People always enjoy watching reality shows. Why? Because it’s exciting to peek behind the curtain at a private life and see how others behave in different situations. Moreover, humans tend to feel empathy and compassion for someone they can relate to. But what is more important, people like to think about what they would do, finding themselves in the same boat. Comparing ourselves with others is just in our genes!
And, whereas the utility of watching a reality show about people dating on an exotic island is questionable, observing someone practicing a technical skill can be quite useful. We thought trading crypto derivatives could be that helpful technical skill. So the idea for The Experiment was born.
Our aim was to show the trader’s reality with its highs and lows, profits and losses, tears and smiles, daydreams and nightmares. And it became the most real trading experiment on CEX.IO — Trader For A Month.
Although YouTube or Telegram traders seem to be super-successful and always at their best, the way things work in life is pretty different. Especially, when a trader makes the first deposit to a cryptocurrency platform and opens the first positions.
Let us go over what the experiment was all about. For one month straight, a real person — Alex, not a professional trader, was opening and closing positions on https://broker.cex.io/?source=blog and sharing exactly what was happening. Alex understands financial instruments, follows cryptocurrency markets and has experience with trading platforms but he has never traded professionally.
Of course, there is a gradation of novices in trading. And, by his appreciation of the cryptocurrency industry, Alex was not a complete newbie. Though, as he’d never traded continuously, never taken a trading course, and never was held accountable for his process — Alex certainly places well into the beginners’ league.
Show Me the Bottom Line!
If you check the last few days of the experiment, you’ll see that Alex finished with 30% profit overall. But don’t expect that his way has been so rosy all along. At some point, he faced a 50% loss of his initial deposit, unforgettable emotional experience, and hours of soul-searching.
Now, it’s been a month since the experiment finished and, as they say, the dust has settled. Good time for reflection. And we, as well as you, are curious to know, from the firsthand experience, how difficult trading was for a beginner. What were the main lessons he’d learned and, of course, if he continues trading or not.
A while ago, we’ve shared a form for the questions you’d like Alex to answer. As, as promised, here’s an exclusive interview with our hero #TraderForAMonth, candidly answering some of the most interesting ones.
1. Should one start trading if he has a job and family? Did trading interfere with your work and personal life (especially emotionally)?
It’s definitely worth it to start trading. At least, you need to begin with small amounts in order to develop those trader’s habits and those positive qualities that will help you in the future.
I am totally sure that people with money, even with little money, sooner or later want to start managing it. But giving money to someone in trust management or investing in funds is not always reasonable or possible. This is where trading can help.
Frankly speaking, it definitely affects other areas of life. I was handling my trading, especially at the beginning, intraday mostly, and such type of trading quickly changed my mood from positive to negative, turning me from euphoria to panic and fear. Emotionally, this is quite complicated.
Of course, when the day was closed with losses, I brought negative emotions home. But in any case, trading and personal life will always be intertwined, and it is what you should be prepared for. And learn to manage!
In general, one should totally start trading, but also should be ready to differentiate – trading is trading, personal life is personal life.
2. What strategy and indicators did you use? What strategy is the most profitable?
I traded three strategies.
The first was described at the beginning. It is connected with the moving averages and the stochastic index.
The second one was pretty similar, but I removed the stochastic from there.
But I did not mention the third strategy and it is difficult in general for me to describe it. This is something like a proprietary strategy.
The first two are the most popular trading strategies if you search on the internet. I have chosen them to check whether it is possible to trade the most trivial strategies, adhering to risk management and money management rules, to earn money.
As for the indicators, I used moving averages and stochastic (although any oscillator would do).
As for the most profitable strategy, I will say the following. The best strategy will be the one that is tested, worked out on the trading simulator by you personally. Very often you can take a strategy, follow the rules, understand when to open and when to close positions, but the result still will not be what’s expected.
There will never be one best strategy, the Holy Grail does not exist. There are profitable strategies, but they are not always suitable — by psychotype or by risk management — for everyone. The best strategy is one that is unique and individual for you.
3. Was it difficult to start and, in general, is trading difficult?
Of course, it’s hard to start. I have not traded consistently before. Bought BTC or some alts for holding, but that was it.
The start was the hardest. I spent a lot of free time sorting out the terminology I came across on forums. It’s good that the platform itself is quite intuitive and it’s not difficult to understand what button to click.
Is trading in general complicated? I think that even after a month of trading, it is still not easy. Understanding how to trade correctly does not come after a month of practice.
They say that you need to spend more than a thousand hours on the market analyzing and trading in order to understand how and why to adhere to the rules of money management.
Trading exposes you to yourself. Look, the market gives a result automatically after your action. No other business does the same. When you make a wrong decision, a wrong trade, quite soon it results in losses, and this greatly affects your mood. But it is difficult until you get used to trading, trade a certain number of hours and analyze your deals. No matter how difficult it is, it is worth it.
4. Was it painful to handle losses?
Of course, it’s very painful to handle losses. Sleepless nights, bad mood, unwillingness to wake up. But worse: the worry that the position is about to be liquidated.
I realized that the worst thing for a trader is not to lose money but to be in a situation when his position is taken away by the forced liquidation. You can handle losses, you get used to it, this is also psychology. But liquidation gives you the whole range of feelings: denial, anger, acceptance, and then some wisdom even. I guess, a first liquidation is an initiation of sorts for a trader.
The biggest pain and the biggest fear were when BTC reached $10k, I had shorts and got a notification that the liquidation was about to happen.
In general, though, handling the losses for me was not as difficult as handling the profits. That’s right, profits! Because when you see a plus, your hands itch to close a position quickly and take profit.
5. Almost a month has passed since the experiment ended. Do you continue trading? And, if you do, how is your P&L looking now?
I continue trading and I will not stop. I love it. The way I trade now, after the experiment, has changed a bit. I’m assessing my risks more holistically. I’m more thoughtful about my positions, and I’m not acting erratically. Now, this is one or two trades maximum, with a stop order, and always with a take profit. Of course, there were some hiccups, but in general, I continue to increase profits. The pace is not so bright, not 30% as before, but still 1-2-3% in a week.
6. What are the main rules and lessons you learned for yourself?
The first rule is to place a stop order. Position must be protected.
The second rule is to never exceed the acceptable risks. If there is no stop order, you should not let the losses grow. Don’t allow the idea that, if you wait a little bit the price will turn back, to take over your mind. No. This will likely lead to a loss of your deposit.
And another important rule is that you must have a clear strategy and understanding of what you are doing, and what you expect from the deal. The right understanding and the right implementation are the most important things.
Finally, you need to trade, trade, and trade again to become a trader. Be sure to keep a diary, write down your thoughts. My diary brought me more benefits than any resource that I read or watched. Understanding yourself is the number one priority. Understanding your psychology is even more important than risk management.
________
And now you have it — the uncovered truth about trader’s life with its benefits and costs. Trading is not a cushy ride with a martini glass, but rather a messy rollercoaster with ups and downs. Good news, you’ll learn to anticipate and enjoy the turns.
We were certainly captivated by Alex’s adventure. Soon enough, Alex had those who were rooting for him and those criticizing him. Some people even confessed that in Alex’s actions they saw their own mistakes and in his emotions, they recognized their own feelings.
Trading reveals the farthest reaches of your mind and exposes your inner demons. When, with bated breath, a trader waits for the market to move in the desired direction, then the trader is confronting these demons. When, in despair, a trader closes a position because the price did not move as expected, – the trader is feeding them. And, when a trader stays cool through the rough moments of the market, that’s when the trader controls those demons. So was Alex’s story, too.
If you want to look back at the experiment, check:
➡️ Week 1: Golden Cross, Death Cross, Familiarity Effect, and the Need to Recoup the Loss
➡️ Week 2: Shorts vs Longs, Understanding the Orderbook, FOMO, and Beginner’s Luck
➡️ Week 3: Stop Loss and Take Profit, Crowd Effect, and Confirmation Bias
➡️ Week 4: Escaping the Liquidation, Averaging Strategy, and Trader’s Performance Anxiety
We must confess, the experiment exceeded our expectations. And we’re grateful for all those kind words you’ve shared with us about it too. That’s why we are not going to stop. Show must go on! Trader For A Month 2.0 is definitely in the works already! In which format? Stay tuned to find out!
Meanwhile, get to practice and trade on the platform with real funds or in DEMO format: See you in the market!