STORY TIME! . . .
I really need to share this, especially since I have promised to share the actual trades I made with future subscribers and how to turn 2BTC into 17BTC in less than 10 days.
Now one the main reasons I want to do this is it helps me follow the very principles I repeat over and over and over again, right here! Remember you screw up money management just once and you can get wiped out!
As you all know I have been quite bearish on BTC, caught the move perfectly, and rode it all the way down. . . I had orders to cover just under 4100 all the way down to 3682 and go long.
But when the market broke and I only got filled with a small order at 4088 and we rallied I was surprised. . . . I saw a potential for a sharp rally so I exited my shorts with a market order . . . and then looked to go long. But prepared to turn around and go short again, since the trend was still down and it did not feel like an exhaustion yet. My equity was about 20.5 BTC which including my original 2 BTC.
Moreover I wanted to do everything right so I took 10 BTC off the exchange. . . good move! My liquidation price was still somewhere under 3000 on the perp and 3300 on the March. Bad thinking!
Mistake One: Do not ever think your liquidation price never changes if you are on cross margin . . . as the market moves against you the liquidation creeps up if you use cross.
Next I listened to Tone Vay’s. I can’t always watch him by I try not to miss an episode. And for the first time in forever and a day he was bullish! Listening to Tone Vays is a good thing to do! But . . .
Mistake Two: Never make a trading decision off of someone else’s advice! Never! Including Tone Vays or Ugly Old Goat! Tone is a great analyst but we have two very different trading styles. (Tone is largely responsible for transforming me into a Bitcoin Standard Bearer and I followed his reasoning and sold all my ETH forever at $200 before the run up to $1800! Again, markets aren’t reasonable.) It is fine to listen to others, but only act on your own analysis. Sometimes I deliberately do not listen to other respected analysts because I do not want my thinking skewered.
So my plan changed from staying short and buying below $4000 to being long and doubling down if we got the break. . . I was a bit too heavy. . . but I also figured I would recognize a coming break and would exit before we got it.
Mistake Three: If I plan on doubling down on adversity my position should be light or only half of my intention. That is the only time to double down on a loser.
So comes now the interview with Tyler. Really thought I would be fine for an hour so did not place stops, which is fine because I am disciplined enough to exit . . . but stupid for not having stops in place when I am unable to manually exit.
Mistake Four: Did not place stops before appearing with Tyler Jenks or lighten up before the interview.
When I finished the show I thought I was fine, because my liquidation was low enough not to get me rekt! WRONG!
I got rktd at 3717 on Perp and 3667 on March and just about the place I planned on doubling down. There was still about 2BTC in the account because I remained short ETH ad BCH. But due to the rktd I close this out at the market. Plus I immediately sent 8BTC to Bitmex.
Now this was the right move. No matter what I was not going to send back my initial deposit! Guaranteed to break even until I got right.
Normally you don’t do this, but I decided I must stay with my revised plan. Fortunately, the bitcoin transferred very quickly. And I was able to start buying back at below where I was rkted . . . so no harm done . . .
Further, the only reason I did it is because I was still trading with what I call OPM (other people’s money) which I defined as equity from the trades. . . and all of my analysis indicated this would be reversal day.
But then fat fingered 400,000 March buy rather than 40,000! The position was not bad but I did not want that much March because it is too thin. So I scaled in pricing to lighten up on the next rally . . . Right thing to do. And by doing so I was able to correctly add to my position for the final dip to 3500.
Everything worked out . . . but I want to show you that even a GOAT can make fundamental errors. . . and by sharing it with you it helps me to practice what I preach!
Hope this helps.