I’m a part-time trader. I trade on stock markets, and recently, at the beginning of 2019, I've tried trading on crypto markets.
People often think that the life of a trader is swimming for hours on end in money, but that is so far from the truth. Sometimes you lose money, sometimes you think that you should have found a better application for your time instead of staring at the screen for half a day. But I love trading and I'm profitable most of the time. When I started trading crypto, it was a little bit overwhelming because the crypto market is open 24/7.
I've adapted since then, and I want to share with you all the little tricks that I've learned about trading crypto, and how I've optimized my trading to be in the green without being chained to the trading interface. Hopefully you'll find my experience useful and avoid the mistakes I made.
Trader’s life: illusion vs. reality
Being a trader, I don’t have a gold Rolex or a yacht. I don’t yell into my phone “SELL, SELL, SELL IT ALL RIGHT NOW, JOHNNY” as ticker tape streams from the ceiling behind me. Also, I live in a normal house, not under the shadows of palm trees with beautiful women sitting on my lap (my wife wouldn’t like that very much). Sorry to say, I don’t live the stereotype that so many people have about traders.
In reality, when I actively trade, it's a boring activity, that requires a special, non-dramatic mindset:
- You have to wait for opportunities.
- You have to learn to be patient, because patience is the only way to win in the market.
- You trade against countless other trades, and the money that you win is always someone else’s money they are losing.
Source: xkcd.com
I spend a lot of my time watching the charts and price movement of various assets. I drink coffee to keep myself focused. Sometimes I go for a walk when I’m out of positions, but I often return to find, with great disappointment, that I’ve missed some good opportunities, and it’s already too late to enter. But my first lesson that I’ve learned by losing money was: you can’t afford to get distracted when you’re trading. The market can go the opposite direction, and you have to get out quick. If you don’t, it can be really bad for you. So I have to spend a lot of time in front of my screen during trading hours. You know, coffee and red eyes; the trader’s starter pack. Don’t forget the constant stress when you’re not winning. And all of this got even worse when I entered the crypto market.
The cryptocurrency market: a non-stop rodeo
For a day trader, the crypto market is a rollercoaster ride that never stops. You can get amused, or you can get nausea if you ride too much. It requires even more concentration, because it's open all hours of the day! It's basically a stock market on steroids. It took me some time to truly grasp that concept.
The Toronto Stock Exchange is open for 7.5 hours every weekday, from 9:30 a.m. to 5 p.m., so I wasn't accustomed to trading the whole day and night. Everything I've told you about markets applies to crypto too; you still need to watch all market movements, but it's stretched around a 24-hour period. Every 8 hours some large part of the world wakes up and starts trading. Asia, USA, Europe - all of them can dump or pump the market, and you have to respect that.
If I have to compare the crypto market to the stock market, I would compare it to penny stocks - it goes up and down with crazy swings, and if you trade with leverage (which I don't recommend) you'll get liquidated very quickly. I didn't lose all my money by liquidation, but I know traders who did. Thus, the second lesson I've learned on the market by observing other traders is to never trade on margins. It's even more punishing in the crypto market simply because you often see price moving 20% during the day, and your wins and losses are multiplied by that much.
Source: bullvestorbb.com
Another thing that distinguishes crypto markets from the stock market is that it’s heavily based on trading patterns. Crypto doesn’t generate revenue, it doesn’t have quarterly reports to influence the price, so the most important thing is the trading patterns, and you have to watch out for them. It’s certainly not the most interesting thing in the world. At some point, I got really tired of trading that much, and I had to stop and reevaluate my approach to crypto. I wanted to live a life instead of stare at the screen.
What options I had and what did I choose
In my situation, I had three options:
- To become a 24/7 trader
- To put my money into a fund
- Use trading bots
The first option didn't suit me at all, as you probably understand. I wasn't feeling any delight from trading every waking hour of the day. The second option was potentially dangerous for the safety of my funds, as only the trading gods know what can happen when you don’t have control over your money. Crypto is a very young industry, so it doesn’t have any established industry standards yet and I’m not ready to trust my money to any other person. That left me with only one option: trading bots.
I wasn't familiar with trading bots before, so I tried a few of them; TradeSanta, Shrimpy, CryptoTrader, CryptoHopper, 3Commas, Levidge. By reading the reviews, I guessed these were the most popular bots among crypto traders, and after much deliberation I finally made my choice. To this day, I still use TradeSanta.
You make money and you save time
Lesson number three: my time is valuable too. I didn't want to spend it on such things as watching charts all day, every day, so I configured a trading bot that now trades according to its predetermined strategy; finding certain patterns, buying, and selling when necessary.
My choice of TradeSanta was dictated by obvious reasons; I wanted a simple interface and an easy configuration. I'm no novice, but I love simplicity:
- You don't have to install TradeSanta on your computer, it's cloud-based and you can check on it from a mobile phone.
- It doesn't need your private keys, as it connects directly to an exchange of your choice, and sends commands to the exchange according to your configuration. Remember, I'm not ready to trust my money to anyone.
- It follows the trading signals. After seeing an opportunity on the chart, it opens and closes the deal. The whole process can take only a few seconds, much faster than any human interaction on a laggy interface.
That's how it makes money (for me!).
Source: tradesanta.com
The initial configuration isn't very complicated either. You set the parameters, choose the long and short strategy, and choose the trading pair. You can also choose the amount of extra orders (the orders to be executed if the price goes in the wrong direction). After that setup you choose the exchange you want to connect it to. Currently, you can choose from Bitfinex, Bittrex, HitBTC, Binance, and several others. BitMEX, OKEX, and Huobi are promised to be added in the future.
Most importantly, it doesn't cost a fortune but it puts money in my pocket. I use a paid plan, but if you're a small-time trader, you can use the free plan, which gives you access to five bots.
Fifteen dollars per month isn’t an expensive price to pay for all the help that I get from this bot. Which is precisely why I will continue using it in the future. For anyone who’s interested in using it, I would recommend starting from small volumes and expand if you find it comfortable.
Do you have to follow my advice?
Not at all! But remember: the crypto market is a place where you can make a lot of money with its high volatility, but the market is just that… volatile. In exchange for all these profits, though, you have to sacrifice all your free time, wake up at night to check your positions, or outsource it to a trading bot, like I did. Trading bots are trading tools, and there's nothing wrong with using one. Who would blame software that can make money 24/7 even when you’re asleep, when you're at work, or while you're out on the town spending some of that money? Not me. As a trader, I’m just getting started.