Two Things I’d Change With How I’m Trading Cryptocurrencies

Welcome back to the series, as always, you can catch up on previous articles — if you missed any of them — HERE. With that being said, today I’ll go through an example of a trade I made late last year, and what I learned from it. As I previously stated, this is by no means financial advice, just my mere observations based on my previous experience.

Overview

The exact trade I’ll be covering today is a swing trade that I made towards the end of last year (if you haven’t already, check out my previous post for what swing trading is). The trade lasted a few days, and it followed the “buy the rumor, sell the news” pattern. I will also refrain from talking about the specific coin, so you can see how these lessons can be applied in general.

Opportunity Recognition

Just to remind you, this was only a few months into my crypto experience, and only at the very beginning of me taking this seriously, so I was just learning the basics — reading charts, understanding both fundamental and technical analysis, etc. With that in mind, I didn’t draw up any kind of fancy chart to execute my trade off of and I didn’t have a stellar fundamental analysis to back my trade. The trade was a very simple one, based on news picked up from coinmarketcal.com + the coin itself — which proved its capability to pump on news in the past (if a coin has pumped on an occasion such as this one before, it is probable that it will pump again in the same circumstances). I had a quick look at the chart as well and decided to give the trade a “green light”.

Trade Setup And Timing

As I said, the basis for the trade was an announcement to be made (day and time was specified on coinmarketcal.com), and as the coin had some traction on twitter as well (social/community exposure and mentions are a positive sign — confirms that other people are considering the trade as well — better potential), it was the first sign of a good opportunity. I myself didn’t get on the coin as soon as I could have, so my entry was one of the later ones, however there was plenty of room for growth left.

Looking back on the trade, I’d change two things though —

1. I’d view broader history of the coin (better chart review) to gain a better idea of possible outcomes.

2. I’d log in the trade in some way or another. Also nowadays, I’d feel like I need to be on top of things a lot more than at the time of the trade.

So, as you can probably tell by the previous paragraph, I missed something very important in the chart, which could’ve been fatal for my trade, and I didn’t log it in any way, so I can only learn from what I recollect, not from the whole trade.

What I missed in the chart, was pretty much the coin’s history. The trade was executed on cryptopia.co.nz, and at the time I only used the charts provided by the exchanges (not a good idea — trading view/coinigy are much better for charting). By default, there is some history of the coin when the chart shows up on the screen, but not much of it. Also, it was me who was inexperienced and didn’t research the chart thoroughly. The coin I traded, was trading at roughly 10,000 satoshis, rebounding from around 8,500 satoshis, where it had fallen from it’s previous all-time high (ATH) — at almost 20,500 satoshis.

I entered the trade between the 15th — 18th as the announcement was at the end of 19th. From here you can see which range I got my coins in, where the run peaked, and what followed after the announcement.

This was as much of a chart as I had seen at the time (or close to it) — very little to no previous movement besides the fall from the ATH, I remember I thought of two resistance lines — 15,000 satoshis and 20,000 satoshis, with the floor being established at around 9,000 satoshis. As such I had two exits — my resistances and the time of news.

Just to paint a bigger picture, this is what I missed back then.

While the first chart is 4hr candles — I was viewing 1hr candles back then — even more zoomed in on the chart. The second chart shows daily candles with much more of the previous movement. It’s much more apparent now that I came in close to buying at the top, which from a long-term perspective is not a good thing. However, as a swing trade, given that I held for less than 3 days, it was still good enough for a decent profit (approx. 25%) even though I already missed the whole run up (20x from early November ’til the ATH). The second chart also shows the risk/reward (r/r) of the trade a lot better, and looking back on it, it wasn’t a great r/r, even though it worked out pretty well.

News & Trade execution

Back to the trade itself though. The position was bought (if I remember correctly — only <10% of my portfolio as I had my other funds locked in other trades/ ICOs and thus couldn’t use them), and the only thing left to do was monitor it and wait for the news. If the news would’ve been really good, I expected a retest of ATH, with a slight opportunity to break it, however the retest of 15,000sats was a given (to me at least).

The chart peaked on the day of the news (just a few hours before the news came in), at my recognized resistance area — this is where one of the rules comes into play — Make a plan and then stick to it, do not change it mid-trade. As you could have probably deduced — I didn’t stick to my plan entirely and so I didn’t sell anything at 15,000sats. I was too greedy and wanted to see it go higher because the time of announcement hadn’t happened yet.

Then the hour of the news came in — with the price fluctuating (around 30% up from my buy-in), but the news was not released. Price fell all the way down below my entry position, then it rebounded back up in a few minutes, and that is where I sold (still for a profit). The news came in a little later, and that changed absolutely nothing, as it was nothing to get thrilled about either(or nothing that would cause the price to reach ATH again). You can see the aftermath on the second chart.

Trade Done, Now To The Learning

From this trade, I learned that I need to do a lot better job researching the coin and the chart before and during my trade. I did miss many small and large details that could’ve cost me my coins too. Luckily, it didn’t, but I did lose some of my profits. As the saying goes though,

Hindsight is always 20/20

and it’s not any different this time either. You’d see the perfect buy-in and sell points now, but that doesn’t help you in the future. How to recognize those points does.

For the topics of Technical Analysis (TA), you need to know how to read a chart, understand price movement and volume, etc. as I already mentioned before. There are plenty of free resources out there on the internet, with many of them explaining it far better and with much more detail than I ever could, so I won’t bother you with mine, however, I can provide you with some insights to what goes on during the trade itself.

In terms of Fundamental Analysis (FA), checking coinmarketcal and coinmarketcap is one thing, but also following that, you should check the webpage of the project, see the team working on the project, their vision, check bitcointalk, slack/discord/telegram/twitter, and any other resources you can find on the projects to gain a better idea of what kind of growth is possible and why (this goes mainly for long-term trades, or longer swing trades, however it can definitely be useful for shorter time-frames as well).

And the last point — keep track of BTC. Any of these small coins will dump heavier if BTC falls. If the market is bear, most coins will be bearish too. Same goes the other way around.

Recap & Conclusion

To give you a quick recap of this article, I gave you a review of one of my trades. I went through how you can find these opportunities, what resources are out there, how I utilized them during my trade, how I could have done it better (and so can you), and sketched a way to improvement from there.

As a resource for now (besides what was mentioned in the article), I’d recommend that you find a coin, do research on any upcoming news, review its chart and paper-trade the news. You cannot get better at something if you never practice it. You either use it, or you’ll lose it. That goes for anything from your edge in market to your physique and fitness. Keep that in mind and practice what you find important for yourself.

---

More On ME👇

I am a cryptocurrency enthusiast, novice trader, and an eager learner. My journey started in crypto a little under a year ago and I’m excited to share my experiences during that time and any insight that will benefit you in the space. Feel free to reach out to me via Twitter or Discord

However I can make this process easier for you I will — So please reach out!

I’ve Got Socials Too 😎

Discord: MaGiKarP#8865

Twitter: Crypto Karp