Alright, here comes another brain dump courtesy of my recent hiatus!
So many people have said TA doesn’t work in cryptos. I believed it myself until I decided to shut off all chatter from people and only focus on the charts and indicators.
For almost three months, I traded without regular, daily news feeds and without anyone else’s point of view swaying me. I’m not gonna lie. At first it was a REAL struggle. Almost like I came unhinged and unplugged from an addiction. It was especially rough when we turned the $20k corner and again in mid-Jan when the bottom fell out. The December one, I felt wholly unprepared for. But quickly understood it when I went hunting for the news and saw just how much people were pumping for the moon. The January one, I saw it coming, but didn’t fully trust my interpretations of the charts until it was almost too late. I after a couple days, it quickly became evident I needed to consolidate and stop portfolio erosion in it’s tracks. Then I got back in too soon! I ignored the charts’ TA and thought I knew better based on the historical research I did for the month of January back in November.
But after I got through two major down turns and a couple of mini-bull runs along with generally volatile weekends, it got easier and easier because I simply trusted myself and the charts more and more. Also, I found myself faster and faster at making the all-important trade decisions.
I’m not saying I was perfect, but I was definitely hitting the 6 out of 10 times mark that defines the above average trader. The great thing is, I caught nearly every major big market mover between LTC, BCH, BTC, ICX, TRX, BNB, and COB (plus a smattering of smaller movers) and I got out of more positions with profits faster.
NANO’s recent strength through market down-turn and steady climb last few days is a good recent example and I was out within 3% of it’s peak this morning, but still able to do a few swing trades on it today. It’s not easy to be consistent and you do have to learn to weed out the noise of the pump and dumps going on along the way. Patience and waiting for exactly your favorite setup is the key. Nearly every time I tried to play it too aggressively, I got burnt.
To get to a 60% success rate, I first focused on just getting 1% profits and when I got consistent with that, started getting 2%, then 3%. I didn’t cash out at 2% or 3% if the volume was solid and the coin was showing no signs of slowing down, so just one 6% makes up for two -2%. One 20% made for a very big boost and usually me taking the equity out and leaving that 20% as “free coins” (coins that cost me $0 to HODL).
To this day, I’m still targeting 2% and 3% to enter a trade, but I’m also better at gauging likelihood of the coins climbing X% to reach some target (or several, really). In my view, it’s far better to target smaller profits and make them than to swing big for home runs and keep missing. If you’re targeting smaller gains, you have higher likelihood of being in a trade when it suddenly takes off. TRX was like that. I never heard of this coin. I simply bought it then watched in amazement as it climbed, and climbed, and climbed.
The bottom line: TA works, but we’re heavily swayed by what others say and what the news say. We become biased towards or against specific coins and that, in turn, sullies your TA. Even so, I do believe FA + TA are the most powerful combo. When both are in agreement, the results are often stratospheric and an absolute thrill to watch.
Also, it’s not always just doing TA or FA or both. It’s about choosing your moments. Some days, I do several trades in a day using multiple markets. Other days, I trade only one coin because it’s oscillating very nicely and somewhat predictably. Some days, I call it quits after just 30 minutes because the market is unreadable. I’ve twice gone more than a week with absolutely no trades. It’s also about finding what works and what doesn’t. Patterns you learn to recognize for yourself as a set up ideal for your risk/reward tolerance.
Although this post is about trading and TA, I would be remiss not to point out that I do not trade 100% of my portfolio. 70% to 80% are core HODL. Trading is done with the rest of the funds. Most positions are opened with 2% to 5% of that. So, as you can see, diversified portfolio with different timeframes for the investments in mind. Trading is obviously very short to mid-term (one to two weeks isn’t uncommon for many positions opened).
I got here from basically zero charting skills starting in August '17, but truly got serious after a few months of reading and watching in November. To do it, I kept detailed notes on every trade. What worked, what didn’t.
coupled with try, try, try again with really small dollar amount. Above all else, it was starting with small positions and targets that was the ultimate game changer for me.
I hope this helps others learn what it takes and general roadmap to becoming good at this. It’s a tough road. Stressful at times. But worth it for me. It’s a lot less stressful now than even a month ago simply because my decision making is a lot more systematic and I’ve grown comfortable and more confident that I’m spotting the trends, the bull vs. bear patterns and markers and generally just feeling more comfortable with the tools of the charting library.
I’m still learning at a rapid rate, but the bulk of the learning is now in the interpretation of the charts and spotting patterns within patterns. I still have NO CLUE about Elliot waves. I’m just now starting to learn about fractal analysis. I still perceive a long road ahead to mastery. If I had to self rate, I’d call myself Intermediately skilled trader/investor. I also consider myself a hybrid trader, taking the best of buying and holding and combining with active trading.
Bottom line: TA works for crypto. It even works in spite of the manipulation that’s happening. The reason being, because to manipulate, there are certain patterns as whale must trade to push prices in a direction favorable to their goals. Whales are not going to go losing money blindly. They’re going to play the market so that they profit as they push and pull. That targeted outcome actively takes time and doesn’t happen overnight. Which means, their activity manifests in the charts and TA will sleuth it out. TA tells you what is while FA (fundamental analysis) tells you why it is. Whether it’s whales generating the volume and action or bots doing it or real live humans in the mix making things happen…it’s all laid down in them there charts.