Many people in crypto lose money, not because they can’t read candlestick charts, but because they’ve never had a trading system that’s truly stood up to testing.
For example, they see that the last few MA golden crosses made money, assume they’ve spotted a pattern, and start trading frequently. If they get lucky, they may make a little money at first—which is actually more dangerous, because they become increasingly confident in their own judgment and may even keep increasing their leverage.
But they don’t consider that what they’ve seen may just be a handful of successful cases. Look at a longer stretch of historical market data, and most similar signals may actually have lost money.
I went down that same wrong path and lost a lot. Only later did I gradually understand that you can’t judge a strategy by the profits and losses of a few trades. You need to see whether it still has an edge after being backtested against a large amount of historical data.
I started backtesting and comparing different time periods and different coins, looking at win rates, risk-reward ratios, maximum drawdowns, and how fees affected the results.
If a strategy only makes money on one coin during one particular stretch of history, but fails with another coin or in different market conditions, you need to be wary of overfitting. What worked in the past isn’t necessarily going to work in the future.
At my lowest point, my account was down to just 17,000 U. That period really made me realize that if you trade on gut feeling, sooner or later you’ll pay for your impulsiveness.
Over the next two years, I gradually adjusted my trading approach, and my account slowly recovered and grew to around 100,000 U. During that time, I also had to withdraw about 1,500 U every month to pay my mortgage and cover living expenses.
This isn’t to say that any particular method can guarantee the same results for me. Rather, I’ve come to believe more and more that trading can’t rely on luck alone—and you certainly shouldn’t assume you’ve found the Holy Grail just because you’ve had a few winning trades in a row.
Validate the strategy before scaling up your capital; control drawdowns before thinking about returns.
If you’re also researching trading systems, don’t just focus on which indicators make it easy to earn money. What’s truly worth investigating is whether a strategy can stand up to scrutiny across different market conditions.
For example, they see that the last few MA golden crosses made money, assume they’ve spotted a pattern, and start trading frequently. If they get lucky, they may make a little money at first—which is actually more dangerous, because they become increasingly confident in their own judgment and may even keep increasing their leverage.
But they don’t consider that what they’ve seen may just be a handful of successful cases. Look at a longer stretch of historical market data, and most similar signals may actually have lost money.
I went down that same wrong path and lost a lot. Only later did I gradually understand that you can’t judge a strategy by the profits and losses of a few trades. You need to see whether it still has an edge after being backtested against a large amount of historical data.
I started backtesting and comparing different time periods and different coins, looking at win rates, risk-reward ratios, maximum drawdowns, and how fees affected the results.
If a strategy only makes money on one coin during one particular stretch of history, but fails with another coin or in different market conditions, you need to be wary of overfitting. What worked in the past isn’t necessarily going to work in the future.
At my lowest point, my account was down to just 17,000 U. That period really made me realize that if you trade on gut feeling, sooner or later you’ll pay for your impulsiveness.
Over the next two years, I gradually adjusted my trading approach, and my account slowly recovered and grew to around 100,000 U. During that time, I also had to withdraw about 1,500 U every month to pay my mortgage and cover living expenses.
This isn’t to say that any particular method can guarantee the same results for me. Rather, I’ve come to believe more and more that trading can’t rely on luck alone—and you certainly shouldn’t assume you’ve found the Holy Grail just because you’ve had a few winning trades in a row.
Validate the strategy before scaling up your capital; control drawdowns before thinking about returns.
If you’re also researching trading systems, don’t just focus on which indicators make it easy to earn money. What’s truly worth investigating is whether a strategy can stand up to scrutiny across different market conditions.