Hi all,
Newby alert! :)
This is my first post on Steemit. I´ve been "leeching" for some while now, but I would now also like to contribute to this amazing community.
Let me first quickly introduce myself.
I´m just a normal guy in his late 30´s. Born in the Netherlands and living in the south of Spain for over 12 years now.
I have a normal office job and my interest are mainly (metal) music and new technologies.
I´ve been looking into trading and investing for quite some while now and was introduced to it by a friend. He was giving some introduction clases on day trading and as this was (and partly still is) a mystical and unknown area for me, I decided to take the clases and learn something along the way.
Forex papertrading
That was about two years ago. Since then i´ve been reading and papertrading in Forex.
The course was oriented on day trading de SP500, but I switched to forex, both for its high volatility as it being a 24h market which fitted way better in my daily schedule. 4 hour charts, allowed me check the charts before going to work, at breakfast and lunch break as well as the bar (candlestick) from the afternoon and evening. I would only mis a bar at 3 or 4 in the morning, depending on wether it was summer or wintertime.
Initially I had bad results as I did not have any good strategy or I did have one, but was not disciplined enough to keep applying the rules. Although I kept hopping from one strategy to another, I did learn everything about moving averages, MACDs, Fibonacci, price action Bollinger bands etc.
Books
After reading some more books, and especially some of Alexander Elder, I came to the conclusion that strategy is not as important as I thought it was. The money management, risk control, and trading psychology weights allot more then a strategy. With a good money management and a very primitive strategy like a coin flip could already turn out profitable. (Try it!, you can use the random function of excel to generator a list of prices).
Book recommendations:
With the strategy I had come up with, basically based on engulfing patterns on weekly charts, indicating trade direction, and price action on 4h charts, I started to make some virtual profit (virtual, still paper trading)
Although i´ve had some good results with my strategy (about 18% in 6-7 months), i haven´t made the step to live trading yet. Mainly because with the strategy i have been using i need a capìtal that i do not have availble yet.
I backtested almost 30 pairs for the last 5 years, and had very good results. I needed to raise capital to start trading
Cryptocurrencies
After not paper trading for a while, my attention was drawn to the enormous gains of Bitcoin and other cryptocurrencies. This was in June of this year, right when all cryptos where peaking out. The fear of missing out (The famous FOMO term), let me to buying into NEM, XRP and Digibyte. Although it was not more then 80 dollars or so, it was a stupid decision. I just entered in a uptrend and was hoping this would continue. Alexander Elder called this the theory of a greater fool. (As you asume a greater fool then you would enter and keep buying, drifting the price up). I entered without any risk strategy or any strategy whatsoever. I just entered for being greedy.
First serious buy!
Now, a few months later, I am a little more serious about entering a trade or not. First I only look at coins that are around for a few years, no ICO madness for me. Then I look at coins that are interesting, and have a good website, blog and team to really make it. Last of all I look at coins that came way back from where they peaked. This is because I´m kind of a technical analysis kind of guy, and I like to have some historial date so I can look for support and resistance levels. I would note trade bitcoin that fast, as it is continuously at new heights, at new and unknown levels. A couple of weeks ago I bought some Bitshares. It cought my eye when it was about 0,17ct and marked it as a buy if it would hover around de 6ct area. I finally bought around 6500 BTS at 0.58ct/each.
Money management??
Now here’s the thing; this, in my eyes this is more longterm, more “investing” as to what I was used to doing in Forex, where I would enter and exit a trade in a maximum of 3-4 days (day trading), sometimes I only needed hours before my stoploss or take profit targets hit.
The thing that keeps me worrying, is that I had a entrance strategy, but I do not have an exit strategy. What will happen if the price falls below 0,2ct, would I sell, or keep holding?. Or what if price suddenly exploded, and pass historic maximums of 40ct, 50ct, or even 60ct?, would I sell? I would probably sell half of my shares when price action shows a big red bar on an uptrend, but I don’t have any “golden” exit rules like I had with forex trading.
Should I just HODL (what a funny term, in a o so famous thread by the way) or should I have a set price level for exiting?
Another thing that bothers me, is that I do not have any money management of any kind. How do you guys do his? I just spent some 400-ish dollars on a coin that looked good. Whatever happened to the 2% and 6% rules Elder taught me and I applied o so religiously to my forex trading.
(Elder teaches that only risking 2% of your available capital, would keep you save from the sharks, avoiding large losses, wether the 6% rules forbids to put on any trade when you lost more then 6% that particular month, keeping you save from the “piranhas” nibbling your capital to the bare bone.)
Everything better then the horrifying Pirhanaconda, or the Sharktopus, the Hybrid Horror from the deep!
I understand that if I had a trading account of 10k or more, I could easily apply these rules but what if my available capital is only 500 dollars or less. It would mean I could only buy 10 dollars of bitshares. It would take ages to increase my capital.
The only thing I kept from my good practises of forex trading is keeping a good log, and having a precise entrance strategy. Risk control, money management and exit strategies went all strait out of the window!
I was wondering how the rest deals with these issues. I would love to read your experiences on this.
Well thank you fellow "steamians" for spending a few minutes on reading my story. I hope sharing opinions on this can shine some light on this topics and perhaps some point of my brief story would raise someones interest regarding money management or crypto trading.
hasta siempre,