Table of Contents
What to expect
I would love to take you with me on my trading journey. I am a novice trader you will be with me as I take my first steps into the world of trading. I will be completely honest with you. I won’t hesitate to tell you about my mistakes. I am sure there will be a lot of bad days. I hope to inspire others to keep pushing through. When I become consistently profitable in a few years, you will have the opportunity to read how I got to this point. You can learn from my mistakes and hopefully don’t have to go through them yourself.
How my trading journey started
It was the end of 2021. It must have been November, and I discovered a project called ScPrime. I was intrigued by the idea of sharing storage space for earning some passive income – maybe I will create a blog post on this project in the future since it does fit the passive income theme of this blog. Anyhow, the project was my first real encounter with crypto. I had heard a lot about the topic but never dived deeper into it. To participate, one needs to have some SCP, a cryptocurrency, but how can I buy it? That was the start of the rabbit hole!
So, after some time, I learned about exchanges, what KYC stands for, and how to buy Bitcoin and SCP. While waiting for my identity to be confirmed so that I can proceed and set up my unit, the SCP price climbed like crazy.
That sparked my interest. Shortly after, a bear market started forming. But that motivated me even more. My vision became to invest as much as possible during the bear market and profit in the next bull market. But I was short on money. That’s why I searched for opportunities to invest in crypto. I learned about trading and started a little miner home setup. I tried to increase the little returns by trading it. Like everyone starting, I almost lost everything. But as you may pick up from my other content already, I am the kind of person that won’t stop fighting through. I learned about indicators, stop loss, support, and resistance. And did the next thing everyone does at the beginning:
Right… my screens became clottered with lines and different indicators. As I know now, indicators do reflect the past and will not give you a clue about the future. They will only ever supply you with confluence. Using too much will paralyze you in your decision-making. More on my take today later.
I discovered that emotions have a key role in trading, and I was (and still am) prone to getting overwhelmed by my emotions. Being a software developer, my logical conclusion was to create a bot that calculates the indicators by observing the market and trades for me. It won’t be emotional on trades and will take trades rule-based and disciplined, as a pro trader would. Soon, I had to discover that my lack of trading experience was reflected in the working of the bot too. The bot was not as profitable as my naive, six-month-younger self dreamed of.
You will be able to read more about the bot, how it works, and what I have tried in another blog post soon.
This leads us to today. After quite a while of frustration, self-doubt, and struggle, I have decided to take a step back and learn how the markets work from a first-principles perspective. Tackling the emotional part is quite a challenge, since not getting carried away by my emotions will be of benefit in my everyday life. Additionally, I like the idea of being more disciplined too.
After accepting that I am just at the start of my trading journey. I started consuming a lot of content on YouTube, Reddit, and the internet in general. It is hard not to get sucked into strategy x, y, z. Everyone seems to have solved the markets. There are a lot of fake gurus out there. But I will condense what I have picked up until now.
Journaling
Maybe one of the most important pieces of advice was that you should journal your trades. Often, my memories of how I feel and what exactly led to taking a trade are gone after a day of trading. Looking at the charts in hindsight, it is obvious why some trades work, and others do not, but observing it in real-time is something entirely different.
To work on this and recognize my pattern, I started journaling. Of course, you can pick any book. Some traders even use virtual forms. But I prefer writing with pen and paper because there is evidence (1,2&3) that handwritten notes enhance memory and learning benefits. I use a book like these:
These books must be at least A5. You will need space because you may want to draw concepts or charts. I like the dotted pages because they offer guidance for writing and drawing at the same time. The numbered pages allow you to put references to important contents into the index. You could, for instance, mark a page of a realization or a pattern/setup you drew on a particular page. I had a lot of notebooks already, the problem with the cheap ones is that they have a thin low quality paper which leads to feathering or bleed-through.
If you want to use the bullet journaling technique I recommend the last book.
Don’t miss out on documenting your trading journey! I am sure you will love to read up on your beginnings. In another post, I will tell you how I work with the journal. I mean what to write and how often I go through the past entries.
Economic Events
Another lesson I learned the hard way is not trading economic events. There was a situation, I do not recall when, where I was watching the markets and nothing happened, except that the ATR was quite low, and all of a sudden, the price jumped up. I thought this was a breakout and took the trade. A few minutes later, the price came down, and I was stopped.
Searching for a cause, I noticed it was some economic event. So I became sensitized to the importance of economic events. The next events came, and I was ready. I watched for the outcome and was sure that the markets would respond positively, but they didn’t. That’s why I will, for now, not trade high-impact events.
Because I was formally trading automated with the bot, I needed an API. I created my own called EconomicCalendar you can read about it in the linked blog post. If you want to test my Economic Events API, there is a free plan.
My trading strategy
The next thing I tackled was my excessive use of indicators. Currently, I only use:
- VWAP
- Moving Average
- Exponential Moving Average
- Support and Resistance
I focus on price action and volume. These are real-time signals, and the above I use for confirmation. For example, if the price breaks VWAP and volume increases, there is a good chance the trend will continue. I use EMA 9 & 21 because these make for good support and resistance. There are specific setups I use, which I will elaborate on in the next post.
Timeframes
Currently, I am using a split screen of three charts. The timeframes I observe are 15, 5, and 1 minute. I base my decisions on whether I do enter on the 15m candles and time my entries and exits based on what I see in the 5m and 1m.
Next step on my trading journey
As I told you earlier this is just the beginning of my trading journey. I do trade BTC/TUSD spot at Binance. I only trade long. There will be no paper trading. In my opinion, this would strip away the psychological challenges. For example, conquering the fear of losing. Additionally, I wouldn’t be forced to use proper risk management. There will be regular updates on my progress – maybe on a weekly basis. As I am not using a sim account, I will start with a balance of $500. You have the opportunity to follow my progress and learn from my mistakes. As promised, I will be completely honest, and every post will update you on my balance.
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