Crypto Accountant Reveals What Makes a Trader Successful
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Crypto Accountant Reveals What Makes a Trader Successful

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Created 9mo ago, last updated 9mo ago

Sometimes having the intestinal fortitude and diamond hands to ride out crypto's wild price swings isn't good for your bottom line.

Crypto Accountant Reveals What Makes a Trader Successful

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With tax season coming up fast in the U.S., crypto accountant and Solidity developer @nyoung.eth tweeted a few pieces of advice for crypto investors successful and unsuccessful that are worth a pause.

After spending "hours upon hours reviewing the activity of a wide range of people in this space," @nyoung.eth said they've come away with a few lessons that apply whether you've lost everything or made a seven-figure profit.

To a certain extent those lessons can be set to the tune of "The Gambler" by Kenny Rogers.

Know When to Hold Them

When it comes to the moneymakers, 99% of the people who made a profit, he said, "were paper hands and early buyers."

Which is interesting given that "paper hands" is not generally a complement. It means someone who sells at the first sign of trouble. As opposed to "diamond hands" who have the risk tolerance — and nerve — to hold on to volatile assets without succumbing to pressure.

And yet, the accountant said the winners tend to be investors who "would only hold an NFT maybe a couple weeks at most."

Calling crypto " a numbers game," @nyoung.eth argues that it is "a lot easier to make a 0.01 [ETH] gain 1,000 times, than it is to make a 10 ETH gain 1 time."

Know When to Fold Them

A good way to lose, he argued, " is chasing the hype and holding too long."

Pointing to fear of missing out, @nyoung.eth added:

"FOMO will wreck you if you let it. Personally, I'd rather have diamonds than diamond hands. Take profits. Control your emotions. Don't chase hype."

To be sure, massive gains have been made by the long-term HODLers.

But, the accountant said, "95% of those long term holds end at zero… As important as it is to take profits, it's equally important to take losses."

Know When to Walk Away

Another losing strategy is never taking a profit. A few good trades are great, but if you always reinvest it all, eventually you'll net zero or end up with losses.

The accountant's advice?

"Don't reinvest everything. If you make a good trade, keep half."

Know When to Run

As any accountant will tell you, the best way to deal with big gains is to offset them with some losses.

But "far too often… people with high taxable gains" will also have big unrealized losses, they said. Meaning, sometimes you've got to dump your losers to offset your winners, as painful as that may be. @nyoung.eth said:

"All in all, nobody has a crystal ball, but patterns exist in this world. If you're here to make money, don't be an emotional trader. Take profits while you can because chances are they won't be there a year from now."
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