Diary of a new Crypto Trader

[Charty McChartface]

They don't even show you where price has been. If you look at an indicator at any moment in time, it can't show you the price. They are in my opinion akin to snake oil. If they worked every time then everyone would be rich. Then we are told no its not the win rate its the money management, which is true, but not to the extent that you can realistically increase gain without other consequences that will pull an account back in the red.

Risk is not fixed, it's variable to the degree of stupidity we all experience (some more than others). I have a theory on it. I see it to be a marriage of apothenia, the tendency to perceive connections and meaning between unrelated things and pareidolia, psychological phenomenon in which the mind responds to a stimulus, usually an image or a sound, by perceiving a familiar pattern where none exists.

An interesting view on this is looking at coincidence. An example is birthdays where statistically you have over 50% chance of finding someone else with the same birthday as you in only 23 people. People See patterns in indicators or price, often both, and associate previous and future occurrences with the same outcome. As in life where every moment is unique and such is the nature of the market. There are so many factors that causes the market to react as it does that coincidence is a common thing. It doesn't however have any cause and effect influence on the market.

Another interesting aspect to this is some people can actively make money doing it despite this underlying smoke and mirror cause and effect.





Sent from my SM-G950F using Tapatalk

Again, interesting point of view.

I actually love probability, (having read books by David Spiegelhalter and such like) and i love the fact that humans have this innate ability to spot patterns in anything, something that has stayed with us from our early origins when it was necessary to spot camouflaged predators before we became lunch. I get that.
But, i am a firm believer in indicators and TA. And the reason i think it works is due to herd mentality.

If me and 20,000 other people are making decisions based off of the same set of rules ie indicators/ trendlines/resistance/support, then at any given time the outcome of a trade is likely to be the way we anticipate.
If the RSI indicates overbought, then 20,000 of us will be getting ready to pull the trigger and exit our positions at roughly the same time. Same is true for oversold.
A single snowflake can cause an avalanche by the "snowball effect".This is why they work.

Referring to a point made earlier about Crytpocurrency, not by you, i think this effect is more prevalent in Crypto simply because you have a lot more new traders than any other market all relying on these simple indicators.
My take is that in regular stocks and shares you have the majority of well established pro's maybe not following the rule book to the letter, so indicators may not work as well? Novice's tend to go by the basics.

On their own they may well be imaginary concepts, but with people acting at the same time on them they become real.

This is just my understanding, i may be wrong.

 

[Charty McChartface]

Technical Analysis

Hi guys.

Firstly, i'd like to say thank you. I wanted to spark a conversation with regards to trading and i have received that from you in abundance. My intentions are to learn primarily, but also hopefully engage with others who may be on the same path as me.

Secondly, i have to reiterate i am not a chatbot! guess that post has made me paranoid. That is definitely uncanny and funny. Thanks for that!

My question is do those that disagree with indicators not fans of TA?

 

[FXX]

Again, interesting point of view.

I actually love probability, (having read books by David Spiegelhalter and such like) and i love the fact that humans have this innate ability to spot patterns in anything, something that has stayed with us from our early origins when it was necessary to spot camouflaged predators before we became lunch. I get that.
But, i am a firm believer in indicators and TA. And the reason i think it works is due to herd mentality.

If me and 20,000 other people are making decisions based off of the same set of rules ie indicators/ trendlines/resistance/support, then at any given time the outcome of a trade is likely to be the way we anticipate.
If the RSI indicates overbought, then 20,000 of us will be getting ready to pull the trigger and exit our positions at roughly the same time. Same is true for oversold.
A single snowflake can cause an avalanche by the "snowball effect".This is why they work.

Referring to a point made earlier about Crytpocurrency, not by you, i think this effect is more prevalent in Crypto simply because you have a lot more new traders than any other market all relying on these simple indicators.
My take is that in regular stocks and shares you have the majority of well established pro's maybe not following the rule book to the letter, so indicators may not work as well? Novice's tend to go by the basics.

On their own they may well be imaginary concepts, but with people acting at the same time on them they become real.

This is just my understanding, i may be wrong.

The herd mentality gives a false perception because it assumes everyone is doing the same thing. Using RSI as an example, it can be configured like every other indicator. When you add other indicators and chart structures its kind of like the lottery with 59 numbers to choose from giving you a 1 in 14 million chance of having the same combination as another trader. Further to this point, those traders in the herd will all need to be thinking the same thing. Since everyone is unique in their character this further reduces the odds of the herd mentality.

If it were that straightforward then investment banks, hedge funds, prop shops and all trading firms in general, wouldn't be spending lots of money on other tools when they could simply find the magic formula with indicators and charts.

I don't want to burst your bubble but you, like probably millions of others, are\have fallen into the voodoo trap of focusing on the wrong area whilst the ones making money are looking at different things. It's easier to understand and there is enough coincidence to keep them coming back for more. You only have to spend some time searching for evidence of others that employ this form of trading to see that the ones that make it are indeed very rare. They might even have other tools they use and don't disclose it.

The most successful traders out there are the ones that incorporate fundamentals and inter-market analysis. The ones that do include technicals, employ them as the very last step In the process to derive entries and management. They don't base the trades off this however, that is determined by the fundamental and inter-market signals.

I am sure this will be water off the ducks back to you but in time you will experience the voodoo frustration first hand. Just ensure you catch yourself before you get lost in it and wind up like millions of others. I have seen some people still stuck in the loop a decade after they started.

Sent from my SM-G950F using Tapatalk

 

[Charty McChartface]

The herd mentality gives a false perception because it assumes everyone is doing the same thing. Using RSI as an example, it can be configured like every other indicator. When you add other indicators and chart structures its kind of like the lottery with 59 numbers to choose from giving you a 1 in 14 million chance of having the same combination as another trader. Further to this point, those traders in the herd will all need to be thinking the same thing. Since everyone is unique in their character this further reduces the odds of the herd mentality.

If it were that straightforward then investment banks, hedge funds, prop shops and all trading firms in general, wouldn't be spending lots of money on other tools when they could simply find the magic formula with indicators and charts.

I don't want to burst your bubble but you, like probably millions of others, are\have fallen into the voodoo trap of focusing on the wrong area whilst the ones making money are looking at different things. It's easier to understand and there is enough coincidence to keep them coming back for more. You only have to spend some time searching for evidence of others that employ this form of trading to see that the ones that make it are indeed very rare. They might even have other tools they use and don't disclose it.

The most successful traders out there are the ones that incorporate fundamentals and inter-market analysis. The ones that do include technicals, employ them as the very last step In the process to derive entries and management. They don't base the trades off this however, that is determined by the fundamental and inter-market signals.

I am sure this will be water off the ducks back to you but in time you will experience the voodoo frustration first hand. Just ensure you catch yourself before you get lost in it and wind up like millions of others. I have seen some people still stuck in the loop a decade after they started.

Sent from my SM-G950F using Tapatalk

Thank you for your time. I am awake to this now. Do you have any reference materials, videos for me to look at?

 

[mike.]

With indicators one could draw the assumption that the more indicators you use the more precise your analysis will be, Put 10 indicators on a chart surely you can’t fail right ? Except you would most likely have the same outcome with using just one. Did price follow what your indicator predicts? Or was it going there anyway? What’s the ratio of positive outcomes compared to negative where price did the complete opposite of your predictions? It’s not an exact science unfortunately,

 

[timsk]

. . . On their own they may well be imaginary concepts, but with people acting at the same time on them they become real.

This is just my understanding, i may be wrong.

Hi Charty McChartface,
Welcome to T2W.

Very informative debut post: your journey thus far is pretty typical of many (not all) newbies. It's good that you're learning from your mistakes and realize that trading isn't quite as straightforward as you perhaps first thought.

If you're still trading a live account, I recommend you stop now before you 'blow up' (trader's jargon for losing all and, in some cases, more than they have in their account). If you carry on as you are, then this outcome is one I'd happily bet on myself. Sorry if that sounds harsh, but if it stops you from losing a shed load of money - I'll have done you a favour.

I suggest you paper trade a demo account while you're learning. That won't hurt you financially and will aid your learning curve. At the moment, you have some fundamental misconceptions about what charts are and the role - if any - that indicators play. FXX highlights one of them in his post above. Traders, least of all day traders, do not act at the same time based on the same set of indicators. If you asked every day trader on T2W that uses indicators, you won't two that use the same ones with the same settings on the same timeframe - unless they happen to be colleagues in a prop' firm trading the same strategy - having been taught by the same person.

Here's a couple of Stickies that will, hopefully, set you off on the right path . . .
Essentials Of Technical Analysis
Essentials Of 'Risk & Money Management'
Enjoy!
Tim.

 

[Charty McChartface]

With indicators one could draw the assumption that the more indicators you use the more precise your analysis will be, Put 10 indicators on a chart surely you can’t fail right ? Except you would most likely have the same outcome with using just one. Did price follow what your indicator predicts? Or was it going there anyway? What’s the ratio of positive outcomes compared to negative where price did the complete opposite of your predictions? It’s not an exact science unfortunately,

I totally agree.

I have found this out to my peril when i first started. Before i knew anything i thought that these indicators were guaranteed signals, and i did have some success trading with just those alone!. StochRSI crossing under 20 was a buy signal for example.

I quickly realised that they do not always work, Stochastic Oscillators for example are not very flexible - working sometimes and then sometimes not depending on whether the market is range bound or in a trend.

I've recently ditched Bollinger Bands and StochRSI, because i was making too many assumptions based on them. I have kept OBV for looking for divergences and to confirm strength of trend, RSI to help with exiting and entering and divergences, and MACD i still don't have a clue how that helps me so will probably ditch also.

Although i may come across like i am blindly trading via indicators, i am merely using them as a secondary tool if you like. A tool to help me make a more informed decision.

I am more concerned with support and resistances and candlestick theory at present.

 

[Charty McChartface]

Hi Charty McChartface,
Welcome to T2W.

Very informative debut post: your journey thus far is pretty typical of many (not all) newbies. It's good that you're learning from your mistakes and realize that trading isn't quite as straightforward as you perhaps first thought.

If you're still trading a live account, I recommend you stop now before you 'blow up' (trader's jargon for losing all and, in some cases, more than they have in their account). If you carry on as you are, then this outcome is one I'd happily bet on myself. Sorry if that sounds harsh, but if it stops you from losing a shed load of money - I'll have done you a favour.

I suggest you paper trade a demo account while you're learning. That won't hurt you financially and will aid your learning curve. At the moment, you have some fundamental misconceptions about what charts are and the role - if any - that indicators play. FXX highlights one of them in his post above. Traders, least of all day traders, do not act at the same time based on the same set of indicators. If you asked every day trader on T2W that uses indicators, you won't two that use the same ones with the same settings on the same timeframe - unless they happen to be colleagues in a prop' firm trading the same strategy - having been taught by the same person.

Here's a couple of Stickies that will, hopefully, set you off on the right path . . .
Essentials Of Technical Analysis
Essentials Of 'Risk & Money Management'
Enjoy!
Tim.

Hi Tim.

Thank you for the kind words. I will devour any information put my way that will benefit me in the long run.

I appreciate the concern for my account, but i do have a figure in my head that i am happy to go down to before i stop and go to paper trading. There's nothing like putting real money on the line to really drive home a bad decision. Call me foolish, but i feel this works for me. Plus compared to how i was before i am 100% more conservative in my approach to trading now, you better believe it!

In terms of misconceptions about indicators i disagree, simply because of the power of social media. You mention prop traders who are taught by a single tutor, well imagine 20000 traders following the same advice of one "pro" trader using one system on Twitter. If everyone's using the same setup, looking at the same chart, then one can deduce that a move via an indicator will have some momentum? In crypto it doesn't take much to swing the needle. And this is why trading in crypto is different.
Social media, especially Twitter, is very powerful indeed.

I have however recently stopped relying on indicators to solely make decisions, and have concentrated more on support and resistance, candlesticks, volume and price ranges to make entries/exits. This simplified view is helping me to learn quickly. This coupled with the fact that i follow a Twitter trader has accelerated my learning.

Out of curiosity how much TA do you use in your decisions, and out of that proportion what drives you the most?

Charty

 

[mike.]

I am more concerned with support and resistances and candlestick theory at present.

Is the right answer...Its not theory though, Its very real

I was always told money management is key, I was under the false impression that this meant look after your money and keep good records.

Basically, for example, if everytime a trade goes right and you make £25 but set a strict guideline that your not prepared to loose more than £15 should it go wrong then mathematically over time you should make money, then factor in your technical analysis for your trade entry and exit criteria and it should tip the balance of probability in your favour.

 

[Charty McChartface]

Trade 4

Dear Diary,

Last night (27/04/2018)
Observed tightening range on 1 and 4 hour timeframe, marked by Lower Highs and Lower Lows. This was after a prolonged pullback on this uptrend.
Kept on observing.
Inside bar formed or commonly known as 'Harami' on 4 hour, so anticipated a big move after this consolidation. This accompanied with low volume is usually a signal of a move either way.
Observed close of 4 hour candle with an immediate bullish explosion on next candle opening.
Hit market order.
Realised i had left the order book open on a lower limit amount and therefore had not bought in!
Scrambled to market order and bought in whilst move was in progress.
Buy in $8995
Stop set $8900
After half an hour price had only moved to $9100 and was looking to come down.
RSI was signalling overbought state on 5/15 min charts .
Sold half my position @ $9097
Set stop for other half @ $9000
Am still in play with stops set incrementally
Current price $9350

Successful trade

 

[timsk]

Hi Charty,

. . . In terms of misconceptions about indicators i disagree, simply because of the power of social media. You mention prop traders who are taught by a single tutor, well imagine 20000 traders following the same advice of one "pro" trader using one system on Twitter. If everyone's using the same setup, looking at the same chart, then one can deduce that a move via an indicator will have some momentum? In crypto it doesn't take much to swing the needle. And this is why trading in crypto is different.
Social media, especially Twitter, is very powerful indeed.

Twitter (in this context) is little more than a modern day boiler room - and what you're describing is a well known boiler room scam called 'pump 'n dump'. Sure, you will have some winning trades (possibly a few very profitable ones) using this approach but, in the long run, you will lose money. But don't take my word for it - or anyone else's for that matter. Just remember these comments - and those from mike and FXX etc. - when your account hits the maximum stop loss limit you've set!

I have however recently stopped relying on indicators to solely make decisions, and have concentrated more on support and resistance, candlesticks, volume and price ranges to make entries/exits. This simplified view is helping me to learn quickly. This coupled with the fact that i follow a Twitter trader has accelerated my learning.

Beware of what you learn on Twitter. Actually, that also applies here on T2W - I'm not being Twitterist. Traders (if they really are traders) who use Twitter to gain followers rarely have the best interests of the followers in mind. So, question everything and don't accept anything anyone tells you until you have checked it and cross checked it every which way to satisfy yourself that it (i.e. the idea, statement, advice or tip etc.) complements your view of the markets and how they function.

Out of curiosity how much TA do you use in your decisions, and out of that proportion what drives you the most?

I'm a big fan of Renko charts as I find time based charts too misleading. This is especially true for Japanese candlestick analysis a la Steve Nison. But that's just me - most other people get on with candlesticks just fine!
Tim.

 

[Charty McChartface]

Hi Charty,

Twitter (in this context) is little more than a modern day boiler room - and what you're describing is a well known boiler room scam called 'pump 'n dump'. Sure, you will have some winning trades (possibly a few very profitable ones) using this approach but, in the long run, you will lose money. But don't take my word for it - or anyone else's for that matter. Just remember these comments - and those from mike and FXX etc. - when your account hits the maximum stop loss limit you've set!


Beware of what you learn on Twitter. Actually, that also applies here on T2W - I'm not being Twitterist. Traders (if they really are traders) who use Twitter to gain followers rarely have the best interests of the followers in mind. So, question everything and don't accept anything anyone tells you until you have checked it and cross checked it every which way to satisfy yourself that it (i.e. the idea, statement, advice or tip etc.) complements your view of the markets and how they function.


I'm a big fan of Renko charts as I find time based charts too misleading. This is especially true for Japanese candlestick analysis a la Steve Nison. But that's just me - most other people get on with candlesticks just fine!
Tim.

Thanks Tim.

Yep i'm totally aware of pump'n'dumps, and fortunately can spot them a mile away (The one's i refer to aren't in that category).
There are but a few genuine traders. The few that i follow don't tell you to buy, they exchange idea's and also show you their trades and often mistakes. But again i can see how people fall for the scammers and their tactics.

I question everything, and i want to learn!

Charty

 

[Charty McChartface]

Hi Charty,

Twitter (in this context) is little more than a modern day boiler room - and what you're describing is a well known boiler room scam called 'pump 'n dump'. Sure, you will have some winning trades (possibly a few very profitable ones) using this approach but, in the long run, you will lose money. But don't take my word for it - or anyone else's for that matter. Just remember these comments - and those from mike and FXX etc. - when your account hits the maximum stop loss limit you've set!


Beware of what you learn on Twitter. Actually, that also applies here on T2W - I'm not being Twitterist. Traders (if they really are traders) who use Twitter to gain followers rarely have the best interests of the followers in mind. So, question everything and don't accept anything anyone tells you until you have checked it and cross checked it every which way to satisfy yourself that it (i.e. the idea, statement, advice or tip etc.) complements your view of the markets and how they function.


I'm a big fan of Renko charts as I find time based charts too misleading. This is especially true for Japanese candlestick analysis a la Steve Nison. But that's just me - most other people get on with candlesticks just fine!
Tim.

Other than Renko what do you chart with?ie indicators . And i take it TA is a small proportion of your analysis?

 

[Quantt]

Hello one and all.

Hello and welcome...

One of the reasons I am active in this forum is a bit nostalgic I guess, in a sense that I see myself in new traders like you - making exactly the same mistakes... I wish there were forums like this many moons ago, when I started, so if I am you I would listen to the others commenting before me...

Anyway, here is my advice:

1. Do not trade tokens, there is just not enough data to build a good trading strategies and no reliable exchanges to do it on (with account insurance)

2. Forget about indicators and candle sticks, unfortunately they just don't work, maybe they did for the rice merchants in Japan few hundred years ago... The moment I became profitable was the moment I realized this simple truth...

3. Trading real money is different than paper trading only if you are risking large amounts like monthly wages, etc and if you do not know what you are doing, it is pure stupidity (and I know it first hand), risking few dollars per trade is just the same as paper trading to me...

4. Twitter and the like is just noise, there is no herd mentality, there are few people/companies trading most of the money and the larger number of traders are trading significantly smaller total amount, so it wont work even if the majority of people are doing the same thing... Not to mention that every one tweeting regularly must have an agenda (selling something: training, signals, etc) otherwise why do it at all... help humanity

 

[timsk]

Other than Renko what do you chart with?ie indicators . And i take it TA is a small proportion of your analysis?

Hi Charty,
Renko is pretty much where it's at for me these days. Although one can use indicators with Renko - I've not found any that tell me anything especially useful. So I just keep it super simple and use two charts to provide a macro and micro view. The longer term chart (i.e. larger brick size) indicates the dominant trend, while the short term one (i.e. smaller brick size) helps to time entries and exits. Put very simply, when the bricks of both charts are green I'll be long the market and when both are red I'll be short the market. This obviates the need to work out what a Harami Cross or Tombstone Doji etc. might be telling me - if anything (on Japanese Candlesticks). My personal view is pretty much in line with Quantt's above: I think candlestick analysis is mostly hokum (note emphasis) and has little relevance (especially intraday) to the current market place. The notable exception to this are daily or weekly candlesticks in exchange traded markets. That said, fair play to those traders who swear by such stuff. It's a case of whatever works for you, floats your boat, mows your grass and sends your elevator to the top floor.

Tim.

 

[mpups]

Whether one is trading TA, indicators, fundamentals, renko, twit signals :cheesy: etc... if you "don't know what you're doing" and you're relatively new, there's a higher risk of losing a few coins Start small...

what is your twitter account McChart? i couldn't find it

 

[Charty McChartface]

Whether one is trading TA, indicators, fundamentals, renko, twit signals :cheesy: etc... if you "don't know what you're doing" and you're relatively new, there's a higher risk of losing a few coins Start small...

what is your twitter account McChart? i couldn't find it

Should be Charty McChartface as typed in on search.

Cheers

 

[mpups]

Should be Charty McChartface as typed in on search.

Cheers

ok cool, got it, i was searching google which didnt work (i dont have a twitter account btw)

 

[Charty McChartface]

Hello and welcome...

One of the reasons I am active in this forum is a bit nostalgic I guess, in a sense that I see myself in new traders like you - making exactly the same mistakes... I wish there were forums like this many moons ago, when I started, so if I am you I would listen to the others commenting before me...

Anyway, here is my advice:

1. Do not trade tokens, there is just not enough data to build a good trading strategies and no reliable exchanges to do it on (with account insurance)

2. Forget about indicators and candle sticks, unfortunately they just don't work, maybe they did for the rice merchants in Japan few hundred years ago... The moment I became profitable was the moment I realized this simple truth...

3. Trading real money is different than paper trading only if you are risking large amounts like monthly wages, etc and if you do not know what you are doing, it is pure stupidity (and I know it first hand), risking few dollars per trade is just the same as paper trading to me...

4. Twitter and the like is just noise, there is no herd mentality, there are few people/companies trading most of the money and the larger number of traders are trading significantly smaller total amount, so it wont work even if the majority of people are doing the same thing... Not to mention that every one tweeting regularly must have an agenda (selling something: training, signals, etc) otherwise why do it at all... help humanity

Well thanks Quantt.

My purpose for posting this thread was to enable me to learn from other more experienced traders, which i am doing, but i would love some pointers as to what i should be studying - if my way is not the most profitable.

You and others have mentioned trading via price, with no indicators or candlesticks, how do you learn to do that? What resources are good to learn this?

I'm not here to argue the pro's and con's of what i trade, if i papertrade or not, and if i follow people on Twitter. I take those points on board, but i think that what i am doing is right for me.

Anyway, thanks for getting in touch and i look forward to your response.

Charty
x

 

[Charty McChartface]

Hi Charty,
Renko is pretty much where it's at for me these days. Although one can use indicators with Renko - I've not found any that tell me anything especially useful. So I just keep it super simple and use two charts to provide a macro and micro view. The longer term chart (i.e. larger brick size) indicates the dominant trend, while the short term one (i.e. smaller brick size) helps to time entries and exits. Put very simply, when the bricks of both charts are green I'll be long the market and when both are red I'll be short the market. This obviates the need to work out what a Harami Cross or Tombstone Doji etc. might be telling me - if anything (on Japanese Candlesticks). My personal view is pretty much in line with Quantt's above: I think candlestick analysis is mostly hokum (note emphasis) and has little relevance (especially intraday) to the current market place. The notable exception to this are daily or weekly candlesticks in exchange traded markets. That said, fair play to those traders who swear by such stuff. It's a case of whatever works for you, floats your boat, mows your grass and sends your elevator to the top floor.

Tim.

Hi Tim.

I've looked at Renko, but couldn't put it onto smaller timeframes on Tradingview without paying the premium membership. I will look into this further.

I'm guessing that Renko is more suited to Swing Traders than intraday, as you are not too worried about small changes in price - as long as the general trend is up or down?
I think that's right?

If i was to switch over to stocks from Crypto where would you recommend a good start? I've opened an account on AJ Bell, but find the interface much harder than Binance which i use for Crypto. Any help would be appreciated.

Charty
x