4 Golden Nuggets of Trading BitcoinHey guys, YoungShkreli here, I am going share with you four lessons that, if mastered, will help you a become a successful trader, so pay attention
1) Use the daily chart. Look at this 4hr chart. This s**t only happens on low timeframes. If the daily did things like this, it would a be followed by like a 20% rally every single time, but on the lower time-frames, you can get stopped out to the downside. This happens all the time and it's why I NEVER use any low time-frame for Bitcoin... and I never will. My strategy works really, really f**king well on the daily, but it's completely ineffectual on the low time-frame and I believe every strategy will be the same. The RSI means NOTHING on lower time-frames, the macd means NOTHING on lower time-frames, so don't trade it. It's that simple. Be patient, don't over trade, and use the daily chart. You will make all the money you want doing these things.
2) Think ahead. Before you make any trade you need to consider two things: a) at what price you are wrong and need to exit the trade and b) how much you are willing to lose. For example, let's say bitcoin is at $7,000 and the prior high was $7,500 and you want to short it; the amount you're willing to risk is $1,000. To calculate how many bitcoins you can short you take 1000/(7500-7000)=2 The MAXIMUM amount of bitcoin you can short is 2. Why? because if the price of bitcoin rises $500 and you were short 2 then you lost $1,000 which was your risk limit. Notice that $7,500 is your stop loss. Never trade without a stop-loss.
3) Program your trading. You don't necessarily have to use an API to automate your trades, you can manually carry out your trades, but you need to be methodical. Write down specific criterion that bitcoin must meet before you buy or short it: this is your strategy. Follow your strategy ALWAYS. you can only become a better trader once you have a better strategy, you can only improve your strategy if you have one, you can only have one if you write it down. This is a lesson that I took more seriously after reading Principles: Life and Work by Ray Dalio. Ray Dalio is the CEO of one of the greatest hedge funds ever and this is exactly what he says (always listen to those better than you - be humble).
4) Always evolve your strategy. Your strategy is never done growing. There is always work to be done and always gains to be had. I am a good trader, you will come to see this as we become more acquainted, but I am still ALWAYS growing. I learned quite a bit of Python this year and that has been invaluable to me for trading. I have learned how to automate my trading and have written code that calculates all kinds of things regarding minimizing risk while maximizing exposure, data analyis etc. Even the most skilled trader will not have the best gains with his/her brain alone. You need a computer to help you make sure you are right with your calculations and you need it to understand more clearly where your strategy can be improved.
These are lessons I have learned that have helped me immensely and will get you started towards whatever financial goals you may have. These are amazing things to master, if you do, you are on the way to being financially independent. You can really become rich doing this. Trading the markets is one of the best ways to make money because it is a multi TRILLION dollar industry. If you are at the top of it, you WILL become a billionaire if you start a business doing it. That is my goal, one day I will start my own hedge fund and I will become a billionaire. I hope if that is anyone's goal here, I help you towards that goal as well.
If my post has been useful to you, please like my work and follow me, it will help both of us.
-YoungShkreli
