Intra-day crypto-trading for a living: lessons I learnt

I'm a b-schooler more into geeky stuff than management books. I first bought bitcoin in order to use, not to invest (or gamble, if you will). Just a high-level understanding of cryptography, distributed ledger aka blockchain was rather taxing for me, but I was convinced that blockchain is the most revolutionary invention after the Internet itself. I then started mining and proceeds were primarily kept in BTC, XMR and lately a little ETH. Last year I started trading altcoins for BTC and quadrupled position (in BTC terms) in a matter of weeks only to lose a week later. I'm not a trading expert, rather I have been one of the 90% retail traders that lose money in trading. So, this post's materials should not be considered as financial advice. I learnt (still learning) some lessons along the way which I now think are more valuable than material loss at that time. Some of the experiences are worth storing in a tamper-proof decentralized platform. Here's Steemit! This post is about what fundamental rules one should follow in order to take advantage in volatile crypto market. Cautious, informed long-term investors are more likely to win than not, though. It could be a primer to absolute noobs in cryptotrading arena.

BTC believers/holders - those not caring much about BTC price so long as holding doesn't diminish - can actually make a living by doing intra-day cryptotrading with a sub 0.5 BTC account. I'm not 100% certain of BTC's trend reversal either but being an early investor, price plunge doesn't hurt me much. BTC is my reference currency. Probabilistically, I believe BTC is still a good long term bet. Though, there are few excellent projects in crypto space, almost all altcoins are assigned tens, if not more, times their actual (utility or application) value. So I just do several in-out trades to have a 3-5% percentage profit daily.

Technical Analysis (TA) works in crypto, at least in the case of minutes to 1 hour candles. For a daytrader, 4.00% daily gain is a very realistic aim. This means 0.5 BTC investment returns 0.02 BTC ~ $160 a day!

Here, on average is used purposefully; never feel the urge to trade every now and then. A pro would stare at monitor for days without hitting the key-board if there isn't good entry. I couldn't trade for several days so bought ViaCoin (VIA) at 10 times the price it was seconds before during recent Binance attack. Get rich quick is a quicker recipe to get poor. Greed alone is enough for blowing up a trading account. I wouldn't have lost much, had Binance's server not lagged just when I placed stop-loss sell order at 5% loss. Institutional traders are not usually allowed to lose more than 2% on a particular trade. Warren Buffet (critic of crypto though) said, Rule 1: Never lose money and Rule 2: Remember Rule 1. Crypto day-traders should never skip stop-loss part. What if market goes down? Exit. Blind faith has no place in professional practice.

Disciplined traders don't take big position size relative to their trading account. Sometimes I do all-in trades, but a pro will never will. Retail traders buy dips and market dips even further. A pro is more likely to trade with the (up)trend than expecting reversal of a downtrend after he gets in. Because he acknowledges that he's not the smartest guy in the room.

A savvy trader doesn't dream mooning; he has realistic expectations. He assumes that market mostly swings up-down; breakouts are rare. Unless it has strong uptrend signals (maybe coupled with news, hypes), he tends to sell an asset at the price he wouldn't buy himself (probably hypothetically; remember position sizing rule?). In crypto, instead of trying to sell at the top, it could be a better idea to place a stop-limit sell order just below current resistance. Who knows we could be in a pump ride. The trick to profit in pump and dump is to lock profits by continually updating stop-loss.

Successful traders are disciplined. They have trading strategies which are hardly violated. Risk and rewards expectations, choice of technical indicators, etc., are calculated before each buy order.

Trading volume is a vital indicator in crypto; this market is a ripe for price manipulation, pump and dump. Stop-limit order may fail in markets with low liquidity. Set limit price such that it is executed at limit orders in the order-book. Pro traders usually buy and sell at market price.

Stay away from social groups! The reality is counter-intuitive; we think we should be up-to-date with project events, etc. The problem is that one will always feel optimistic in, say, a project's Telegram, reddit, bitcointalk, etc. groups. Shilling, sock-puppets, reputation management and many other fake crowd marketing activities are hot because of crypto. Look for knowledge-base, news from neutral sources instead of listening to project's group chat.

I’ll try to illustrate (with simplest assumptions) the maths behind making consistent profit. Suppose a trader took four long positions each weighing 25% of his trading portfolio. Now assume, two of the assets went up and other two down. If stop-loss is set at 1% below purchase price and he sells winning trades for 3-5% gains, he’d have 1-2% net profits on account size.

I'll probably write about Technical Analysis indicators and how one can combine several indicators (available at Binance's Advanced interface) for stricter justification of his prediction about price movement. Binance has highest trade volume hence liquidity, excellent charts, responsive, fast interface, low fees are just a few reasons for choosing Binance. New users, please use my referral link https://www.binance.com/?ref=28276701 to sign-up.