FUNDAMENTALS & MINDSET
It’s challenging to be objective in a matter that is close to your heart, and this is it for me. It’s not about trading – it’s about believing that you’ll find a magical ticket to success and wealth, I’m not much of a believer but all the magical things I’ve witnessed on my life came from an epic culmination of massive effort.
It is no different than when you’re learning to trade, to speak Russian, to master Brazillian Jiu-Jitsu or to play the piano.
It’s a simple question, how fast can you become fluent in a new language? How fast can you play piano fluidly?
Among those lines, you will find the answer to how fast can you become a profitable trader.
So why do you think that research, create and deploy a complex and multifaceted task such as to predict & automate decisions for the financial market would be any easier? Some people read the word BOT or SIGNALs and they instantly act like a fool.
Automation and trading is no emotional human’s game, the cold rational one’s dominate this craft.
So get one thing straight, if you don’t understand how the BASICS of the process work you’re about to have a long and expensive ride to find that out for yourself.
If you are an average guy, without several million at your disposal, the first and big MYTH you have to stop believing is that whatever bot, signal, alert or service you can pay for is not likely to make you filthy rich. It’s as simple as that, a GOOD and ROBUST piece of this technology can cost a FORTUNE.
The second myth is, if you are an average guy, without several million at your disposal, and you believe you can’t make it by yourself. I didn’t say it was impossible, I just said it ain’t easy brother.
Fact is that most of the tools only solve one small part of the problem, but if you are able to mix your tools, learn a few new tricks and be resilient and disciplined as hell you can definitely make it without spending much more then just your time. A lot of it.
So enough with the bs and let’s get down to it: HOW TO APPROACH AND SOLVE THE WHOLE PROBLEM – and just like any other big problems you have to fix yourself, the first step is all about shutting up and understanding.
CYBERNETIC TRADING FOR KIDS
Trading is just like trying to find hidden treasures. And you can really break it down into 4 simple steps.
- Gathering Intel. Listen to all the lores about hidden gems. After that, you have to sort through all the info and figure out what’s fact and what’s fiction and then pick the worthy ones.
- Strategy. You know where your treasure might be in, it’s time to act, so spend your time and user your intelligence planning your way in and out of the dungeon.
- Execution. That’s when you will learn the true meaning of an old saying: “Theory is different in practice”. When your strategy falls apart do you have a plan B? Do you have steel nerves to act fast and improvise?
- Take Notes, Learn from mistakes, there are always things you can improve, make sure to remember all the details about the execution, write them down, study and evolve after. If you don’t know exactly what you did how will you teach your crew to it without you?
You see most of the indicators, alerts, scripts, bots mainly solve the Strategy Selection part, some tools even execute it for you, but rarely ever it’s satisfactory. In this case, you will often execute many trades and rarely ever see CONSISTENT profitability. You’ll find yourself trading sideways markets while commissions eat you alive. Usually, this type of people is lost and don’t understand how it doesn’t work for them since the bot or whatever is running. Trading ignoring assets and data collection is just like engaging combat with bad intel and finding yourself in a bad neighborhood surrounded by an army and even though you’re great with your gun, the odds are you’re about to fail because you didn’t choose your battles carefully.
Buying signals from experienced traders will deal with the asset picking and sometimes they will give you some hints about strategy and execution. This is even worse, this makes you a complete financial acephalous. Considering that you actually want to learn how to trade yourself. This is pretty much going to a gunfight without knowing how to operate a firearm.
ASSET PICKING,
This step is completely overlooked and underestimated by newer TA guys, they just jump into charts and try to make sense out of it. Classic trigger-happy kids who won’t survive much in this wild and ruthless habitat. This is probably the most important step for me, it saves you time and A LOT of money.
Do your research, this will ensure you pick an asset that has the volatility you are looking for or the characteristics the fit your trading style, therefore enhances your profitability and diminishes your costs because you avoid sideways markets.
You can both use TA and fundamentals for this, you can use a filter such as this FREE one: https://www.tradingview.com/cryptocurrency-signals/
Also, use Bloomberg or Cryptopanic or whatever you use to track news related to the market you trade, never ignore the news and overall market sentiment.
STRATEGY
I already have my strategies very well written, it’s pretty much a set of requirements that a trade has to show me in order for me to execute, I also have very clear emergency rules for each specific situation.
This is also where beginners fail a lot, they don’t have a clear and written strategy, so when it’s action time they freeze, vacillate, behave unprofessionally – they’re unstable. Remember, this is no human’s game, thinking and operate like a machine. It’s really not that hard but it takes discipline.
It can be as simple as Spectro + RSI, personally like I said if you did your ASSET PICKING right, you won’t need much TA analysis for this, I simply use support/resistances, pivots, whatever you call the key price action levels, Fibonacci retracements are good too, and then I use only Spectro to get in and out.
EXECUTION
The best way to put it is: You can plan as much as you want, when it comes down to it you see how many things you didn’t plan will happen and you won’t have clear instructions how to deal with them and will end up improvising. This is normal.
Execution is where it test your nerves, where all the emotions hit you in the brain – make you second guess everything that you didn’t carefully plan and trained for.
I could list MANY problems you will find here but this is “for dummies” kind of guide.
Book bots constantly overbidding you, fast unexpected moves, typing the wrong numbers, not being fast enough with the buttons, not being capable of understanding volume & order sizing and being stuck in a position or losing an entry point. They are just endless.
“Everything happened so fast”, that’s the most common quote from people that can’t deal with adrenaline – that can’t be you, you have to be lucid and calm while you execute your order and follow your strategy.
DATA COLLECTION
Make sure you write down everything you do. Gather as much data as you can, it’s a pain in the ass but it’s worth every second.
If you had a company would you just take the money from your clients and put it in your pocket? Wouldn’t you have a control system so you can pay taxes and all? Why don’t you do the same with your trades? It’s a company your own company. How can you tell that your company is growing if you have no numbers? How can you tell your trading is getting better if you have no idea what’s forward?
When you write things down you will see that you didn’t have enough volatility because of a poor asset selection, or you made a lot less money than you could because you didn’t have a clear protect-profit strategy or even you took a catastrophic loss because you totally overestimated the volume of a position and got stuck with a dumping asset. Learn from that, develop and train methods to deal with everything you find along the way – this is called experience and there’s no other way to get it.
Without this step, successful automation is close to impossible.
Thank you for reading.