Trading Crypto made me stronger!
Crypto is a dirty word isn’t it? Especially in 2018…
Why is Crypto a dirty word? Because you FOMOed in, HODLed through a bear market, got REKT then sold the bottom….
For me, getting REKT was a great experience. It had lots of significance. It taught me things. I learned about markets, trading, technical / fundamental analysis, and it opened up a world of possibilities in trading any kind of assets!
Also, learning trading in a bear market is much better than in a bull market. In a bull market, all you do is buy the dip and hold. In a bear market, most beginners don’t know how to short (buy a down move), and will simply get REKT buying a bounce, then having the rug pulled from under them, over and over.
Even in a bear market, all the same rules apply as in the bull market — just in reverse. So you can pick spots when to go long for a brief period, and still make nice gains, only to be back out again shortly after.
I didn’t even get REKT that hard. I went through a few major draw downs, and then went: “Wait a minute… What am I doing wrong? Oh I’m just HODLing through a confirmed bear market… Let’s not do that”. And so it all started…
I learned that you can talk about a single price chart for 1 straight hour non stop — rapid fire fashion. You look at hundreds of technical parameters across many timeframes. And there are so many ways to trade!
- You can swing trade, with a risk-reward position that you hold from a few days to a few months at a time.
- You can intra-day trade, where you constantly buy support in an established range, and sell resistance.
- You can HODL and buy dips, although you better do so in a confirmed and established bull trend only, unless you are HODLing shorts.
- You can momentum trade, when a lot of pressure on the price is built up against a resistance or support, and the wall suddenly falls. You just hop on the big move bandwagon and take profits quickly in a measured fashion.
- You can even write your own intraday trading bot, or a swing trade alert/notification bot, if you’re inclined to program!
These are only basic examples and are just scratching the surface…
Learning to trade has made me a better person and there were no disadvantages. The only thing I had to spend was time. But I’m no longer blind now when I look at a chart.
I know what to look for.
I have more confidence setting up an entry, because I can list out all the technical reasons why I’m buying, where I’m taking profit, where my stop loss is, and therefore what my reward to risk ratio is.
As a person builds up capital from their day job, they need to be able to deploy it meaningfully, so that the capital works for them. You could just put the money into blue chip mutual funds, however there’s always that “once in 70 years crash” in every market, that WILL happen once in your lifetime. And you won’t see it coming… (Check out “Black Swan” by Taleb)
Mutual funds also frequently have 2% management fees which end up costing you HALF of your gains over a 20 year period due to compound interest!!! (As Tony Robbins describes in his books — Unshakeable, and Money, Master the Game)
I have confirmation now that only after a year of studying many different forms of TA (Technical Analysis), I can be consistently profitable, provided I follow all the rules, and manage risk properly. Therefore, trading is a great measure of your discipline, by definition.
The main thing to understand was: You must accept that you will lose half of your trades or more, just like the best traders in the world do. But risk management is what will make you profitable (because of your Reward to Risk ratio being 2 to 1 or often way higher).
I also learned that the best traders try to make as few trades in a year as possible. But when they take the trade, it’s so well-put together, it has tremendous reward-to-risk ratio. They can also perform important trades on leverage (margin), to maximize their gains, and then they don’t have to trade again for the rest of the year. So it’s actually possible to make all your gains in a single trade in any given year. You just have to do a ton of homework!
You can buy options as insurance to cover spot shares of stocks you buy during critical periods — allowing you to more predictably enter positions that are risky. Options don’t have to be a “high risk” instrument. On the contrary, they can make things “low risk” for you, the way insurance policies do.
Futures are very similar to options, but also carry an obligation to take ownership of an asset upon contract expiration. They are something that helped McDonalds bring to life the Chicken McNugget, when Ray Dalio taught them how to lock-in the future prices of wholesale chicken to be more predictable. Check out the summary of his amazing book “Principles” here.
I encourage you to try trading with a small position, and gradually ramp things up as you get more capable. I am in the process of transitioning my managed RRSP accounts to my own control, to gain more flexibility and direct control over them.
The only way to learn is to feel the losses and wins in your gut. I think it’s the ultimate battle, and it will make you a better, stronger person.
I recommend the books of Thomas Bulkowski and “Trading in the Zone” by Mark Douglass.
For online streams and tutorials, I recommend: Mitch Ray, Eric Crown (Krown’s Crypto Cave), Tone Vays, and Tyler Jenks (Hyperwave).