crypto traders, investors, and enthusiasts dream of.

Nevertheless, the odds are definitely against you.

In this guide, I will discuss how you can adopt a certain mindset and not be swindled by short-term price action.

I will try to answer whether it is possible to change your mindset and start thinking like a millionaire even before you become one.

As always, the strategies discussed here are described for educational purposes, and this article should not be viewed as financial advisement. Never invest what you cannot afford to lose.

The doubling down logic

Something people do not realise is that you usually don’t need more than nine or ten doubles to reach a million. For instance, let’s say you start with a $1,000 portfolio.

Following the doubling down logic, this would be the path to $1 million:

  1. $1,000 -> $2,000
  2. $2,000 -> $4,000
  3. $4,000 -> $8,000
  4. $8,000 -> $16,000
  5. $16,000 -> $32,000
  6. $32,000 -> $64,000
  7. $64,000 -> $128,000
  8. $128,000 -> $256,000
  9. $256,000 -> $512,000
  10. $512,000 -> $1,024,000

 

It would take you around ten doubles to go from $1,000 to over $1,000,000. What this means is that with an average of ten doubles, you could increase your portfolio over 1,000 times.

Of course, although it does seem quite straightforward, you would need to pick the right strategy that adapts correctly to your risk management. Investors and traders looking to double down should always keep their focus on the goal.

As the legendary investor Warren Buffett once said: “Risk comes from not knowing what you are doing.”

If risk is lack of knowledge, the only way we can reduce risk is by learning the core fundamentals of the technology, company, or market on which one operates.

The path to success is laid with books and articles, YouTube videos, and documentaries, because knowledge is what keeps investors from pressing the wrong button. Or worse, pressing the right button at the wrong time.

Picking the right strategy

In this section, I will discuss a number of trading techniques and how to pick an exit strategy. The first two are more suited to bull markets while the latter are better for bear markets. Of course, any strategy can be used during any season. The only requirement is to keep your eyes on the prize, as we’ll discuss afterwards.

Margin trading

With leverage or margin trading, you are essentially borrowing funds in order to leverage (or increase) your position. In essence, each percentage point gained is multiplied by the number of times you’re leveraging your holdings. If you’re using, for example, 10x leverage, it means a 1% change would be equal to 10%. Of course, when the market moves the other way around, each percentage point loss is also multiplied. And depending on how much leverage you use, there’s a chance you could liquidate your entire holdings. The higher the leverage, the higher the chances of liquidation.

Dollar Cost Averaging (DCA)

Regarded as the “safe haven” of long-term investors, what dollar cost averaging means is simply to buy Bitcoin, or any other cryptocurrency, on a recurrent basis. This can be every day, week, or month. Usually, advocates of the above strategy prefer to set certain days to make purchases and stick to their schedule – almost like a direct debit. Purchases are made at roughly the same hour so that the asset is always bought independently of the short-term price.

The DCA strategy is regarded as one of the safest, as it helps investors and traders to get less emotionally connected to their investments.

Buying the dip

Buying the dip refers to purchasing an asset after it has declined in price. It has different contexts depending on the situation in which it is utilised. According to Investopedia, some traders may say they are buying the dip even if an asset is in a long-term strong uptrend in the hope the uptrend continues after the minor dip or drop. Others may use the phrase when no uptrend is present, but they believe an uptrend may occur in the future.

Buying the dip may work if investors are disciplined enough to not fall into the temptation of buying at the wrong time – for instance during long bearish periods.

Short trading

When a trader uses a short strategy, it means they are betting against the price of an asset. This means you would use this strategy if you were anticipating a Bitcoin bear market, for example.

Short trading can be tricky thanks to the volatility of cryptocurrencies. This strategy is mostly used during bear markets – or when traders anticipate one – given it’s easier to just go with cycles rather than against them.

Keep your eyes on the prize

Last but not least, keeping your eyes on the prize is the last piece of this jigsaw.

No matter how good of a strategy you pick, or how many good entry points you may have, you will struggle if you do not know how to:

A) Pick an exit strategy: More important than knowing when to enter is knowing when to exit. Always have a set of crypto-assets ready to sell at a certain price range. Otherwise, the likelihood you’ll miss the best days of trading increase exponentially.

B) Focus on the long term: Cryptocurrencies are the most volatile asset I know of. Even during massive bull runs you can expect 30% to 40% drops in price. If you do not have your eyes on your long-term goal (the price range you’re targeting), chances are you will sell at the wrong time.

Hopefully, by following this guide, you’ll be able to make better decisions in terms of picking the right strategy for your risk profile and knowing when to enter or exit a market.

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