Trading Diary #1: Trading Is A PvP Game

After publishing my book on Amazon, I wanted to take a break from writing, so I went full-time into trading – BTC/USD and ETH/USD particularly. So I ended one project and dived right in to another, without much of a break actually.

Like any other new project, or jumping into a new job, the start is always overwhelming and I was trying to find my balance around these choppy waters. It was not a smooth start, I fumbled and I am still grappling around, and I am at least a little more confident to start sharing how I have been stumbling so often.

Hence I am starting a new series specific to this blog, to document and share my trading mishaps, and lessons hopefully.

Learning And Losing Goes Hand In Hand

I have been learning and practicing technical analyses for a few months now, and I thought that this skill would serve me well as I moved into day trading. Indeed, the technical analyses were important to time your entries and exits for investments, but day trading is a totally different ball game.

An Intro To Technical Analysis (TA)
In TAs, we look at the price action of an asset to determine if it is tending to go up or down next. The most basic of TA is support and resistance levels (which I have written about here), and the whole market trades using these, so it is a bit of a self-fulfilling prophecy, i.e. it works because everyone follows it, rather than some formula.

Beyond that, traders use a variety of indicators that they are familiar with which include Moving Averages, RSI, Fibs, Trend Lines, Ichimoku Cloud etc. This is a nice summary by Henry Gillett, and do take note that you do not need to master all the indicators.

I spent the first couple of weeks figuring out how to use Bitmex. You can use this link to sign up, I do get a small referral bonus if you eventually use Bitmex to trade. All contracts on Bitmex are 1 USD per contract, so there is some difference in calculating how much to risk for how much reward you seek. These will affect your Stop Loss and Take Profit levels.

Subsequently, comes the part on Leverage. Bitmex allows you to trade at up to 100X leverage for BTC and 50X leverage for ETH. And leverage affects your liquidity.

After I got comfortable with calculating my risk-reward ratios and the number of contracts to buy and sell, I started trading proper. But I soon met with a series of losses. What was intriguing was that my stop losses were hit to near perfection. Had I set wider stop losses, I would not have lost. So, is this about adjusting my stop losses?

I tried, I adjusted, and more losses. Another week, more losses. My technicals were not wrong, they were accurate, but I was making the wrong trades! Why?

And then I remembered a lesson – The Crypto Market Is Manipulated. Now, let’s just try trading against myself.

Trading Is A PvP Game

I started clocking some wins when I traded against myself, more than before. It sounds intuitive but it took me several losses to realise it. Day trading is a Player Versus Player game, and the big players are trying to wipe you out. Now, step up.

Just as I was getting into the groove and making some winning trades, I was once again soon wiped out. Why?

Let’s just put it this way: It is like a game of poker. You start by learning the rules of poker and how to play it. Then you realise that you are playing against other players, not by yourself. And then, you learn that there are bigger dynamics at play, like how the big stacks have a different playing style.

To cope with the different frameworks of trading, I actually came up with several personas. I am still figuring out which personas excel best in what market conditions. And I jot these lessons down in a physical journal.

Moving forward, I will be sharing more of these lessons, alongside a monthly Crypto Pick, and some technical analysis (for investing) on this blog. I will also feature excerpts from my book, which will also be published on Medium.

I am still learning, and I am still losing. Hopefully, these lessons will take me forward.