The Trading Journey: what I've learned so far

Well, after two months of full-time day trading I want to say that I absolutely love this lifestyle.

There is something special about it, I'd say the unique mix of competition and freedom. I think now it's the Golden Age of inefficient markets driven by people. And we should take this opportunity because one day all markets will become efficient (what is market efficiency).

Imagine Global Decentralized Exchange, which allows anyone to trade any asset on the planet. Imagine thousands of super-robots processing every news and executing orders just perfectly. Human will have no chance.

But thankfully now we see huge 10-30% price movements within 10 minutes. It's just incredible! The only question is: how to take the advantage of such market movements and don't blow up the deposit?

The Great Myth

"I'm the BOSS, I can predict the next movement! " - The most stupid thought that can come to mind. This statement is a perfect deposit vaporizer. Crypto instruments are too chaotic for making any prediction.

What really matters is the probability. This may seem surprising, but even with 30% of right predictions, you can make money. But it's possible only with the proper risk management.

And here is the lesson I learned two days ago. The perfect example of bad risk management. I was overconfident about my price prediction and lost some money. It was $TRIG coin:

(Right-click -> open in new tab -> enjoy zoom)


Usually, I look at the order-book trying to find active buyers (some call them dynamic). These guys push price up, fighting against each other, limit and dynamic sellers. You could see them when buy orders appear in order-book with a huge frequency, usually with a big gap:

6100.0
6050.0
6000.0
...

$TRIG was the case. I was sure that the price should return to 7000, so I bought more than I planned at first. I must say that I successfully applied the strategy of "additional buying" earlier. This is easy:

• when the price drops by -10% you are buying X coins
• when the price drops by -15% you are buying X * 1.5 coins
• when the price drops by -20% you are buying X * 2 coins
  ... (deeper it goes, safer the purchase)
• if your prediction is right, you sell on pullback

But something went wrong this time... Or maybe it should be so? What if it was just my fantasy about the price? This trade finally showed me that stop-loss aproach is the only way to trade professionally.

The Market is changing

I started an active trading because of this guy: @quickfingersluc. His approach was just awesome and I started making profitable trades almost immediately. Thanks, Luc!

But when the strategy becomes well-known, it loses its strength and elegance. I don't want to say that it doesn't work now, it does, but the charts became ugly. Now It's harder to tell where is the "base" (using Luc's terminology) and when it's broken. I'll show you some examples.


Interesting fact: we have about 100 000 active traders in our community. How did I find this? New exchange called WCEX has people counter. Now there are 260 000 registered accounts, but we could easily divide the number by 2 or even more because of multi-accounting.

So even a few thousands of traders who use this strategy could make things a little bit harder.

So before we had a perfect "V" pattern:

And now more and more often we see "W" pattern:

This happens because of smart guys who sell pullbacks.

Or worse, there are dead patterns, when the support level is not reached at all like in the case of $TRIG.

TheSolution

There is nothing wrong with the fact that the market is changing. It becomes more mature and professional. The only thing we should remember: we have to adapt.

So, my today's trade:

As you can see buyers were ready to pull the price back after the first break (big volume). But pullback sellers entered the game and we got this ugly VVVVV (I counted 5 V's) chart.

I think it's way better to enter the chart at the end of this messy area where the probability of the rally is maximal.

P.S.

The virtual tradingroom/scanner project is frozen for now. I'm too busy trading this sh*t :)