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Advice from a CryptoTrader

Discussion in 'CryptoCurrency' started by Mohamed Habib, Sep 26, 2018.

  1. Mohamed Habib

    Mohamed Habib Junior Member

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    I've been trading crypto for a year now. As a new member, i feel like offering you some advice before you enter this crypto game and start losing money. If I had to start all over again, i'd want someone to impart some good trading habits into me. I'm by no means successful myself, but here is what i learned.

    There are three main components to trading:
    1. Having a strategy that yields profits overtime. (like any business)
    2. Psychology
    3. Risk-management.


    Psychology is the most important part of trading, and if you haven't mastered it, you will make all the wrong calls. Here is how to keep a balanced head. Many of the things below sound basic, but trust me, you are going to make all these mistakes.

    1. You are not supposed to feel too excited or too fearful when making a trade. You are supposed to feel bored or completely neutral. Trading is supposed to be boring, if you are winning that is.
    2. Only play with a small amount at the start: if you lose $100, it is not a big deal.
    3. After you double your money from $100 dollars, you can withdraw $100 and continue playing with the remaining $100 that is pure profit. Idea is to keep playing with the money you made, not the money you originally invested. This helps keep you emotionally sound. Good traders turn $100 into $1000, easy, you are still learning and want to be able to reach that point with minimal losses.
    4. When you get good and start making money, don't make the mistake of playing with too large of an amount, as it will influence your emotions. Many retail traders limit themselves to 10k because of this.
    5. When you are good at trading, don't accept to trade for friends, it will emotionally drain you knowing you are responsible for other people's money.
    6. IMPORTANT: Do not TRUST ANY youtube traders or traders on tradingviews for your calls, even the best of the best make mistakes, and are only right a maximum of 70% of the time. I like Marcpmarkets personally but you only need to watch his predictions for this month to see how bad it turned out. Your money, YOUR RESPONSIBILITY.
    7. Understand that institutions control the money in this game and all you are doing is following the wind.
    8. never trade on drugs
    9. never trade when tired
    10. Greed will make you lose a lot of money, as it is a powerful emotional state. Remember, we want to be like the bots and trading algorithms.
    11. Traditional traders only trade 2% of their entire balance. Crypto traders seem ballzy and generally go for 10% of their balance. Don't get greedy, if your strategy works, the laws of probability are on your side.
    12. never stay in a trade overnight. see #5 under risk management below.
    13. Beware of overtrading: that is when mistakes are made. That is why I only make 1 high probability trade every 1-2 days, and am on BHW to find other streams of income. I know of an actual professional trader that wakes up in the morning, makes 1-4 trades and calls it a day: low stress. This part is up to you, but i recommend you start off with as few trades as possible.
    14. Keep your male EGO in check. There is a difference between confidence and ego. Ask yourself if you have a big ego before you enter this game, and ask yourself how you will manage it.

    Risk-Management is the second most important factor. Here is what you need to learn and what you must use for EVERY SINGLE TRADE:
    1. risk reward ratio, and how that leads to you winning mathematically over time.
    2. laddering, because no one knows where the exact bottom or top is.
    3. sometimes we enter bad trades, learn to spot the signs and exit quickly.
    4. Reaction over Prediction. It is better to react to the market than predict where it will go, because no one knows where bitcoin will be 1 week from now. Signs of bullish/bearish divergence can happen within a single day and can quickly turn a market from bull to bear and vice versa. It was also fun watch a vast majority of people in the trading community predict that bitcoin will go up, only to see it crash then watch the awkward radio silence. Nobody can predict the price of bitcoin. Better to be a reactive trader (scalper) than an investor. This rule does not apply if you have insider trading knowledge.
    5. Your trades as a scalper, should last, ideally: 2-15 minutes. Some may take 30 minutes. some may even take an hour. some trades do require that patience. But keep in mind, the more you hold onto the trade, the more your RISK grows as time goes on.

    Strategy
    1. A simple strategy works best, one you add too many trading strategies together, the % error in each one, when combined, will multiply exponentially. This is what the pros tell you also. Acceptable # of strategies to combine: 1-3 (ie. rsi, macd, EMAs)
    2. always have a stoploss and takeprofit target, for me this is generally around 0.5-3% depending on the coin.
    3. Don't pay for or follow trading strategies online unless you can write a script to test them out. I used ninjatrader to see if my strategy to see if I would be profitable overtime. Didn't work out because the dataset was buggy (missing LARGE candlesticks, which erroneously registered great losses or great profits). Might write one for tradingview or maybe they fixed it by now. If you are unable to do that, you can just test them with your starting $100. Backtest your strategy for free before committing actual money if you can. If you can automate the process, even better.
    4. Psychologically: the best strategy is not to maximize your wins, but minimize your losses. Treat trading like a business. A business always seeks to minimize losses and liabilities first, before going into maximizing profits. That doesn't mean don't take risks! but make sure the rewards are huge relative to the risk you are taking.
    5. Always check the daily chart every single day, the indicators and strategies seem to have an extra weight on the daily chart. (ie. the candle can bounce off the 50 EMA on the daily).
    6. IMPORTANT: All Cryptocurrencies are influenced by bitcoin's up and down price. IF bitcoin tanks, cryptos will TANK. if bitcoin goes up, after a few hours cryptos will follow. I don't care HOW GREAT your coin is, bitcoin will influence its price. There are some coins that appear to move independently from bitcoin, but depending on how HARD the price DROPS or RISES, these coins WILL be drastically affected. Don't believe me? go put alerts on the 15 min rsi overbought/oversold region of bitcoin and other alt coins. Most of the time the alerts will ring for all of them 1 minute apart from each other.

    Last Thoughts
    That is all for now. This is to be treated as an intro for trading crypto. You are still responsible for learning TA and learning it right. Don't fall for scammers on tradingview, youtube, or pay for trading groups... some of those people don't even trade but make money off showing you some nice little charts with their "predictions." A trader that makes money probably isn't keen on sharing his secrets, and even if he does, he is going to be getting a lot of death threats and people hacking his PC to shut him down.

    90% of retail traders lose money. The only way to make money is to follow the institutions.

    Good luck.
     
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    Last edited: Sep 26, 2018
  2. artur core

    artur core Regular Member

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    Hey Mohammed :)
    Thank you for your guide, i m sure a lot of people dont have this stuff in mind.
     
  3. MTGuy

    MTGuy Newbie

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    What timeframe do you prefer to trade off of?
     
  4. Mohamed Habib

    Mohamed Habib Junior Member

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    The short answer is all of them. Here is my process:

    Right now i'm limiting myself to hidden rsi divergence on the 15 minute because I try not to trade too often.

    In the past, this was my trading procedure:
    1. hunt for the top 5 volatile coins (daily volume changes > crazy +-50% price changes). (FYI: a trader is a volatility hunter first and foremost, and right now it is better to trade the DOW jones or S&P500 as it is more volatile than BTC).
    2. note any major resistances on the day chart, 4 hour chart, 1 hour chart. This could be a certain fib level, EMA support/resistance, or a large set of candlesticks going sideways, ichimoku clouds, etc. Mark them on my chart. Look for any patterns and or channels that the candle sticks may be travelling in. Account for bull/bear traps.
    3.set alerts on the 3 minute, 5 minute, and 15 minute rsi. Generally I watch the 3 minute rsi to start bearishly/bullishly diverging and hope it cascades to higher timeframes.... but If i see a coin that looks exhausted and is about to drop (denoted usually by a hammer following a graveyard candle stick, after a pump), I go to the one minute and try to nail the exact moment before the drop. We can't exactly see a half minute chart, so for that I look at how things are going in the order book to predict how the 1 minute candle will turn out. I only aim for a 1-3% gain with cryptos. Only 1% with BTC.

    Note to newbies: orderbooks are very hard to read at first. 6 orders at the exact same second for example, is made by a single person. you can see the momentum shift of the number of orders being spammed in the book. it is just as important as reading candlesticks when it comes to scalping
     
  5. SMSCodes

    SMSCodes Jr. VIP Jr. VIP

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    Which exchanges do you use for shorting ?
     
  6. adexnetwork

    adexnetwork BANNED BANNED

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    Hey, thanks for your advice. You took a great efforts to give advice to people.
     
  7. myomin

    myomin Newbie

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    Thanks for info.
     
  8. Wooten

    Wooten Jr. VIP Jr. VIP

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    Neat guide.

    I will add a little bit of my experience, hopefully someone will find it useful too.

    I personally was involved into crypto for about 6 months and I do occasionally still trade ( mostly for fun ).

    So what I've learned from my journey is this:

    1: simplest strategy is usually the best. I've been a member of several crypto trader groups and essentially majority of people I've seen use 5 indicators, try to mess with elliot waves ( without actually understanding how they work in the first place ) and thus lose money.

    I used and still use simple support/resistance strategy and my only indicator is STOCHrsi. I trade only on 5/15 min charts depending on how quickly coin moves. Now, I do check higher time frames for confirmation of trend. As for support, I mark only horizontal lines of previous support/resistance and confirm it with stochrsi for my entry. If they are in agreement, likely that I will enter. Ofcourse, there's an order book, which is also useful to check for buyer/seller walls ( again support or resistance ) to pin point your best entry price or exit.

    I believe there was a similar strategy shared in this forum by someone early in this year. Do check it, it's pretty good also.

    2: If you are new and just starting to learn, I cannot advise you enough to not mess with margin trading and shorting. Learn to read movements properly
    and have a moderate success rate with going long, before you try margins. Unless you know what you are doing, YOU WILL LOSE MONEY.

    3: Don't follow calls and like OP mentioned, dont try to predict the movement. Countless times I've seen so called GURUs saying that in August BTC will be 50k ( they have their own agenda to push ) and it never got there. Instead, watch charts and look for opportunities a.k.a. react. There's money to be made if you are patient enough.

    4: You will lose money. Period. I don't know any one trader with 100% success rate, it just doesn't happen. That being said, do a reality check. There are few great traders and chances are you are not one of them. Don't get into trading just because it's still hot and you want that lambo. Keep in mind, that majority of those youtubers ( IMO anyway ) who brag about making millions and buying lambos and all other kind of shit GOT LUCKY. Any dumbass can make money in an uptrend that was last year and some just managed to get on the train with a right amount of money. All of a sudden they're all gurus of trading.

    Get in this only if you are willing to invest a shit ton of time to learn and practice practice practice for the long term. Although I made some $ trading, this is not something I'd like to do for the rest of my life as it gets dull after a while.


    In summary, this requires patience, mental strength and actual practice. What trading did help me with is to better understand my emotions and how to better control them under pressure. But you need to trade with real money to learn best.

    And don't invest in any courses for the love of god. From what I've seen, they're mostly scams. You can easily learn majority of stuff you need on youtube for free and the rest you will learn by doing and learning which style of trading suits you best.

    Anyway, don't want to hijack OPs thread, just sharing some tips that helped me in this game.
     
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  9. Fakeha Crypto

    Fakeha Crypto Newbie

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    How about a auto trading bot? what are your thoughts on that?
     
  10. spajki323

    spajki323 Junior Member

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    Guys it is same as forex at the end you lose all
     
  11. DTjai

    DTjai Jr. VIP Jr. VIP

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    Taking profits is one of the most important and painful lessons I have learned. Went from 1k to 25k now back to below 1k.

    Remember to take profits.
     
  12. Mohamed Habib

    Mohamed Habib Junior Member

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    Hijack this thread all you want. I'm always curious to see how others trade, as I'm always down for backtesting their strategy if they are generous enough to share it. You can buy Philakone's course on Udemy and then order a refund within 30 days if I recall correctly, after you have watched it. I've had friends share other crypto courses they have bought, they are all shit.

    Also, interesting that you only use sRSI, with higher tim eframes, supports/resistances as confirmation. In engineering they teach: simplicity is a mark of a good design. My friends use sRSI as well, but I prefer RSI because you get less buy/sell signals but generally they have a higher probability of not being false signals. That's the beauty about trading, so many tools, but we all trade differently so it is up to us to choose which tools to use.

    Also, you are right. Trading is boring and can be exhausting mentally too. These 2 facts can cause you to lose money. That's why many people aren't fulltime traders and some even play video games as they wait for big moves as to pass the time.

    Excellent comment on elliot waves. An impulse elliot wave is easy for me to read but otherwise is very difficult, so I prioritize general patterns first.
     
  13. Mohamed Habib

    Mohamed Habib Junior Member

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    Well you can program a bot using NinjaTrader and connect it to bitmex via API. I've tried using it to test a person's trading strategy (and if it is successful, make it automate the trades), but I ran into three problems:
    1. I was not able to emulate SRSI on tradingview (the one the trader was using) on ninjatrader. I don't know why the 2 srsi indicators are different.
    2. Some of the candlesticks were missing on ninjatrader, this is now a known issue and they are working to fix it. It fucks up the backtest BIGTIME and you are left unsure if your strategy is profitable or not.
    3. For my own strategy, I use divergence and hidden divergence a lot. I'm not sure how to get a bot to trade using divergence.
    *If you are able to solve any of the three problems, let me know. I would be willing to share my strategy in exchange for getting the bot up and operating.
     
  14. Wooten

    Wooten Jr. VIP Jr. VIP

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    Well as for Philakone, I stopped following him when his hypocrisy surfaced. I watches his tutorial videos while they were free and he swore that he will never sell any course and his material is free till the end of his days and month later he made videos private and compiled them into a course. Not saying I blame him, since he has a huge following as well as his own agenda to push, but that's just not my cup of tea as well as he uses waaaaay too many indicators for my taste.

    I use SRSI only as a last confirmation. I can easily trade with horizontal lines and order book without any indicators whatsoever, because I like my charts as clean as they can be without any distractions. Usually that way I have the best results. My biggest issue with trading is my own emotions that are still not perfectly controlled. Meaning that I usually take more risky trades than I would like to admit. But my success rate with this strategy is very high. Also worth mentioning, that I trade with 25% to 100% of my portfolio depending on how guaranteed I am about the trade ( yeah,I know, risk management and stuff... ). 100% of the times I enter with 25% for bigger gains, rest of the portfolio is used when for instance my entry point was a bit too high, I will buy lower to lower the average cost and if the coin moves up I'll buy a bit more and more and then take profits along the way.

    Also, it takes practice to really understand how order book works, because very frequently there will be fake walls. So once you get to understand them, I usually place my order just a bit above the buy wall so my order would be matched as when selling, just below sell wall. You have to notice the trading volume of the coin, because liquidity is the key and you don't want to be stuck in the trade ever.

    Following same strategy, I will never do multiple trades, because I like to focus on one trade without distractions. Sometimes it takes 15-20 minutes to get out of the trade, sometimes I sit for 5 hours staring at the chart until it plays out, because coin moves very slowly.

    My biggest tip, that I've learned the hard way, is that you have to understand, that there will ALWAYS be another trade. Meaning that since crypto world never sleeps, there will always be another opportunity to get into a perfect trade inline with your strategy. So never rush into a trade you are not absolutely sure about it. Sure, there will be trades that won't pan out the way you expected them to, but that's fine. You have to stick with 1 strategy that you chose to trade with and stick with it.

    Funny thing is, that using horizontal lines of support, you will usually find that orders placed in the book are usually inline with that same line.

    And ofcourse - never mourn lost profits. I know countless trades when you get out with 3-4% profits and coins goes up for about 30% within next 30 minutes. Don't try catch it anymore if you already made profits. Better safe than sorry.

    With this strategy my success rate is very high. When I used to trade everyday, all day, my worst day would be around +1.5% on full port. Best would be
    around 6%. Ofcourse I lost A LOT when I began and was clueless with all those indicators and followed bunch of different garbage. In my experience, simplicity works best. We had a group of about 6-7 trades who would share same strategy and constantly shared charts. With this same strategy, that I learned for one dude, he was so good at it, he managed to go 3 months without loss. Started with 0.1btc, ended up with about 2btc within 3 months. And that's in a downtrend and without any shorting and margin trading.

    ( we traded BTC/ALTS because since everyone was expecting btc to rise eventually, we wanted to accumulate as much btc as possible )

    Well I hope that helps anyone who wants to play. Just sharing what worked for me and how I went about it. I no longer trade full time, because everything got much slower, than in first half of the year and I only trade on occasion to have fun. Too much of the same for the long run :)
     
  15. Mohamed Habib

    Mohamed Habib Junior Member

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    Philakone has a nice tutorial on Udemy that you can get for free by requesting a refund if you payed via VISA, doesn't mean anyone should trust him... and I kind of regret throwing his name on here knowing noobs will be noobs: they will try to follow his trades, and fail at doing so even if he is successful because he is able to manage his position infinitely better. As for my lack of trust: he seems to be hyping mass adoption of crypto for some reason and it is easy to see if you leave the crypto scene for a break.

    Thanks for sharing your trading method. Simplicity is the mark of a good design, as mentioned in the first post. I'm not good with the orderbook so i've adopted a different strategy, but I did mention it was just as important as reading the candles :). My simple trading strategy is waiting for a hidden bull/bear div on the rsi, in the 15 min chart, and trade accordingly. When that signal shows up, it shows up you typically have an hour to enter the trade before you get a decent sized candle UP or DOWN, so of course, take into account resistances and support. It is a high probability trade and it works most of the time, only issue is it takes 1-2 days to show up and you might miss it because you are sleeping. But remember, the important part is in NOT losing money.
     
  16. Mohamed Habib

    Mohamed Habib Junior Member

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    Actually Wooten, could you post a chart or 2, as an example of your trading strategy at work? I mean it sounds so simple that it is hard to google/youtube. Sounds very similar to the "supply/demand" strategy. and where do you place those horizontal lines? at areas of consolidation? pivot reversal points? etc. Do you have a stoploss or take profit target?
     
  17. Wooten

    Wooten Jr. VIP Jr. VIP

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    Sure, I'll upload few of them. For me it was the same, the strategy is sounds so simple, yet it's takes time to actually start seeing legitimate lines. People tend to complicate things more than they should be.

    Useful note would be to constantly either expand or contract the chart to better gauge the lines. It's not always obvious. And I only look to relatively recent support/resistance lines. I definitely don't look for historical, like days or weeks ago. While scalping, they don't hold that much significance.

    Hope that helps

    EDIT: had to reupload and just paste the links. For some reasons images won't appear :suspicious: sorry for the mess

    https://imgur.com/a/LLT84NN
    https://imgur.com/a/dZCf9N9
    https://imgur.com/a/VnRscC1
    https://imgur.com/a/YpBMQom
    https://imgur.com/a/YpBMQom
    https://imgur.com/a/VDYAcnv

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  18. Mohamed Habib

    Mohamed Habib Junior Member

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    Thanks for posting those. Yeah it looks super simple, actually looks like you are trading based off an elliot wave rule: (ie. wave 4 shouldn't go past wave 1). Where would you set your stoploss, what if your strategy fails and price dumps below that horizontal line? 3-6% is what a good trader makes per day regardless of strategy
     
    Last edited: Oct 7, 2018
  19. b1step-ahead

    b1step-ahead Supreme Member

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    Wait till btc drops to the mid 3k range and buy back up again.
     
  20. Mohamed Habib

    Mohamed Habib Junior Member

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    I trade on the 15 mins, the price of BTC is irrelevant to me, what is important is its volatility. Fact is, right now it is better to trade the DOW or S&P. Technical analysis works for all types of markets.