How I went from losing-gambler to profitable-trader

I returned to bitcoin in very early 2017 and uncovered crypto exchanges around mid-2017. They gave whatever I ever before imagined: access to a complete exchange with real order publications and also matching algorithms (no CFD crap) on a virtually pure technical property – so primarily what I developed with my own exchange in the pasts, just with real money as well as other individuals utilizing it. Certainly, I liked it.

Of course I had no idea how trading real money messes with your emotions yet, but thanks to my experience in risk management and me still being risk averse, I only traded tiny amounts. I funded only 100$ into a spot-account and had positionsizes of 1$ to get a feeling.

And I was hooked: Jumping in and out of positions in matter of minutes, “analyzing” the orderflow (aka watching it), reading the tape and jumping to gut feelings. I did all the things you shouldn’t do, but every rookie does. In the bullrun of 2017 this was all fun and games as price was anyway only going up.

After the top in 2017 it got more difficult. Since I wasn’t tracking any of it (big mistake) I didn’t really know what was going on, except that my account was not growing. I soon realized that low timeframes where full of noise, so I “went higher” to M15 (lol “higher”). After all the experience with indicators (and none of them really working) I traded the naked charts. Drawing (random) lines, seeing (random) patterns etc. And it sometimes even worked.

But I lost money nonetheless. I wasn’t trading yet, I was still gambling. Playing it as a hobby. When i saw a setup, I had a defined stop and risked similar (rule of thumb calculation) amounts each trade (again: thx prior knowledge), but with no real system. I didn’t document trades, I didn’t reflect on my performance. There was no reproducability, nothing. Just luck (or the lack thereof).

It was the classic beginners story: refund the account, “this time it’s different” and falling back in the same traps. I traded from my mobile (big red flag) without proper analysis (huge red flag). I often didn’t even know why I entered in hindsight. I also had big wins, lucky shots that covered the losses of six months. But nothing to build a sustainable strategy on.

To be clear: I knew all the theory. I knew that’s why beginners fail. I knew that emotions are your enemy and you shouldn’t “trade” like that. And I still did it for months. Thinking I am different. Thinking I will outsmart everyone.

If you wanna trade successfully, you need to leave your ego behind.

Ultimately, I recognized that it’s not working like that as well as started a journal. At least I was tracking my efficiency and also trades now so I saw the contour dropping (hooray, development). So I started reflecting and defining a technique. I recognized I had excellent entrances however shed a whole lot en route. I attempted to specify a system based upon the components that worked. Defined access signals and also leave guidelines, the entire thing.

And then I started trading it. I made a plan to start with small risk and on success I would double it every two months until I make enough for a living (next big mistake: far too high expectations right from the start). First month was a crazy one resulting in a 20R profit and (again despite knowing better) I immediately became greedy and quadrupled my risk the next month (because “it’s working, i only miss gains if I stay low”… sometimes it’s really painful to remember all those mistakes). And you can make an educated guess what happened next. Next month was 12R down.

I already traded my system (or at least I thought so), documenting every decision, analyzing every trade. But critical reflection (hooray reflection!) showed that I still had a lot of gut-decisions. I still jumped to conclusions, so I decided to tighten the system and define algorithmic rules for each step: when to enter and where, where to put the SL, how to trail the stop etc. Thanks to those definitions I was able to backtest the system (manually). And it worked! The defined rules of the strategy were profitable in history and they were simple to follow. I even made an indicator to help visually.

So all settled and done right? Lambo soon! … far from it. Despite the system being profitable, despite me knowing that I just have to follow the rules, I lost money each month. “Only” between 1 and 5R but I lost, while the strategy should have been profitable. So I added a column to my journal “according to strategy”, a simple yes/no field I had to fill before entering each trade. A no-brainer to help me stick to the system. To remind me that if I fill “no”, I will probably loose. And who in their right mind would fill in a “no” in that column? Well: this guy.

I thought I knew it better. I tried to outperform my own system (yes, knowing that I fucked that up for some months now). I made bad decisions all the way and lost while seeing the numbers in the journal, how the pure system would perform (and yes, that sucks even more than loosing).

At the beginning of each month I promised myself to stick to the system. And every month I failed. I got better, but I failed.

You are your worst enemy. Specially when it comes to trading!

It doesn’t matter what you know, it doesn’t matter what you plan. You need to be able to execute that plan. every. f***. day. And this was with a strategy based on my own mindset, risk strategy and view of the market. I can’t imagine trading signals/systems from anyone else.

So what did I do? I went deep! I already had written an “indicator” showing me entry and exit levels, so I took the next step and wrote a TradingView strategy implementing the full system (at least as much as possible in PineScript). And it was profitable. This f* strategy that I failed to execute, was fully automatable with nice profits.

So I spent the next months writing a python “framework” and automating the strategy into a fully functional trading bot. I deployed it to my trading account Dec. 1st 2019 and it has been running on real money ever since.

Since I still believed that the master (me) had to be better than the pupil (the bot) I still traded my own approach manually as well as still failed to really adhere to it. 2 months later I included one more technique to my crawler as well as the crawler outshined me like crazy. I never really quit trading manually, but I kept the threat low so i would learn from my mistakes while the robot printed cash.

It took me another year to get my emotions enough under control to also turn my manual trading profitable. But it’s still a daily struggle against the man in the mirror.

The takeaway:
Have enough runway for months/years to loose

Know yourself. In trading there is only one to blame: yourself.

Start a journal on day 1. Analyze and reflect every trade from day 1.

Make it reproducible: If you can’t write down the rules of your strategy you might never be able to execute it properly. If you have a defined strategy, you can backtest it, you can analyze and tune it. You can’t “tune” following your gut.

And plan your risk: When I made the plan it included the risk per position, the number of maxDD per month before I stop for the month etc. So I knew the max amount I would lose over the next 12 months if everything went south.

With all that, it’s still a tough journey. Only a few manage to beat the market consistently (and I don’t count me to that few yet). So don’t fool yourself. But if you manage it, it’s everything you ever dreamed of!

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