Flockoos Beginners Guide To Trading
Recently I was approached by a friend to write a free topic lesson on anything related to trading/investing that would provide guidance or benefit to those individuals that are novice to the trading industry. I had been on a small hot streak, and was relatively a minor participant in a community of extremely skilled and high-level traders, as such I embraced the role as a villain. With that, I was actually caught off guard and my response fell along the lines of “why would anyone choose me, as I don’t feel qualified to provide expertise advice on anything.” After further follow up, he finally convinced me to take some time and I considered further. Over the course of the next few days I thought about some of my struggles and what issues I consistently was running into, which lead me to choose the topic of losing. As any trader will tell you, drawdowns are disappointing and a negative experience but it also lead me to the idea of writing this particular piece: “How to handle losing and what to do to change it”.
For the many who don’t know me, I came to this community around late November with zero trading experience, zero knowledge of cryptos, and a lot of memes. I immediately fell in love with and went balls deep into alts. By January, I thought I was the next Bill Gates and that I couldn’t possibly lose. The next few weeks were my first learning experience that what goes up almost always comes back down as I proceeded to watch my alts crater. I don’t remember the exact moment, but at a certain point it clicked that the hodl strategy was not going to be my saving grace.
In late Jan, I decided to begin learning TA and trying to chart while also beginning to move btc over to the “casino” to start protecting my cratered alts. The strategy was to learn and absorb all the info I could from the best, then try to out-perform them. My first issue was the vast amount of information available on twitter and my inability to figure out who the best traders were until they were proven wrong enough times that they lost credibility or quit. This process was the hardest adjustment and I quickly discovered that it doesn’t change overnight. However, when you begin to find the right people they will begin to guide you to the people who have your best interests in mind. There are lots of different styles and methods and one of the hardest parts for me until recently was opening my eyes to other people and applying what works for them to parts of my strategy.
After I had started to develop my own strategy, the next obstacle I quickly ran into was using a gambling methodology rather than trading. Impatience, lack of willpower, impulsive behavior or any reason I could have attributed it to did not excuse it or justify it. It can’t be overstated how important and critical using a basic risk management strategy is in the process. The two highest risk elements that negatively impacted me were: Leverage and Stops. There was a candle in April that cost me close to 65% of my stack because I decided using stops wasn’t worth it. There are plenty of times I’ve had 400–500% winners on 25x leverage be close to negated because I opened and closed the position so many times on every $10 move. These are the mistakes that I always have to be mindful of and still fall victim to occasionally. The key is to quickly recognize them and take action to avoid prolonged losses. Starting and maintaining a journal is key for self-assessment to make sure you avoid those dreaded pitfalls.
When it comes to trading (more-so than investing), it is a game of statistics. The best maximizes their wins by laying out a strategy of risk to reward and ensuring that they won’t lose a large percent of their capital on any one trade or decision (I prefer to not have more than 4% at risk on any given trade, most would say 1–2%). They also know how to notice changes in market bias and can quickly get out of losing positions or take their winnings and go home without being greedy or over euphoric. Managing emotions is one of the toughest aspects of trading: each trade presents a new opportunity and getting upset because of a lost trade or being overly euphoric because it went well is one of the fastest ways to get burnt. Unrealized profit and loss is exactly that and the minute one believes the market won’t turn against them is when one is most at-risk for a big loss.
One of the newer experiences I’m adjusting to but may not apply to everyone is the impact of having an audience that follows your advice. Generally speaking, I’ve never been one to refrain from expressing my thoughts and my twitter/online persona represents more of me than just a trading journal. Exposing your ideas and producing content is just as crucial to keeping people interested as long as you don’t take yourself too seriously. Being perfect should not be your goal, you really are only as good as your last call on twitter, and there’ll be times where it doesn’t go your way and eating shit is going to be part of the process. The only way to deal with it, is to embrace being called out and either taking it as one of the many humbling lessons that come with this game, or simply quit. I don’t filter myself or any of my content and I genuinely enjoy being the villain for some of you and all it brings. My best piece of serious advice is to never doubt your abilities, take every loss as a lesson, don’t be discouraged, and try not to repeat the same mistakes, as it will inevitably happen.
I also want to thank Cred for making me take some time to think about this and turning a negative experience into something I can learn from. I feel this piece is a work in progress and will never be truly finished as everyday should be taken as a learning experience and recognizing the downfalls is just as important as the accomplishments.
TL;DR you’re gonna fuck up here and there but learn from it and avoid making same mistakes twice