2 Months of trading Crypto Futures: Update of my journey

It changed a lot, since the last update of my trading journey. I will brief you on my progress as a beginner crypto trader and what changed since last month. That will be a minor part of the post. The majority will be lessons I learned.

My crypto trading environment

In the last post, I told you that I will only do Longs on Binance Spot with the BTC/TUSD pair…. yeah… only the “BTC”-Part is left. Because of Binance having a lot of bad PR lately, I decided to switch the exchange I observed how FTX had a bank run and that people were unable to get their money back. It would be unlucky if I start to make some profits only to lose them to such an event. Another thing that annoyed me about Binance was that I wasn’t able to short. I live in Germany and Binance has not the needed licenses. So I was only able to trade one side of the market. With this situation, I jumped into cold water and found out about Bitget.

Starting to trade crypto futures

I watched a few tutorials on how to use Bitget and started a USDT-M-Futures-Demo-Account. Normally, I do advocate for trading real money to learn the psychology part right from the beginning. Psychology will become a thing! More on this later in the post. But starting with a demo account was needed. The concept of futures compared to spot was quite something else. Getting a feeling for margin, learning about the commissions and how they affect one’s profit, how much leverage to use, and what it means to get liquidated. I never did a short before and that’s why I decided to start with the demo account first. A few days later (I thought) I was ready to start trading with my own money so I deposited 500 USDT from Binance to Bitget. And then the worst thing happened to me: I did start a trade with a leverage of 50x and did work within a few minutes I earned $48. This started a time filled with aggressive revenge trading, an emotional rollercoaster, a lot of despair and even begging the market to move in the other direction. 

Even if I did a lot of mistakes I want to keep the post as positive as possible. That’s why my mistakes will be wrapped in lessons learned from trading crypto. This section will focus on what mistakes I made and how to avoid them. I won’t be able to list all lessons learned yet, some of them will be integrated in my next posts.

My results on trading crypto futures 

Start balance$500
End balance$62.68
Savings account$19.32
Number of trades328
Amount traded$73,4485.93
Win rate52.77%
Green/White/Red days – / – / –
Statistics of trading 2 months BTC futures

As you can see, I did lose almost everything. I managed to achieve this within a few days. If I kept the leverage at 50x my account would have been blown already. It has been a rough time, but I am sure this was needed to make me aware of my bad habits and how important securing gains is.

Going forward I will count the green (profit) and red (loss) days from now. Days, where I do not trade, will be called white days. I will start with a leverage of 5. In the case of 5 sequential green days, I will increase the leverage by 5 and vice versa. White days will not influence the sequences.

Lessons learned

Here are some of the lessons I learned from trading crypto futures since my last post. 

Trade with the trend

Trying to capture the top or bottom to maximize the profit is the dream of everyone, especially beginners (like me). But this can result in trading against the trend. I can tell you, from experience, trading against the market will hurt you. The market will surprise you and continue its move upward or downward. You will get stopped out. Many times I found myself thinking, “The market seems excessively extended; surely, it must correct soon.” However, reality often proves that the market follows its own path, irrespective of my expectations.

Spare yourself from a lot of frustration and stress and just trade with the trend. If you want to capture the reversal wait for confirmation, and don’t do what I did. For example, speculating that the price will fall because of MA200 rejection while the current candle isn’t closed yet during an uptrend.

If the market is trending up, only look for opportunities to go long. During a downtrend, only seek opportunities to go short.

Fade Breakouts

This lesson builds on top of ‘Only trade with the trend‘. Breakouts can occur in two settings:

  • while a Trading Range
  • when moving within a Trend Channel

One speaks of trading range when the price moves sideways between Resistance and Support for a while. Ranges are established when the market is indecisive. Additionally, it happens quite often after the trending phase. 

In another post, I will explain how I use trend channels. For now, you only need to know they can have breakouts as trading ranges do.

Now, after the clarification of the terms used, we can go on with the lesson. When the price moves between its boundaries there will be times when either the bulls or bears are trying to push it beyond. Beginners will take a breach as a sign, jumping immediately into the trade. But most of the time, breakouts do fail and you don’t want to bet on these breakouts to succeed. You should rather fade breakouts. That is taking the opposite direction. But don’t do this blindly. First of all, do not fall for the breakout, then wait for confirmation of failed breakout (FBO). If you miss a real breakout, so be it. There will be plenty of other opportunities. We only take high-percentage trades and focus on keeping gains. 

Here is a video of Thomas Wade, a role model of mine. It will help you understand why most breakouts fail and how big institutions are related to this phenomenon.

Do not move your Stop Loss 

One of the most crucial (… and painful…) things I needed to learn has been, once you decided on your entry and exit for the trade, do not ever move your Stop Loss. Before entering a trade you should always have a plan for why you take this trade and when to exit. The Stop Loss should be placed such that should the price move against you and crosses your Stop Loss your initial idea is invalidated.

I know how tempting it is to move the SL just a little. I had thoughts like:

  • the market has moved so much already, the price will reverse soon
  • the RSI is way oversold/-bought
  • maybe the price will be rejected not by the EMA/MA or Support/Resistance but reversed just a little above/below
  • oooh… in another timeframe there is another indicator just nearby, I will set my SL a tick behind it

And then the price jumps, and you are stopped. But not at your initial SL but farther away from your entry, and because it exploded you are victim to slippage. An even worse scenario: you repeat this reasoning multiple times. There was a day when I was not able to accept my loss and would not stop moving my SL away from the entry. I was into a short with a 50x leverage, severely in the red, I am talking 60ish %. At the end of the day, I was fearing to get liquidated the first time. This was a stressful day and it carried into my family life. 

And to make matters even worse, I did not learn from this experience. I repeated this mistake several times over the next few days. I could not accept that I was wrong and had the fear of closing in a loss, because I was thinking the price would get to my Take Profit (TP) soon. 

What I couldn’t see was: Had I accepted the loss early, there would be a better entry for the next trade.

Do not Revenge trade

This leads us perfectly to the next lesson. You shall never seek revenge for losses. Keep your calm. If you get emotional about a loss, step back. Go for a walk, drink some water do something you enjoy. 

After the enormous losses I told you about, I was trapped in a cycle of “I need to make huge wins to make up for the loss and still grow my account” and losing again. That resulted in pressure. I was not even thinking about reducing my leverage. That would make it harder to make up the losses.  

Do not chase entries and exits while trading

When you try to enter a trade and the price suddenly moves in the direction you anticipated but leaves you behind. Do not try to catch it. There will be new chances for you. 

Here is what happened to me:

I am trying to trade only with Limit Orders to avoid commissions (Market Orders are more expensive), so I have to place the entry just a bit below/above the current price. The price moved straight in the direction I was aiming for. As you might know, I scalp BTC/USDT ( fast trades with small price movements). I canceled and set the entry just below the price for 4 times, at this time the price reached almost my TP. Suddenly, the market corrected, my order did get executed, and shortly after my SL triggered.

Another scenario:

I was (thank god) accepting that the trade moved against me, so I wanted to exit at a loss. I did cancel my Stop Loss Order, a Market Order, to exit with a Limit Order. The price keeps moving away from my Limit Order, I was getting increasingly frustrated and setting the exit even nearer to the current price. The market turned again and the Limit Order got exected as Market Order. So I did not avoid the Market Order Commission and had an even worse exit than my initial SL. As I told you in the section above, do not cancel or move your Stop Loss. Keep it as is and try to exit by moving your Take Profit.  

My Conclusion on trading crypto futures

I know this post sounds quite negative. I understand it could scare you off going the same route as me. But there are a lot of profitable traders. They only trade a few hours, if at all, a day and are having financial freedom while enjoying life. I do wish that me and you achieve the same. Therefore we have to learn, reflect on our mistakes, and develop discipline. Even after the losses of the last weeks, I am still convinced that trading with real money is the right way. Otherwise, I wouldn’t have felt the pressure. But do it safely, don’t burn all your money with high leverage. Accept losses and have a concrete plan. 

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