Hey folks, since I don't want to flood you with cryptocurrency news which, though important, are not always interesting, I've decided to do another section. Here, in this particular blog, I'll be publishing some of my interesting moments as a full-blown crypto geek, living and breathing the industry.

This is take #1. It's one of the few attempts at Futures trading and it's a rollercoaster one. Here we go.

At the end of 2019, I made a promise to myself to become more financially conscious (I know the title puts this in the dust, but stay with me). Hence, I decided to put $400 from every monthly paycheck I get into my investment portfolio.

I've been in crypto for more than 3 years now and I am well aware of how particularly volatile this market is. And, even though I believe in Bitcoin's potential, I can't disregard the possibility of it eventually going to $0. Likewise, when it comes to investing, I had to assume the same for other cryptocurrencies.

In any case, out of those $400, I decided to invest in Bitcoin, Tezos, and Chainlink. All of these I intend to hold for a long period of time rather than flipping them for short-term gains. The reasons for which I chose these I'll explain in another post.

$400 Deposited, So It Begins!

So comes the beginning of February and I receive my first paycheck and diligently deploy $400 into my Binance account. Now is the time to mention that I follow a lot of successful cryptocurrency daytraders since I'm working with a lot of media websites and I cover their analysis regularly. I also have the privilege of knowing a lot of the popular ones personally.

So it hit me - why not copy those peeps, allocating a small yet leveraged amount in the trades they do and eventually stack even more sats. It didn't take more than 10 seconds for me to make up my mind and $100 worth of USDT was already in my Futures account.

From $100 to $1,000

Luckily, this happened on February 5th when Bitcoin was trading just above $9,000. On that day, I remember seeing one of the guys I follow saying that if BTC closes the next 4hr candle above $9,250, he's adding to his leveraged positions. Now, I knew that if this guy is adding leverage, it means he thinks something huge is cooking. Needless to say, that's all I was waiting for. Say no more, I thought!

The Candle That Was!

I saw a closing above $9,250 and I decided that it's my time to shine. Having no idea how to manage my risk, and, quite frankly, not really caring about it, I opened up a position for 1 BTC using a margin of $90 with the 125x multiplier. Take that!

via GIPHY

And off it goes. Bitcoin surged to $9,800 in the next 24 hours. During this time, I was pretty much obsessed with the trade, looking at the ROE and PNL stacking nice 4- and 3-digit numbers while my account was growing. "Like taking candy from a baby," I thought. And as I finally closed my position for a bit less than $700 profits, I saw my account balance at just shy of $800. Booyah!

Enters Link and Tezos!

This other guy I've been following for quite some time now (and I'm pretty certain he made fortunes), said that Link and Tezos will be huge in February. Again, I was in! Now, I don't remember the exact dates but it must have been around the same time. I bought Tezos at $2.02 and sold it at $2.6. I bought Link at $2.8 and sold it at $3.2. My positions were, again, hugely leveraged (always max leverage on Binance).

On February 8th I had about $1,500 in my account. At this point I was so full of myself, thinking that every trade I take would net me cash. Guess what - it didn't!

The Downfall

It was on that day I entered a few other highly leveraged trades and babysitting them like crazy. A few is an understatement, actually, as I probably opened 25-30 different positions and closed them all in the span of 6 hours. I got into almost everything that Binance's Futures platform offers on leverage, thinking that we're in altcoin season and that everything will pop right away. I was afraid of missing out on the action on pretty much everything.

All of these positions I closed for a loss ranging between $40 and $50 because I didn't have the nerves to hold, always thinking that they might crash and liquidate me. And, as you can imagine, with this type of leverage, the liquidation prices are always near.

I was so frustrated at that point that I put everything in Bitcoin thinking that, once again, it would be my savior. The price I got in was $10,250 and overnight it dropped to about $9,800. Of course, no stops were in place because I didn't think it would spike as low and everyone said it was going to $10,900. I woke up to an empty account and called it quits.

The Takeaway

I don't regret this rollercoaster ride in any way. Sure, I'd love not to have lost those $1.5k but it was an experience that showed me all my mistakes in practice.

What I understood from all of the above can be summed up in a few lines.

#1 Don't Use Max Leverage

Using 125x leverage on something as volatile as Bitcoin (or any other cryptocurrency) is suicidal. It's borderline stupid and you shouldn't do it. A tick of less than 1% in the opposite direction and your margin is negative. Regardless of what anyone might say, this is pure gambling. Predicting Bitcoin's price down to less than a percent is impossible - don't let anyone tell you otherwise.

#2 You Don't Know The Whole Picture

I had the information, I thought. The people I followed - I've been working with them for a long time. What I didn't know was how they manage their positions. Risk/reward ratios, hedging, stops, take-profits - all of that, I didn't know. In other words - I didn't have information. Anyone can tell you "buy Link, it will explode", and, at some point in time, he'd probably be correct. Link did eventually explode and reached almost $5. Yet, my positions weren't placed appropriately enough so I could enjoy this ride up. The same is true for Tezos.

#3 Daytrading is For Professionals

Sure, you can make a quick buck here and there if you're lucky. Staying profitable consistently in this market - that's the tricky part. I read The Wolf of All Street saying that the most important thing here is to protect your capital and profits. He couldn't be more right.

#4 Invest, Don't Trade

It became clear to me that I can't trade. Does this mean that I have no faith in crypto? Hell, no! The way I'm going to stack my capital going forward is using consistent, dollar-cost-average approach. I'm going to chunk my investment overtime to downsize my risk. Sure, I won't be able to enjoy a potential surge in price as much as I would if I had stashed a large sum at once, but I want to protect my capital!

The silliest thing of this is that I actually knew it all. I'm not here for a week. I'm here for three years! I've looked at this market for more than 1,000 days and, yet, I failed to apply what I knew in practice.

I guess the main point is, yes, you can make a hell of a lot of money day trading, especially in a bull market. But you can also lose it just as quickly. Remember guys, even on the way up, there are always pitfalls. Make sure to protect your money and don't gamble it as I did, even if you got lucky getting it in the first place. Money is money.

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