Current Market
While there’s been green the past few days, overall we’ve been in a downtrend. Many people have expressed frustration about their inability to trade in a bear market. Trading in a bear market is still trading and someone with a set of solid strategies and experience in the market can successfully trade a downtrend when they trade using logic instead of emotion. If they can’t, then their strategies or psychology aren’t as solid. I’ve been successfully trading all through this bear market. Some would have you believe that is because I’ve got some sort of unique factor that is out of reach for average people, factors that potentially impact the effectiveness of my trading.
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Potentially Advantageous Factors
These are the most often cited factors that impact trading. To me, they are more excuse than reason.
Portfolio Size
People think that trading effectively can only be done with a portfolio of magnitude. They attribute this to manipulation by so-called whales. The same reason this isn’t true is the same reason Technical Analysis (TA) can work. Many people think alike, react similarly, and hold opinions within a close range of each other. Usually in just 1-3 defined groups. Members of each group make up what is mistaken to be whales – people making similar choices at similar times which mimics “a whale”. Like a school of small fish forming the shape and size of one. There are way to determine what is going, but that’s another topic for another day. Recognizing the behavior of these 1-3 groups, the volume for each, and what each is doing gives you a picture of what is happening in the market. You can call these people “bulls”, “bears”, and “undecided”. There are many different tools that show you which of these is doing what. These “whales” are people with a range of portfolio sizes acting in concert because they think similarly. That makes portfolio size irrelevant.
Skills and Experience
I do have 5 years’ worth of experience and skills in trading this market and it is an asset. However, it isn’t what makes me an effective trader. I don’t use 5 years’ worth of experience in a trade. I don’t use the 100’s of strategies I’ve learned in each trade. I use less than 5 minutes’ worth of planning and 1 strategy.
Access to Paid Signal Groups
Some people have said that the key to them making money is having access to paid groups that tell them what to do. This is called price manipulation or a “pump and dump”, is potentially illegal, and it works until you’re the one losing 90% of your portfolio in the “dump”. I do not use a single paid group. Not one. I don’t need to and neither do you. I’m not talking about groups that talk about fundamentals, teach about TA, and so on. I’m talking about groups that say “let’s push this coin to this price then sell”.
You do not need that to make money trading.
Access to Premium Tools
I’ve been told that having access to premium tools is why I’m successful at trading. Some cite my bot, others cite things like Coinigy, Coinstats, and TradingView. I trade with more than just my bot* and I’m the one who created my bot using just 1 strategy. These tools are nice to have and can make a decent trader good, a good trader great, and a poor trader worse. They aren’t necessary to trade effectively and can be a hindrance when you’re just learning.
(my bot, which I programmed, is not for sale, is not available for you to use, and is using a modified PAMR algorithm for 90% of its’ trades, and no I don’t have a bot recommendation for you)
Access to “Better Exchanges”
Depending on who you ask, various exchanges are better or worse. I personally prefer exchanges with high volume fee breaks and a maker/taker fee schedule. Some prefer exchanges with a large number of offerings or just a few. Some prefer exchanges with only highly vetted projects and a quality User Interface (UI), while others prefer harder to use exchanges with their broader and earlier stage offerings. I use pretty much any reputable exchange and some not so reputable, depending on what I’m doing. My ability to profit is not based on the exchange, outside of the exchange not screwing me over, of course.
The Challenge
I wanted to trade without the perceived advantageous factors, at a portfolio size anyone can scrounge together, and on an exchange anyone can get access to, and to blow standard trading returns away in a bear market. I set up some rules for my challenge.
The Rules
.00100000 Bitcoin to start. At $8,000 USD, that’s roughly $8. No additional capital.
Cryptopia, a low volume, easy to access exchange without price breaks.
One week goal, but continue until 0.1 BTC which is 100x.
No premium tools and limited TA: support, resistance, trend line, volume.
1 strategy only, a basic momentum trading strategy.
No changing the rules.
Aim for high volume pairs you can enter and exit on the same candle.
Aim for 10-20% per trade, keep risk reward ratio
Exit trades when losses above 5%.
Results
While trading, I considered seeing how long it would take me to get to 1 BTC, which would’ve been a rule change, but I was sick and ended up getting sick enough they took away my trading and put me in the hospital. Cruel and unusual punishment. (I’m actually writing this in the hospital but will post it when I’m out. If you’re seeing this, I’m FREEEE!).
Anyway, I failed. I didn’t make 100x in 7 days. It took me 6 hours into the 8th day to get it done. I’d like to make an excuse here about being sick and getting worse, but life happens and it impacts our trading. Given how close it was, I’d say it’s possible to do 100x in 7 days. I want to include my trades, but haven’t figured out how to include them without typing out every single trade into a table. Steemit doesn’t support CSV’s and I’m not in the habit of posting google doc links. I may take the time to figure out and post them later, but for now, you’ve got the breakdown. I traded 274 trades in the time period.
Why the Strategy Doesn’t Matter
The most important thing is not the strategy. The most important factor is becoming skilled at one strategy. Many, many strategies give what’s called an “edge”. This a mathematical advantage. Do you know what counting cards is in blackjack? This is a system with an edge over the house, a mathematical advantage. You need to learn one strategy with an edge, stick to it, and stick to it. Did I mention stick to it? The edge is found in sticking to it. In counting cards, you lose on a fresh table. You lose until the conditions are right and then you win. If you can’t stick to a system with a mathematical advantage, you are gambling. Just like playing blackjack without counting, trading without a system you can stick to is gambling. Any strategy with an advantage and the willpower to stick to it is what’s most important.
Actual Factors
Psychology/Emotion – This is part of the sticking to it. You weight your losses heavier than you do your wins. For many, 10% loss has the same net impact as a 20% win. Don’t fall into the trap of giving up on a mathematically solid system because you’re momentarily discouraged.
Lack of Planning – This is one of those things that is gambling. If you don’t know what your plan is for a trade, you’re gambling.
Too many tools/ Strategies – Use. One. Strategy. Seriously, use one strategy, get good at that strategy. Then work on learning more. If you haven’t spent at least 6 weeks trading a strategy, you’re jumping around too much.
Ignoring base currency – Don’t trade away your satoshis valuing your trades in a fiat currency instead of the base currency for the pair you’re in.
Probably Not a Good Idea
This experiment was not the best idea. I didn't sleep much and definitely didn't have a life outside of trading. The point was to prove that profit is not dependent on the bulls. I drank significantly more caffeine than I should be drinking and sacrificed things that I enjoy and need to unwind. If I can advise you of anything, it is to make sure the choices you make are not just healthy for your portfolio, but also for you.
Learn With Me
If you’re interested in learning more about crypto tech and trading, check out my course site, Cryppick.
There are a few spots open before the launch of “Trading on Track”, a 4 part course series focusing on trading with strategies and planning instead of gambling. I am also hosting a members’ only live training on trading in our Facebook group on 6/7.
What is your favorite trading strategy? Upvote and Resteem!
I'm Ash. I have 10 years in tech and 5 in crypto. I write about crypto and tech here on Steemit, teach people about crypto and trading on Cryppick, and tweet about crypto on Twitter. I'm also on LinkedIn and will be guest blogging on a few sites soon!
Absolutely. This reminds me of when I first tried trading. I didn't really know what I was doing, but got lucky for quite a while. And then, I found myself back at square one having lost pretty much all the profit I had made.
Great post. Resteemed.
Thanks Phil :)
Amazing post, and I fully agree. Upvoted! It perfectly encapsulates the problems I am having with trading.
Currently, my focus lies in Forex trading, and I can't seem to do anything other than breaking even. A few months ago, I created a demo account with 1000 euro on it. Today, that account has a balance of 991 euro.
The current strategy i'm using is:
Simple breakout trading
Just drawing a trendline across multiple tops (in a downtrend) or bottoms (in a uptrend). If it breaks, I wait for the price to retest it and form a pattern, from where I place the trade. I use Fibonacci to measure take-profit levels, and place the stop-loss just behind the pattern.
It sounds like you're not using math. Implementing some further assessments of your trades would likely really help you.
Lots of valuable donts here, especially like the part about trading each strategy for at least 6 weeks.
Was hoping/expecting you would give some of the actual strategy but i guess ill have to sign up for cryppick for that!
If you want to upload a file, maybe try a free service like wetransfer.com?
Thanks Frank, I will look into that. :)
Your post is very great.
I feel very meaningful.
Interactive.
upvote and follow.
Very good read.. thats a lot of trades and taxable I hear..but will see how taxes turn out next year.. but interested in learning more your style.. THX ASH
I've been in crypto since 2013 and run a bot, a week of intense manual trading isn't going to impact my overall year in a significant manner. I'm glad you enjoyed it :)
I'd really appreciate if you could share the details of your thought process. How do you choose which pair to trade? What do you look for in the pair? What's your time frame of choice? Etc..