Educational post
We all have seen those groups announcing buying or selling signals. Going long or short. Or YouTube tutorials how to learn to read the chart and day trade.
They are all sugar coating and majority of times using you. Either just for clicks to make money on YouTube explaining the most simplest things that won't make you money or manipulate.
Let's say I have a group of hundreds of followers. As a trader I see a potential downtrend so I short. I tell the hundreds of followers that this is a great short signal. They see it goes down so they short / sell. MY position is now potentially already in profit just because of that. At the end even if I'm wrong it's a 50:50 chance and I drove the price further down. Especially effective on smaller market caps.
Some of you might think that "it's a whale game retail doesn't move the prices" but that's statistically proven wrong. A single person definitely isn't moving the price but a group of people have done that in the past. Great example are my fellow degens over at r/wallstreetbets pumping up random stocks together.
It is important to mention that professional traders are most of the times not even allowed to talk about their investments / strategies. They use funds of clients and are by law prohibited to give any insider information.
So all traders are fake and you can't actually make money?
No you can definitely make money day trading. Especially if you are a good trader you can become a millionaire if you start with a decent amount. It's a professional job in the stock market for a reason that gets paid really well by investors / institutions. Usually those professionals don't tell their secrets. They keep them for themselves and manage your funds for a cut of the profit.
So how do I become a day trader?
It's important to know that statistically 71%+ of retail traders LOSE MONEY. Arguably you could even say that with such a high number that some of the other 29% could just be lucky. But there are ways to become a good trader and the keywords are experience, knowledge & commitment.
We live in a free market and if there's money to be made there is competition. Especially trading has a huge potential so the competition is even bigger. You can't expect to be able to compete with those that have been doing it for years 40-80h/week. If you want to you have to accept that you need to spend a lot of time and effort.
What I would recommend: Try papertrading for a couple months. But take it seriously and only use small numbers that you would feel comfortable trading yourself. DO NOT just "do some fun trades" that can lead to profit. If you do a gamble 50x leverage trade and profit it can easily blind you and ruin your stats overall to see if you do well or not.
Read books. There are awesome books out there to understand patterns in the chart, learn strategies and market psychology. I personally only scalp trade lately because of how irrational markets move.
OVERSIMPLIFIED Scalping strategy ( NO FINANCIAL ADVICE )
Plus ( + ) sign is where I opened shorts. The minus ( - ) sign is where I closed them. Sure I could've kept them open but that's not the point. Scalping is trying benefit from a down or uptrend opening and closing trades over a short period of time. Sometimes even within minutes - sometimes over a longer period of time.
Weekends are infamous for Crypto to test new lows especially after a weak stock market week. Technically you could've shorted after the close and now wait for such a low dump, cash out, or if you are truly degenerate go long at those bottom to benefit from the support bounce.
Prediction
Sometimes Indexes like the NASDAQ futures can have great signals. NASDAQ futures are nearly open 24/7 and Bitcoin usually follows them as you can see by the chart.Over the entire Wednesday 5th october crypto fell really far most likely reacting to that red NASDAQ day / sell off. However, after markets closed, NASDAQ gained a lot of strength while Crypto was still behind.
3-4h later NASDAQ futures were already up +0.7% and the japanese markets opened in big green as well pushing the NASDAQ futures even higher. In that short time frame crypto diddn't move. That's a way to bet and predict it will follow any moment. You go long, set up stop losses to not get rekt by a whale move and sit it out. If NASDAQ falls back down and you see crypto following it - don't hodl trades. However in that moment bitcoin indeed followed NASDAQ and did pump a couple minutes later. Later on you can see how it slowly faded away again which should be the latest exit point.
Cashing out in profit during a pump is always better then watching the pump fade away.
Remember, as a trader you are not aiming for a 2-3x or even 10x in a day. You aim for small and consistent gains that cover your losses. You will lose. Markets move irrational and sudden. Black swan events exist.
Your goal should be taking profit and make profit every month consistently. Even if you only increase your funds every month by just 2%. It's still more then just +2% overall.
10.000 initial investment:
10200$ 1st month -> 10404$ 2nd -> 10612$ 3rd -> 10824$ 4th -> 11040$ 5th month
That's +10,4% gain in 5 months. Now imagine you proceed to do it for years. That's why it became a profession especially for bigger money. You can obviously adjust your risk tolerance and aim for higher gains but that requires more and more work & experience.
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