Welcome to another Nugget of Wisdom! A free weekly post I send out every Thursday. These are designed to be short and sweet, a quick read to (hopefully) impart some sort of wisdom, or at the very least to get you thinking about something interesting.
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Finding a way to have a healthy dissociation towards money
One of the things I learned as a professional poker player for 15 years was to have what I call a healthy dissociation towards money. What do I mean by that?
Basically — you can’t be sitting at a poker table with a stack of chips in front of you worth $2000 and be thinking about how that is rent money for a month, or a potential vacation, or a new laptop. No, it’s chips. Points. Not-real-money. A tool to use to win the game. You shouldn’t fear making a big bluff because you’re thinking about what real-world things you could be doing with the money.
But you also need to recognize that the chips are still worth something. It’s not actually play money. You can’t (shouldn’t) play every hand, bluff every pot, go all-in on a whim, and treat the chips like they’re valueless.
Then you do leave the table, you also need to be able to go back to thinking that $2000 is actually a pretty significant amount of money. It’s not just a tool. You shouldn’t spend it on bottle service at a club, or upgrading a flight to business class, or on any number of other random life luxuries — unless you can afford it and it makes sense to do so in the grand scope of the rest of your personal finances.
It’s the same with crypto. If you’re trying to actively trade, then you need to think of the money in your trading bankroll as a tool. You can’t think that you’re spending rent money on a vapid memecoin or altcoin with no utility, or you’ll deprive yourself of some of the best opportunities in the space. But, you also can’t think of the crypto money as totally worthless either, or you’ll go crazy and bleed it away on all sorts of random crap.
You need to find the balance between understanding that money has value, but also that it needs to be approached differently in crypto, in trading, in poker, than in “the real world”. You need to find a way to have that healthy dissociation towards money.
It isn’t easy. It took me many many years of experience to get to where I am today, and I don’t think where I am is perfect by any means. I am great at using money as a tool and making risky-but-reasonable plays in crypto, but I also recognize that I struggle to maintain a reasonable grasp on the value of money outside of crypto. I spend more than I should, though not to an extent that’s too dangerous or harmful.
One of the risks of any dissociation towards money is that you can’t find that balance, and you start to extrapolate the gains from within crypto to the world outside of it. You have a few big wins in a row, a good month trading, and/or are earning hundreds or thousands of dollars a day farming some lucrative defi protocol. You start doing moon math and going “well, if I’m earning this much money, I can spend so much of it and still have some left over!”
Yeah you might have made $15k in a month, or you might be earning $500 a day in some sort of defi rewards — but that doesn’t mean you should be spending anywhere near that amount in your day-to-day life. Not even taking into account taxes, the chances of that level of income being sustainable for years is very, very low.
I think this is one of the greatest edges I have in trading, being able to think of my crypto bankroll as a tool. I recommend trying to think of it this way too, and to work on your own healthy dissociation towards money.
What that means is going to be different for everyone — and a lot of it can only come with time and experience. You gotta do whatever you can to find what works for you and you alone.
Good luck.
Thanks for reading! In case you missed it, check out Monday’s post below 👇
In 2021 I traded my way to an NFT portfolio valued at over $15m starting from about $50k of initial capital. Like many people, when the bear market set in, I remained stubborn and foolish and roundtripped most of my gains. However unlike most people, I was still fortunate enough to make it through the other side of the bear with a healthy amount of profit and some still-valuable NFTs.
