This blog is about one goal. During 2018, I am going to try try and turn an initial $5000 investment in crypto currency into $1,000,000. I have no experience in trading and will be documenting my successes and failures here for your amusement (the failures) and inspiration (successes).
My strategy is built upon two driving principals; Compound Interest & disciplined, consistent trades. I’ve set up a simple Compound interest calculator in google sheets that tracks my current balance and tells me how much daily interest I need to accumulate for the remaining days of the year to achieve my goal of $1M. Currently, this target is at 1.55%. This is still in line with the second fundamental of my strategy, Attempt to make trades of at least 2-2.5% each day of trading.
Now, obviously, I won’t be trading every day for the rest of the year, so that will skew things a little bit, but since crypto markets are open 24/7, I will try my best to actually trade every day.
So how did I come to the point where I thought this was A) A good use of my meager saving and B) even possible. About a year ago, I began investing in cryptos. I started with BTC and had my first brush with success just before the big jump from $1200. I was waiting on a check to come in the mail and I was going to buy 3 BTC with it. But before the check arrived, BTC jumped to $3000. I was inconsolable. But I bought in anyway at $3000. Over the next couple of months, I bought a little more when I could though a coinbase account.
During this time I was reading about cryptos and the blockchain, trying to figure it all out. After BTC started really taking off, I did the math and realized that I would never be able to get a decent foothold that would allow me to benefit from the big gains. So I moved everything over to ETH. This was when when BTC was at about $13K and ETH was still under $500. It proved to be a good move and I saw an immediate increase in my portfolio as ETH jumped.
Around this time I started reading about XLM, TRX and XRP. All three of these seemed to be legitimate investments but I had no way to enter into a position through coinbase. That led me to the exchanges and after talking to some people and doing some research, the easiest entry point with the options I wanted seemed to be Binance. So I got on.
Boy, was I immediately overwhelmed. I bought a bunch of TRX, XRP and XLM. Then started trying to figure out what the exchange was good for. That led to youtube videos and articles about trading, chart analysis, strategy, etc.
I started to think, that maybe there was more money to be made trading than in investing. (This ended up leading to my second big regret.. stay tuned).
As an experiment, I consolidated all my meager funds (about $3500) into ETH and began to perform some hypotheticals. “If I want to make $10, what do I have to do?” I started throwing my entire trade account around into $2-$5 swings, just to prove I could make $10 appear out of thin air.
In doing so, I accidentally made about $200 my first day. So I thought, I can totally do this. I started watching more videos and reading more articles, in earnest. This was mid/late Dec 2017. I made a few mistakes right off the bat, but overall I was coming out on top and entered in to 2018 with about $5000. A nice increase to my initial bank roll, in my eyes.
I knew that most of my initial mistakes and losses had been caused by lack of discipline and by taking an improvisatory and reckless approach to the market. This would not do. I knew I needed to settle in on a definite strategy that I could use to keep my emotions , FOMO and FUD in check.
One of the most confusing things at the outset was where to hold my funds when I was out of trades. I eventually discovered USDT and it seems to be a good choice for holding “out of market” funds. My goal was to get all my money out the market each day at a minimum and modest 2% profit.
This led to my second big regret. I had about half of my funds in TRX and XRP. I really believed in these currencies, but I felt like I needed a month or so to build up a bank roll before throwing my long term holding back into them. So, of course, I only had dust when they both mooned at the beginning of 2018. TRX hurt me the most, my stake there would have been worth about 30K as of this writing, That would have really helped my daily compound rate. :/
But I have to keep FOMO in check. One good quote I have come across while reading about trading was from Warren Buffet’s team and it said basically “We won’t catch them all, but we’ll catch some of them.”
I’ve only been at this for a couple of weeks, but it seems relatively easy (but not stress free!) to pull in 2% a day. I have been tweaking my strategy a little to try and account for unexpected break outs and I’m sure it will evolve as the year goes on. However, I do want to keep it as basic as possible to off-set my lack of experience and technical knowledge in the arena.
So what is this mystery strategy that I’m risking most of my savings on? It’s been pieced together from different videos and blogs with the main tenet being patterned after Steemit’s own @quickfingersluc system. His way of explaining market trends and disciplined, consistent strategy was the best that I came across in hundreds of blogs and videos. Add to that a few pearls picked up along the way and what I am working with is basically this;
- Identify currencies that respect a base and have good average bounces after cracking
- Draw bases and set alerts and buy within the “Circle of Saftey”
- Be patient
- If I miss a trade, get out ASAP with hopefully no more than a 2% loss
- If I see a currency that experiences a large break out, set an alert for about ½ of the rise or the last point of resistance
- Work primarily with 1h candles during investigation phase
- Once I’m in a trade switch to 15m candles
- If momentum does not seem to be on my side, don’t get greedy
- Settle for 2-2% or more and get out if a break isn’t obvious
- Repeat
A few subtle additions have been to identify when a market is fighting against a buy or sell wall and starting to use stop-limit orders to catch a small (or large) up tick if a particular wall is broken. I am also experimenting with taking small positions when a currency reaches an established and repeated base, saving my larger positions for when it actually cracks the base. I think this will lead to some additional crumbs of interest for markets that are reacting consistently to support.
So that’s basically it. As my name suggests, I am clearly an idiot trader, but I will be happy to have you along for the ride and will dutifully consider any advice or comments offered along the way, especially from more experienced traders who may see a glaring flaw in any particular course of action.
Of course, if you are interested in donating to the cause, ETH is my base currency of choice and you can send donations to:
0x2794bcfa857d0b2686ed22310e7343c17e3bf33b
I will try to post daily updates of my activities. I probably won’t delve into analysis or strategy too much because everything I know and do currently is listed above. If there is anything particular you are interested in hearing about, please let me know and I will try to incorporate it into this blog.
Be well and don’t trade like an idiot!