Well, our Experiment #TraderForAMonth 2.0 continues. Last time, Alex swore on the terminal that he would certainly make 100 trades according to the strategy he chose and would not step away. So, he has already covered almost half the way. Let’s see how he is doing and, as usual, discuss in detail all of his victories and defeats in this time period.
Alex started this round with a cold mind, and hopefully with a cold heart. At least, his initial plans looked promising: reducing the leverage to x10 and depositing $1000 on the account from his own pocket, since the previous round of trading ended with liquidations. Alex went deeper into risk analysis and expected to earn 5-10% per month (modest compared to the previous ambitions). Did he manage to do it? Let’s see!
Since the last time we examined all the psychological and strategic issues with Alex in as much detail as possible, this time we have prepared a list of cases where Alex was doing really well. Indeed, if you perceive your mistakes not as the end of the world, but as an experience that teaches you something useful, the next time you’ll notice how this approach comes to fruition. Alex was much pickier in trading this time. His positive and negative experiences provided him with a valuable foundation to build and practice a more effective strategy.
By the way, as a bonus, he also became much more emotionally stable and reasonable, which undoubtedly had a positive effect on all other areas of his life. This is how trading plays the role of a psychologist! But we’ll talk about that later. Let’s see what changes in the trading strategy turned out to be the most beneficial for Alex.
Equity management rules
Sounds serious, right? In fact, this is a very useful thing, which Alex appreciated during his 22nd to 33rd day of trading. Put it shortly, it’s about coming up with measurable plans for distributing your assets and possible exposures before actually trading. For example, based on the equity balance, Alex has established for himself that a certain amount is acceptable to lose per day and per week (in percentages).
The big difference is that this time he assessed the situation realistically. And the reality is that a certain percentage of risk always remains probable. In other words, you can’t just gain all the time and never lose. It’s simply impossible.
Having said that, when you manage your funds incorporating some risk assessment amounts, those small losses that you’re writing in, don’t come as a surprise, don’t tick you off, and don’t bother. Everything goes exactly as planned. You stay calm and sleep well, watching your balance grow. Good job!
Another helpful practice is keeping a trader’s diary. Alex has been doing it all along, obviously. The fact is that during the day you can notice interesting patterns in the market, results of your experiments, or some epiphanies about using a strategy. How many times have you thought something along the lines: “I will definitely remember this” and, as a result, stepped on the same rake?
That’s completely not your fault! The human brain is designed in such a way that it remembers repetitive actions or those that are especially important to us. At the same time, surprisingly, even the most brilliant ideas can suddenly light up your mind – and just as suddenly disappear! Therefore, if you write down your trading experience, it helps you to analyze it more effectively. You will draw appropriate conclusions for the future while remembering the results of your own research, which will help you trade better and better every time.
What did Alex write in his trading diary? 😉 Take a look:
- Calculated risks and profits as percentages of the deposit on the account;
- Did his homework – counted how many profitable vs. non-profitable trades he made for each coin, and how this compares to the expectations of loss-profit rate of 1 to 2;
- Tracked and recorded interesting patterns based on market trends;
- Drew conclusions based on the results of his trading: what worked, what didn’t work, what he could have done better, what he’d like to try next time;
- Noted his success in following the initial plan;
- Spotted emotional patterns and how he coped with them (with occasional doodles and curses);
- And, of course, ROI.
As an alternative to the diary, Alex noticed that some traders do screen recording during their trades. Any desktop application that has this function is suitable. After that, they review the video of their trading activity, analyze, and draw conclusions. Unfortunately, Alex didn’t have enough time to try this approach.
Oftentimes, day trading requires you to act quickly – Alex fully appreciated the meaning of this phrase in this round of trades. He realized that if he placed orders faster, it would have a positive impact on the overall dynamics of trading. To avoid wasting his time thinking, he continued to intensively engage in analytics and collect statistics in his free time to begin the day all set.
Also, he continued discovering many interesting features that are incorporated into the functionality of CEX.IO Broker. For example, many technical analysis tools allow you to visualize trends and more accurately select entry points. After all, this way you have much more accurate data to rely on. Alex was happy to find new “chips” in the use of MACD (Moving Average Convergence Divergence) and other tools that helped him adhere to the strategy day after day. It turned out that trading with one strategy is not boring at all if you practice a more professional approach and analyze many factors at once!
For example, Alex just loved one of the useful things on the terminal – when you set up stop loss and take profit, you get suggested levels and profit you’d make. It’s like a built-in risk calculator. All you have to do is choose the automatically suggested stop and take with the optimal values of the equity capital risk. They appear in the stop and take fields when you’re placing the order.
This time, Alex began trading with the intention of proving to everyone that patience really pays off. Spoiler alert: he was right! And, although at certain moments the temptation was even stronger than in other weeks (for example, a friend who got rich on Bitcoin), Alex was unshakable. In fact, he used some psychological tricks to keep himself afloat.
One of the most powerful incentives was the help of a loved one. Alex told his wife about his plans to keep up with the strategy because it would be a shame to not fulfill them in front of her 🙈. In addition, they made an interesting deal: if his wife found at least one mistake in following the strategy, he would buy her the newest iPhone (shrewd!).
Overall, Alex was happy to note that he was becoming an increasingly systemic trader ☝️. He relied more and more on analytics and became less driven by emotions.
You know as they say – stand for something or you’ll fall for anything, right?
Time to stop – now what?
So, our #TraderForAMonth has set risk limits in order to stop trading when it’s time and not suffer big losses. Ok, let’s say he could stop. But what should he do when prices on the market were jumping around and he was dying to place at least one position?
As a rule, at such moments, thoughts about trading never want to leave your head. It’s extremely tormenting to sit down still when breathtaking swings are calling for you 🎢. And the next morning it’s also torturing to see how much you could have earned and it didn’t happen.
To get rid of such painful thoughts, Alex got busy. In these moments, some people prefer to meticulously clean the house (we are more in this group), others scroll Insta feed, yet others watch a comedy. But since all the thoughts Alex had were about trading anyway, he decided to use those moments with benefit! He found a way out by switching to a demo account. There he could be experimenting with new strategies with no harm.
Keep calm and prove ‘em
With his resolve to get profits, he was not set back by losses. Kept on keeping on, as they say. Partly by minimizing risks, partly through gradual and stable capital growth, we’d get to green numbers on his P&L.
Another important conclusion that he made is this: you need a greater understanding of the market and your own experience in order to trade with the highest benefits. After all, even following a strategy, it is impossible to abstract from the surprises that the market has to offer every day 😉.
Towards the end, Alex managed to earn decent money by following the strategy. This result proved that consistent and solid work pays out. Then there was again one careless step, but in the end, Alex didn’t lose everything as in previous times but ended the year with a small plus in his account, good mood, and faith in the future.
Wow, the whole month of our Trading Experiment is already behind and it feels like we barely even started! Our trader Alex is unstoppable – he is confident he wants to trade more. So, we figured, why should we stop him? 😁 By the way, as you might’ve noticed, it’s possible to come across all kinds of predictions regarding financial markets. However, not all of them come true. Hence Alex realized that he needed more time to analyze the results, adjust strategies, and improve his actions. That’s why let the trading ride! We’re officially extending our Trading Experiment to the year 2021! 🥳🤩
Summing up, Alex finished this round of trading with a positive balance on his account: $1090 (+ 9%). Until the end of the experiment, he has 55 more orders to make. We look forward to when he comes back from his winter holidays and rolls up his trader’s sleeves!
In the meantime, let’s see how Alex traded these 10 days:
🔄 Carrying out the transformation of my goals and aspirations. I have already gone down to earth with my “wishes” and started a new chapter in my trading 📒. I am confident that patience is rewarded, so I will patiently trade only according to the strategy 🧑💻 day after day. In order not to go astray I have printed out a couple of screenshots with the situations I consider to be classic. I’ve sent them to my phone so that they are always with me. And I will revise them until the moment I develop the discipline not to trade everything that catches my eye 🧠.
❗️ 100 trades. $1000 to start. And I will praise myself only if I do not make a single mistake 🙏. And the financial result depends on how cool I am. And as I read in one smart book, if your own qualities are not enough to act according to the plan, then you need to tell about this plan to a beloved person, in front of whom it will be a shame not to carry out the plan 😎. I shared my thoughts with my wife. And so that she has the motivation, I’ve promised that if she finds 5 mistakes in my trades, I will give her the last iPhone 📱. This is how serious I am 😅.
🤓 Today I read the money management rules to add to my trading. 💡 So, if the equity drops by 5% per day, then I stop trading for one day. If the balance drops by 10% during the week, then I will not trade until the end of the week ❌. And a trader always has something to do. You can test the strategy, trade on demo. 📊 The terminal provides a super cool demo mode, which is identical to trading with real money, but without emotions, without financial consequences 👌.
😬 I do not want to continue losing money, I do not want to be one of those who failed. I will become the one who learns, develops and succeeds ✊.
📝 Today I will finalize some filters in order to cut off unnecessary trades, describe the strategy, print it on a piece of paper and prepare a diary in which I compare: what the market has given and how I have used it, what thoughts I’ve had, what mistakes I’ve made💬.
📖 For example, according to my strategy, over the past 20 days, there were 37 trades only on Litecoin. 18 of them were profitable, the rest were not. At a 1 to 2 risk/reward ratio, I would have 17% profit 🤑. And I took trades only during working hours, I did not take into account night ones. And now if we compare those results with my actual ones, they are clearly many times worse 🙄. Therefore, I will do this homework every weekend.
🤝 The groundwork is laid, I will continue to move in the right direction.
💭 I understand that everyone should think with his own head but I have decided to share my approach.
📊📈 Long pattern: at least two candlesticks are growing, then a pullback candle is formed and this is my first entry into a long. ✊ Stop is below the low of the first rising candlestick, set the take the same as the size of the upward impulse. Risk is 0.75% of the first entry deposit. If the next candlesticks are down, but do not interrupt the base of the upward impulse, then I will get another position with the risk of 0.75% and put the take a little lower. ⚡️ So I have a maximum risk of 1.5% per trade. 💰 Potential profit is at least 2%. But if all goes well, then about 4%.
📊📉 Short pattern: at least two falling candlesticks, then I wait for a pullback candle upward and this is my first short. ✊ Stop for the maximum of the downward impulse, take of the size of this impulse. In the same way, I will get a position if the price moves against me, but the risk in trades is fixed. I can lose 5% maximum in a day. Maximum 10% per week. When these marks are reached, I stop trading ✖️ and trade demo, or do testing.
💻 Additional, but not mandatory filters: with a long idea, the price should be above the moving average with a period of 21, with a short idea below the moving average.
👀 I will also closely monitor the technical levels on higher timeframes. I will look at the volume. I will check the shape of the candles. For example, if the impulse ends with a pin bar, then either I decrease the volume of the trade, or I skip the trade altogether.
😬 It is exciting to start such a challenge and I understand that it will be the most difficult for me, but if it is impossible otherwise, I will act radically. I had two attempts to do as I wanted, but I failed. So I can’t trade at random. The conclusion is simple – I need to become a system trader 🧑💻.
Faced a problem. It seems that the strategy is clear, there is risk management. But how can I quickly calculate the volume? 🤔 Found a built-in calculator in the terminal. I right-click on the chart, choose, for example, buy 🛒. Then I select a market order, put a tick next to the protection orders, and set up stop and take profit. And the terminal itself calculates how much money I risk 👍.
If I need to increase the volume, then I can press ➕ next to the Lot field. To decrease it, just press ➖. So far, this is the best way to control volume and risks in my memory. Considering that I did it differently before, I need to get used to it in order not to make stupid decisions on real money 💵. Therefore, I am practicing with a demo account for now. During trading, all you need is to find an entry point. Stop and take profit orders should be automatically calculated so as not to think about it. You know… I don’t think about how to breathe🙃.
All day long I was looking at charts 📊👀 for entry points and practice on demo. It missed a point once while placing protection orders. I should increase the speed of placing the orders ✍️. It seems like little things, but they affect the result and my mood.
Today I am only practicing before the weekend. There will be enough time for trading. Wait for it 😏.
🙄Plans are plans, but force majeure happens🙄
🤕These weekends I wanted to devote more time to the market, but life presented an unexpected “surprise” and I was not able to trade until today 😞👎
And what a pity – there were many great trading opportunities and entry points🍾📈📈📈
👉I practiced working on demo by placing protective orders👊. Even opened my first trade, and already have some thoughts on how to improve the strategy 🧐.
Opened a SHORT position with DASH. There was a leading downward⬇️ impulse, a correction took place and I took a position at the very maximum of the correction. The price quickly went in my direction and walked the required distance.
But, while testing, I did not take the spread into account. You can’t imagine how upset I was when I realized this.
DASH reached the take point, but for my TAKE order to work, the ask price needs to cross it. I waited, the price reversed and went to the STOP order. Well, the trade was not lucky for me and was STOPped.⛔️
⏰The idea, which came to just later, was to move STOP to non-losses when the price went in the right direction. But, you need to work with statistics in order to understand at what point it is desirable to rearrange STOP.
I continue moving to my goal, and according to the strategy, there are 99 trades left.
- ROI for today: -9 USD is -0.9% to the deposit.
- ROI for this trading week: -0.9%
- ROI since beginning of trading month: -1009 USD
What a day! What a volatility! 🤯 Everything moved up and down. The market was so crazy that I even forgot to share my emotions yesterday. 😜 I clicked on the charts like a robot. 🤖 Used a few entry points. Some are positive, some not. But without liquidations, and that’s good. I am sure that if I had traded as before, I would have lost half of my equity. I really wanted to open positions with a larger volume 😏, but then restrained myself. Volatility is great! But I have a strategy and I should follow it.
Conclusion for that day — I need to switch to higher timeframes💡. My analysis for 5m and 15m is not relevant🙅♂️. So far, the best results are on 30m, so I will trade a little on it. Not so many entry points, but I’m patient. There is no hurry in this matter.
I feel great! 👍Such a movement on the market and so many opportunities, just take it and earn 💵. It is interesting to look at charts and look for entry points. And when I realized that everything right in terms of strategy, I was so proud of myself 💪.
- ROI per day: + $2, it’s +0.2% to the deposit.
- ROI for this trading week: -0.9%.
- ROI since the beginning of the trading month: -$1009.
When I saw the bitcoin price 😳, I realized that the day would be interesting. What a pity that I didn’t manage to create a decent portfolio. It would show a good result 😔. You can only catch such large movements if you sit in the market in advance. Maybe there are traders who enter before the price rally. But maybe I’m just a trader who is already analyzing history.
I used to trade with market orders. Now everything is smooth, calm: stop orders, take profits 🥱. The risk is determined in advance and this greatly facilitates the process of going to bed 😴. Now when I wake up, the first thing I see is not the chart of some altcoin, but the face of my wife.
I also treat the market as a game right now😜. Like a long quest. My trading has plot and tasks. I am going through the task to make 100 transactions according to the strategy. I’m working on it.
By the way, one conclusion was made: I had a few positions at the same time and all of them were short. And then everything moved upward sharply ⬆️. Stop orders worked out. 🛑. But everything was according to strategy. So I decided to add something to the strategy 💡. At the same time, keep a proportional amount of long and short positions. So, if I have two long positions, there should be two short positions. This is the way not to have losing streaks 🧠.
The results do not please me, but the finish line is still far away.
There are 89 trades left to do.
- ROI for today: – $16, it’s -1.6% to the deposit.
- ROI for this trading week: -2.4%
- ROI since the beginning of the trading month: – $1024.
There are signs of weakness today 😩. I thought that I started my experiment with a trading strategy at the wrong time. There is so much that I need to do before the end of the year🎄. Work, home, plans for a weekend. When to trade? When to analyze the market? 😥 There was a free minute — looked at the market situation, found an entry point, entered the market. And there is no time to accompany the trade 😔. Yesterday’s positions were closed by stop order, although the price approached take profit and I could fix a good profit 💵. But I didn’t see it. So they were closed by stop orders.
I understand that this is my brain 🧠 tests me, wants me to give up. But no, I will not deviate from the path! I will make 100 trades 😎. So far, the results are not impressive. But I haven’t made a single mistake yet. Although there was a temptation 😏. I tried to open some kind of risky position, but I stopped right at the last moment. It is so difficult for an undisciplined person to adhere to their own trading rules. You probably need to be a robot. Or maybe… I should open another account, where I will trade as I want. And this one will be only for a strategy 🤔.
Also, my pen friend started to piss me off. I met him six months ago, he trades with no strategy 🤪. A very risky dude. 100x leverage is fine for him 🤯. He is already three weeks on vacation — Turkey, then Egypt. The cryptocurrencies have surged, he earned, then went on vacation 🏖. I also want to do so 😩.
86 trades left to make.
- ROI for today: -$50, this is -5% to the deposit.
- ROI for this trading week: -7.4%.
- ROI since the beginning of the trading month: -$1074.
🤕I missed all the movements for today. In the morning everything seems sluggish to me. Which made me a bit of bad luck for today
And I did not find a single point to continue. Of course, they were, but I have noticed them later when analyzing the situation in a calm atmosphere. It often happens when you are looking – there is no entry point. Two hours later you look, and the point was, and was missed. Is this a Magic?
🧐 It takes experience and time to spot such situations. And if it is clear with experience, it takes time to learn to abstract from the noise and approach trading with a calm.
I made a couple of trades on the weekend, and adjusted the balance a little. And he reinforced his conviction that the strategy can be profitable. I am glad that volatility does not fade away and that I miss situations less and less.
🎞 These weekends I watched a movie about traders, noted they record entire trading sessions so that later they can review, find mistakes, or see places where they could have done better. I’m not sure that I will be able to record the screen constantly, but as an idea, I will definitely take it for the future.
📝 And of course the diary. Without it, nowhere. Everybody insists on keeping a diary. But I am Stubbornly putting it off🤕🤕.
😅 But I have an excuse – while there are such movements on the market – I do not want to waste time on paperwork.
I continue following my trading strategy. Now, there are 80 trades left.
- ROI for today: + $15 is 1.6% to the deposit.
- ROI for this trading week: -6.1%
- ROI since the beginning of the trading month: -$1061
🧐 The beginning of the day was awesome!
I’ve placed two positions – with XRP and with DOT. Before going to bed yesterday, I’ve checked, and it was a total of +$10. But I decided not to close it. 🤓
😏 In the morning the situation was next: +35 in Ripple and a small minus in DOT. At what it turns out, I opened short at the very maximum, so I could go all-in.
🤨I closed the XRP, waited for a little, and DOT broke through. But it did not reach the Take, and rolled back down. I made a small plus in a hand mode. Then I made a couple of trades with LTC, and Stellar: some with profit, some with minus.
I ran into the problem that no matter how I set a stop, my loss always exceeds the expected one. Probably I don’t understand some basics. And it turns out that I do not adhere to the risk/reward ratio.
😒 Same for ETH, when shorting, I calculated everything so that the risk was $21. And then boom, it occurs to be $50. So sad! Need to figure out why I was mistaken.
😋The day started on a very positive note, I practically went into a plus. But then it was a couple of trades with Stops with more losses than expected.
It’s time to stop trading until I understand what am I doing wrong. And the drawdown limit has already been reached.
I’ll have a rest for a day, and trade on a demo. The mood is depressed, because I have a blockage at work and turned out not lucky in trading this time.
🤓By the way, my friend, who sells anything, made money. Raised 32BTC from 0.9 BTC. I just can’t believe it! He even cashed out some of the profits through my friends 🙄. It’s cool to know such a person…and it should motivate, but I can’t say that I don’t envy. After all, he was just buying different assets.
But for me, working according to strategy is the only path to success. 70 trades are left
- ROI for today: -$70, what is -7% of the Deposit.
- ROI for this trading week: -13%
- ROI since the beginning of the trading month: -$1130
If you work hard, the result will be. I didn’t go astray, didn’t stop following the strategy, and I was rewarded.
However, as planned 😏
🙌 Yesterday I opened a SHORT position in ETH, and what a pity that not XRP))
💤 I opened this position and it was the last one for yesterday. Since the risk limit was close, I decided to keep this position to the end.
👉 At first, the price approached the stop order and I tensed, but it quickly turned around and went in my direction. Then I calmly watched the price. Well, how calm, I’m so smart now, but yesterday I was sitting in front of the terminal and just looked at the chart and forced myself not to interfere😅
👉 Before going to bed, I closed part of the position and moved the stop a little further due to the fixed profit. Thus, without exceeding the risk, I was able to increase the distance to the Stop.
👉 At night, the price went in the direction of the stop again and stopped a couple of points. The Stop was set just perfectly!))
👉 I woke up, overslept, had a call with colleagues. And all this time I was thinking about my trading positions, and when I open the chart I saw a $190 profit.
I swear, I thought it seemed it is untrue – updated the terminal – the profit remained.
Closed the position abruptly. And realized that when I placed the stop, I accidentally moved the take by 60, and not by 620 dollars per coin. What a wonderful day!
👉 Then there were a couple of trades, without much result, only spent on commission. Then I stopped because I was too emotional. And in such a state it is not worth trading.
The market knows how to present a pleasant surprise!
There are 63 trades left to do.
- ROI for today: 173$ is + 19% to the deposit.
- ROI for this trading week: + 4.3%
- ROI since the beginning of the trading month: -957$
I literally screwed up today
🤕Yesterday I closed all positions and continued my usual day. I decided not even to look at the charts in order to calm down.
➡️ Today I open the terminal and see that my equity is much lower than yesterday. I look at my positions, and there are two deals and both are unprofitable. Strongly unprofitable!
➡️ Scam-attack? The platform has broken? And then I realize that I have not removed the limit orders that I’ve placed yesterday… And they are both without stop and take orders.
I forgot about the opened positions at all – this is my first time
➡️ Also opened the charts just at the time of the big fall. And I saw about -80$. To close or not close? It’s a pity to lose such an amount. I decided to wait!
➡️ Soon one position went up and I took a small profit, while the other approached the opening price with a small minus. I was lucky that my limit orders were low. If I scattered the grid of orders, I would have earned decent money. But, to close almost without losses is already wonderful. Because these deals were not in my plan and in my strategy, at all!
🤓Such situations happen, therefore, you need to remember about limit orders and, if they are not relevant – to remove them. If relevant – to use them with stops. Due to this situation, I traded just for a little. Moreover, I have many tasks for the end of the year, work. I don’t want to rush when trading and to make mistakes.
It remains to make 62 trades (I don’t count two overnight trades)
- ROI for today is 5$. It is + 0.5% to the deposit.
- ROI for this trading week: + 4.8%
- ROI since the beginning of the trading month: -952$
2021 is almost here and it’s time for some conclusions 🏁.
I discovered trading this year and it was difficult to understand all the terminology 🎓. It was scary. I traded with my own money 💵. The first deposit was $100 and in the first month I managed to make +20% 💪. But it thanks to small risks.
Then I started diving into trading, tried to understand risk management, position keeping, and using strategies 📊. As a result, I did not lose my first deposit 🙅 and earned some money for a vacation. 🏖
Then a new account, a new risk, x100 leverage, and a $500 deposit. I wanted to earn 100% in a month. The first attempt was a disaster 😥. I almost doubled my deposit but I did not control the risk at all. I opened crazy positions and just waited for the price to go in my direction 🤑. As a result, a significant movement in the wrong direction and liquidation. It was to be expected. No risk management, no position management — the final was obvious ✍️.
Then I returned to risk management, reduced my leverage to x10, and revised my expectations 🤔. Earning 5-10% per month looks pretty good, and the risks are reasonable. I replenished my balance with $1000 and took on the challenge to make 100 trades according to the strategy without crazy stuff.
At the moment, I have $1090 (+ 9%) in my account. I will not trade this year anymore. There are 55 trades left. And there should be a result, I’m sure. It is a wonderful experience, a cool year and I am happy to start trading. May 2021 be the best year for you! 🥳
ROI: + 9%
If you missed the latest #TraderForAMonth 2.0 episodes check out the summary at the links below:
Experiment 2.0: Day 10-21 https://blog.cex.io/cex-io-broker/the-experiment-2-0-day-10-21-23441
Experiment in Telegram: https://t.me/CEXIOBRoker