Bulls make money, bears make money, pigs get slaughtered.
This Is an old Wall street saying that warns investors against excessive greed. Old but of paramount importance.
Most of us try to figure out how to make money quick and live a life with more freedom and less stress with our loved ones, me included!
When I discovered cryptocurrencies back in 2015, they intrigued me with their volatility. They gave me the potential to earn a huge amount of money in a very short time frame if I traded them. I saw a gold mine in it.
I have always considered myself to be smart enough to achieve anything I want. My ultimate dream was always to achieve financial freedom and I felt that by mastering the skill of trading my dream will come true.
Trading was thrilling, offered flexibility and good money. What else can I ask for?
Financial freedom on the horizon
I started doing my research and it was clear that the path I was taking was not an easy one. Statistically only 5% of traders manage to break the barriers and make a sustainable income, the remaining 95% failed or lost most of their capital.
“Many are called, but few are chosen".
The 90-90-90 rule applied to trading. This meant that 90% of traders lose their money in 90 days.
I was not disheartened at all by these statements or statistics. To me these were only numbers.
At the age of 25, I was working in a fintech company, had a well-paid managerial job and had the confidence to overcome the most challenging skills.
I already imagined myself making part of the 5% successful traders.
My fintech job was interesting but was not interesting enough! I wanted to achieve more than just being a number in a company.
I started studying fundamental and the technical analysis with an Institution which gave me a good understanding of the markets in general. I started trading with little money and managed to close off a number of successful trades, but I was still losing a big chunk of my wage on trading.
For 3 consecutive years I studied the charts day and night, I became obsessed and trading became a personal challenge that I had to overcome no matter what.
I even dropped my standard of living to save more money and use it for trading (which I was losing anyway).
I arrived at a stage where I had to borrow money from my parents to keep me going. I had no money to buy food or to pay my rent and I was slowly realising that this path would ruin me instead of leading me to success.
I started trading psychology a few weeks later to help me deal with my obsessesion. Here I realised that the biggest enemy was MYSELF and before I overcome myself, I will always lose in the markets.
All of this had an adverse impact on my personal life. I was having issues with my partner, changed me into a grumpier person and had this huge voice within me saying-
YOU ARE A FAILURE!
It was hard decision, but I decided to have a break from trading for a while and only invest long term.
I am not the type of guy that give up easily, in fact this break only arrived after three years of trading. I had to accept reality and had to accept the fact that it was not yet the time.
I was determined that I will be back to trading one day. I knew it was not going to be an easy skill to master in the first place, so why give up?
"You have to be willing to make mistakes regularly; there is nothing wrong with it. Making your best judgment, being wrong, making your next best judgment, being wrong, making your third best judgment, and then doubling your money.” – Bruce Kovner
During the 1 year I did without trading I always stayed updated with what is happening in the crypto space. To be honest I was living a much more relaxed life without trading. Trading was stressful - especially if not done in the right way.
During the time I was not trading, I felt better mentally and physically. I also had more room for new ideas. In fact, I started an educational business for crypto enthusiasts.
I knew that cryptocurrencies in general is not an easy subject to understand – especially as most of the information found online involves crypto jargon which is confusing.
My mission was (and still is) to make cryptocurrency simple and explained for anyone, no matter your level of education, your nationality and your job. I loved the project and it kept me busy and distracted from trading.
As part of my long-term investment strategy, I was buying crypto and holding onto it (no selling). A few months ago, I started using Binance as I heard that they have the best crypto exchange fees. Their platform looked a little bit too complex at first, there were too many promotions and products on the page, especially for someone like me who was only interested in buying some crypto.
I was still curious and roamed throughout their website to understand what these guys had to offer. They certainly had some interesting products including the famous futures.
In simple terms futures offers the possibility to leverage a financial instrument, this means that if you take a trade and you are on the right side of the market you are able to multiply your gains, or multiple your losses in case you get yourself on the wrong side.
The risk is huge, but the reward was even bigger. With Binance I could trade futures on cryptocurrencies.
Binance offered (and still do) massively leveraged products, whilst most online brokers offer a leverage of 1:2, Binance offered a leverage of 1:125. This means that you can multiple your gains/losses by 125 times with a huge possibility of losing all your capital.
Let's give it a shot!
The massive leverage made things interesting to me and I felt like this was the right time to give it a shot at trading again after a year on break.
Binance have the option to either trade in USDT (stablecoin) or in any cryptocurrency you want. I started with a very conservative strategy, as I was out of the game for a while and I started off on the right track - making profit.
I was excited to be back and I thought this time will be different, so I started adding volume and leverage to my trades (much higher risk).
At the time XRP (like 1 month ago) had a massive rally and was super bullish. I said it is very improbable that XRP will drop to 0.30c USD as it had already reached a high of 0.90c and corrected to the 0.60c USD area.
I scaled in, and I risked 10,000 XRP in one trade. The liquidation price (losing all of them) stood at 0.25c USD which gave me comfort that I was in a safe spot.
That same night a big news came out and I woke up to find XRP in double digit losses.
It was a bloodbath!
“Ripple sued by Sec for selling unauthorized securities! “
First thing I saw on the news.
I was still hopeful that XRP’s drop in price will recover and gains its bullish momentum again, but the price went below 20c USD when large crypto exchanges started to delisting them.
I lost 10k XRP. Emotions started to kick in and wanted to get my XRP back. I increased the leverage and put another 10k XRP to trade with it.
The next trade was a massive success, closing off with a gain of 65,000 XRP in green. (hereunder you can see the withdrawal) that I did on the night.
At the time I felt like I was invincible, and I was pretty sure that I can make more money, so I continued trading. This time with less caution as I felt powerful and nothing can stop me!
I started losing small amount of money in trades and once I started losing my patience, I increased the risk with each trade I took.
Believe it or not, I managed to lose all the gains (65,000 XRP) in 24 hours.
I felt angry, frustrated, and kept on adding money in the account to trade and recover my losses.
I realised that apart from the gains I initially made, I also lost a significant amount of my savings. With every trade I took the more frustrated I got and the more stupid mistakes I made.
I felt like I was losing my mind and control of the situation.
Luckily enough, one morning one a fresh mind I managed to stop and think.
I was still full of guilt and anger but managed to arrive to an agreement with myself.
I was the only one responsible for my actions and no one else! I earned them and I lost them.
I was carried away with greed and there was no point to self-pity and regret my actions. I cannot rewind the clock, so all I could do was to learn from my wrongdoings.
I am very aggressive trader and impatient person which are the best combo for a GREAT failure in trading if not controlled. I know that I would have those days where I will make massive gains in one day, but this IS NOT SUSTAINABLE, and I will eventually lose everything in the next few days.
When I earn a massive amount of money in a very short time frame, I forget the value of money so the probability is that I will lose it all again.
The same process will haunt me again and again if I don’t stop risking too much!
I decided that I should go back to my conservative strategy. It is very simple but worked when I sticked to these five simple steps:
- Establish the trend.
- Wait for pullback.
- Buy or sell in favour of the trend.
- Risk only a small amount (that you can afford to lose)
- Set a generous stop loss.
These five steps together with a very important attribute – PATIENCE is an easy way to become a successful trader.
Of course, you will have losing trades, but in the long run it is a winning strategy. Trading does not need to be complicated. I complicated it and I made myself my worst ENEMY.
Since I have integrated my conservative strategy my patience has paid off, I am still far from achieving what I lost but I am confident that this will be sustainable and in the long run I will be again in profits.
I have been sticking to it for the last three weeks. I am doing my best to remain systematic after all they say that “it only takes 21 days to form a habit”.
Maybe I will take a little longer than 21 days considering I am a stubborn person, but I am positive that in a few weeks’ time my brain should be wired to behave more conservatively.
I cannot suggest leveraged products to anyone especially to anyone who has never traded. I suggest to buy cryptocurrencies from well-known crypto exchanges and keep them long term in your hardware wallet.
I am pretty sure that the returns will be massive anyway.
However, if there is anyone who believes that he has enough self-control and interested in taking a higher risk for a higher reward they can check out Binance futures.
Only use small leverage and trade with small amounts you can afford to lose without affecting you emotionally!
It was a painful road and hopefully I have learned a lesson which won’t repeat itself again.
Remember PIGS will always get slaughtered in the end!