Lessons from a Cartoon Day Trader

How to grow your bankroll trading risky assets

Explaining all the nuances of stock, options, or cryptocurrency trading would be redundant because every trader has a unique style that makes or break them. In the following, I’ll highlight the collective opinion of the people I’ve met who claim to be in the green.

Warren Buffet is the father of modern stock analysis and his success was built the hard way, from the age of 11 he picked up encyclopedias and began reading. If understanding markets was a game his name surely would be on the top of the leaderboards.

Buffet built his fortune by being on the winning side of trades much more often than not. He is a man of calculation.

A unique breed of trader compared to that of bitcoin day traders. Not everyone is like Buffet. When he buys up shares he is looking to hold onto them for long periods of time and change how they do business.

His financial analysis style while valuable to know is not very applicable to other styles of trading that are faster paced and less about the intrinsic value fo a company itself.

Day trading is only holding onto an asset for minutes to sometimes a few days, and Swing trading is about holding onto portions of a portfolio for several days to a few months.

Markets end up boiling down to a handful of winners and a larger group of losers, but because people trade on different time frames there is room for you so long as you build a strategy.

You can have more losing trades than winning trades and still be in the profit.

Don't use too many technicals

There are a large variety of tools to be used with trading but the fact is most of them tell you what has happened and not what is going to happen.

These extrapolations you make early on will be the building blocks to being a smarter trader. So instead of searching for the magical combination of Volume, Moving Averages, Stochastic RSI, MACD, Ichimoku, or identifying Eliot waves.

Take a step back, and build on less first, because many of the tools that traders use to identify trends are just visualization of the data in front of you.

So the first lesson in trading is learning how to draw trend lines, support, and resistance. Which is really just your interpretation of price action.

Limit your losses

When you enter a trade you don’t just set it and forget it for a random amount of time then hopefully you’ve made money when you come back.

You enter with a timeframe in your mind and what you feel the price will do within it. If it doesn't then exit at what you find to be an acceptable loss for the return you had hoped for.

You wouldn’t risk 80% of your bankroll in poker on a pair of spades pre-flop would you?

Everyone has different levels of acceptable risk, and learning what yours is early on is a fundamental part of growing as a trader. The notion that only very risk-loving people succeed in trading is a barrier to entry, in fact, most if not all successful traders are very cautious in every trade they enter.

Limit orders and market orders exist for a reason. Upon entry and exit of a trade, you should never just buy an asset for its market price. If you truly have done your homework you’ll know what price you’d want it at and will wait for it to buy and sell.

Your gut instinct is probably right

If you feel its too late to enter into a trade then it is.

Just leave it at that, bankrolling on a whim is how people stop being traders. Sure you might’ve seen or heard of someone who got very lucky, but those types of trades are generally longer-term investments. They aren't risking it all as often as you think.

They most likely built those decisions on financial analysis, not technical analysis. So be hungry, not foolish.

Start out paper trading

This is pretty sound advice that new traders often don’t listen to. Paper trading is using fake money to trade stocks or cryptocurrencies and many platforms offer it.

Yes, it’s exciting to learn a new trick and apply it into your strategy but until you’ve tested your method in real markets it's as good as guessing.

Another way to do this is to simply use a journal or type out your thoughts directly on sites like tradingview and once you make your analysis you can view your ideas later and see how they panned out.

Tradingview is also a great place to connect with other traders and learn from their success and mistake but be wary because you can delete failed ideas.

This is why it's important to build your own strategy. Instead of joining a paid community in order to get signals from them.

While you can join these types of groups in order to learn, you should never blindly follow other traders. That is because they may just be using their influence on social media networks in order to influence markets or worse fake profits.

A healthy dose of a nhilism is needed in trading.

Record even your losses

It goes without saying that even the best make bad trades but if you write them down and keep track of every trade you make even 15 1% losses can be hedged against one 15% profit.

At the end of the day if you’re trading around your life savings you’re probably going to lose it because trading too often becomes an emotional experience. Learn how to take hits on the chin and you’ll greatly accelerate your path towards success.