Trading Crypto Futures 4#: Update of my journey

This post is part of my trading crypto futures series. You will receive my latest results and insights. At the end of this article, I will share some of the lessons I learned. I hope that you can take something from this post and that it helps you on your journey to success. I can tell you that I made some good progress this time. If you missed my last post, here is my last update.

Statistics last 2 months trading crypto futures

Start balance	$63.00
End balance	$64.58
Savings account	$19.19
Number of trades	137
Amount traded	$47,210
Win rate	47.43%
Green/White/Red days	14/32/15

Looking at the stats above you can see that I had quite some rough days in the first half of the last trading period. Especially the first day was one filled with overtrading and ‘jumping the gun’, leading to my biggest loss. Additionally, there were other days of I not being disciplined enough to set a stop loss or stop dragging it farther away so I could stay in the trade. You can easily tell which days I did not stick to my rules.

There are many white days (where I didn’t trade). I was on vacation and had lots of overtime for the last two months. But after my vacation, I came back refreshed, motivated, and with a good mindset. I started to stick to my rules and daily routine, and at the end of October, I was able to get a winning streak of 7 days so far. As stated in my second update post I am now able to increase my leverage to 10x. I felt a lot of pride for that. Going forward I will include the leverage into the trade days too. So you can see when I increased or decreased the leverage.

What lessons I learned trading crypto futures?

The next section contains lessons I learned while trading crypto over the last two months. I think some of these are a bit repetitive but even this reflects how one as a trader stumbles and has to relearn some of the concepts again and again until the habits form and protect one.

Discipline in Trading: Enter Only When Certain, Avoid Doubtful Setups

Currently, I trade the 2-Legged-Pullback Strategy. I think this strategy is safe for trading crypto futures because it aims for small price movements and has – when used correctly – a high win rate. It implies counting the long and short entries at certain key levels. Once the second entry into the trend direction successfully moves past the Signalbar one should enter (I will create a post on this soon). Often the entries a not as clear as one wishes for. This had me tricked into entering a trade when it was not the right time.

For clarification what I mean here are two examples. 

This is a 3-minute chart of BTC/USDT, you can see that I followed an uptrend, that I found in the 15-minute timeframe. At around 8:51 we hit the top of the channel and the price reacted beautifully and started to fall. The first entry long has been at 9 o’clock followed by the second leg short. Around the EMA21 support kicked, in at 9:09 the next bullish candle emerged and even closed above the EMA21. Therefore I decided for this candle to be my Signalbar, according to the strategy the next candle has to tick above the Signalbar high. Because I was nervous about losing this opportunity I entered almost immediately. Next thing you know… the price dropped and I was trapped. If I had been patient, I would have seen that this setup would not work.

Enter Consistently for Profit: Trading Crypto Futures with Confidence

Whenever your edge merges and the context is right, take it! Do not hesitate too long or you will miss your chance. Even if you end up in a Stop loss. If you set up your trade correctly, that is using an SL and your Risk/Reward Ratio (RR) is at least 1:2, you will be profitable in the long run. This statement only holds if you enter your edge consistently.

Set SL even if the price moves against you while entering

As mentioned in the section above, you have to put a Stop Loss Order in place to save yourself from losing your hard-earned gains. Only those that protect their gains will be profitable.

Before you enter a trade always figure out when your entry reason is invalidated. For example, you enter a long because you think the price has broken above the prior resistance. Your SL should be below the resistance, if you are correct this key level should act as Support in the future. Don’t make the mistake I made in the past and find the next key level because this resistance (now support) doesn’t hold.  

It is crucial to set your SL immediately even if the price moves against your anticipated direction. Sure the market could change its mind shortly after and hit your Take profit but you lose the chance of even better entries. Even worse, if you get lucky and the market hits your TP you will repeat this behavior in the future. But such kind of behavior won’t ever get profitable, it is gambling. There is always the possibility of you getting liquidated. 

This image illustrates perfectly what this lesson teaches. You can see how I went short (T2) and the price immediately moved against me. I was too stubborn to accept it and did not place any Stop Loss Order as planned. You can see that I got lucky but soon after the market kept rising and would have liquidated me.

Moving average 200 is a magnet

The indicator Moving Average 200 (MA200) tends to act as a magnet. I observed on several occasions that the price is drawn to this level if it approaches this indicator. Regardless of the direction the price most often tests this key area. If it breaches the MA200 volume picks up. 

So when setting up your trade keep this in mind, you can use it to your benefit and should mind if its suction could interfere with your idea.

Have a look at approximately 18:00 the price was dropping and got pulled the pink line (MA200) only to get rejected and pulled again. The second time price breached this key area and volume increased big time.

The vertical yellow lines are economic events that took place on this day. More on this in the next section below.

Do not trade economic events 

Economic Events can have a severe impact on the markets. You never know, at least me, how the market will react to the announced information of these events. Furthermore, the price behaves differently around high-impact economic events. That’s why I do not enter trades around 15 minutes before and after such news. 

Every morning I use my API to check for high-impact events. It has an endpoint called ‘Events by Impact’. You can open it by pointing the browser at https://economiccalendar.p.rapidapi.com/events/impact/high.

You will receive output like this:

{
  ... other information ...
  "events": [
    {
      "Datetime": "2023/11/15 07:00:00",
      "Timestamp": 1700031600000,
      "Region": "United Kingdom",
      "Currency": "GBP",
      "Name": "CPI (YoY) (Oct)",
      "Impact": "high",
      "Actual": "4.6%",
      "Forecast": "4.8%",
      "Previous": "6.7%",
      "Last Update": 1700031604177,
      "Change": "-2.1%",
      "Change %": "-31.343%"
    },
    {
      "Datetime": "2023/11/15 13:30:00",
      "Timestamp": 1700055000000,
      "Region": "United States",
      "Currency": "USD",
      "Name": "Core Retail Sales (MoM) (Oct)",
      "Impact": "high",
      "Actual": "-",
      "Forecast": "-0.2%",
      "Previous": "0.6%",
      "Last Update": 1699152648308,
      "Change": "-",
      "Change %": "-"
    }
]}

There is a field called ‘Datetime‘ and it tells you when the event is to take place, the time is UTC so for my timezone I have to add one hour. I use this data to mark these events in my chart. You can see this in the image below, it is the orange line.

You can see why it’s a good idea to respect the impact of economic events. Before the event took place the price changed its behavior and rose to the MA200. At announcement time the price dropped quite strongly. Especially, when trading crypto futures you have to be careful because the more leverage you use the more volatile and unexpected movements of the price can hurt you.