CryptoCurrency Day Trading Test – Trades 7-8
Well trade# 7 is not so lucky. As previously mentioned in a previous post, trade #7 was my first venture into the Bitcoin trading world of Crypto. I purchased $57.25 worth of Bitcoin (BTC/USD) which was worth at the time 50,313 per bitcoin. Good thing I only purchased 0.00113787 of a bitcoin, or $57.25 worth. Basically it has been in a multi-week downtrend since that point, with its usual volitivity. As I am writing this on 5/31/21, 1 Bitcoin is worth 37039, a drop of 0ver 26%. During that time it has traded in a range from about 51000 down to just below 30,000. What I should have done is sell when I had a loss of 5% or so, which would have meant, a max loss of $2.50 or so. I was still holding the trade when it dipped below 30,000 per bitcoin. But I did sell when the price recovered on May 26th when Bitcoin was over 40,000. So my $57.25 investment decreased in value to $45.67 on 5/26/21, the completion of trade #7, a loss of 20.2%. Ouch! And besides the loss, I violated several of my trading rules: 1. Don’t hold trades too long (more than 10 days versus goal of several hours)! 2. Sell at a loss, generally at twice the anticipated profit! Since my goal with these Crypto trades is generally to make 2.5% per trade, at 5% loss is when I should have sold. Now in my defense, my broker does not appear to offer stop loss trade options for Crypto, and there is no way to watch the charts 24×7, but still I need to watch it better.
So, now I need to move on. Trade #8 was also in Bitcoin, and a much better result! This was entered on 5/29 a little before midnight, and the sale back into USD happened (via my limit price) at about 2:30am, giving me a profit of $2.00 (or 4.4%), with a new net of $47.67.
I have decided that in future test trades of Crypto, I will not put the full amount on each trade, I will break it into smaller amounts, so as not to risk the entire trading account, in one trade. This is more closely related to how I regularly trade Index options, which I generally trade 20-25% (of my available trading funds) in the market at any one time. For purposes of this Crypto Currency test, I plan to only trade 50% at one time for the next few trades. This will make my progress a little slower, but will reduce risk.
