February 17, 2018
Today’s story is about what we did during the quiet periods in the crypto markets. Of course, we’re still holding onto our XLM because our view on its fundamentals has not changed but it’s no fun to see prices drop because of external factors being tied down to BTC. We’ve come to expect that though, so it’s not just that. What we hate is wasting time not being able to make money … FOR … AN … ENTIRE … MONTH! There are only 12 months in a year. If you think about it, that’s definitely a long time to sit on your hands and twiddle your thumbs waiting for a recovery.
Our solution? Follow the money elsewhere!
Crypto is not the only place where you can get 10x your money. Those who have read about us and follow our journey know that part of our action plan is to apply CFD trading strategies in more traditional markets as a hedge against volatile cryptocurrencies. This was the perfect time to test out that strategy. What really makes us happy is being able to spot opportunities and profit from them, just like the last time when we discovered Ether at $12, and when we performed a two-part S&P and Gold trade on the day of the U.S. Presidential Election towards the end of 2016.
Each time, we enjoyed starting with $1,000, turning that into $8,000, taking out our original capital, and letting the rest run. Rinse and repeat. This allowed us to feel comfortable with the amount of risk we took, and make the most of opportunities as they arose. Everyone is an expert in a bull market, but the real challenge is keeping your profits!
There were many opportunities during the month of January. Here are a few notes:
- Follow the trend – all our trades were simply following the uptrend established in December. One of the simplest tricks in the book is to follow a trend and so that’s what we did.
- Respect the January effect – historically speaking, on a majority of occasions, January has been a great month for traditional assets ever since 1942. When probability is in your favour, take advantage of it and so that’s what we did.
- Don’t underestimate demand and supply – the media can make the story as complicated as it wants but at the end of the day, price is influenced by demand and supply. With a low supply and a high demand, oil was at a bargain and so that’s what we bought.
- Leverage the Trump trade – a rising interest rate environment, positive employment and inflation figures, and the reinforcement effect of record high after record high meant that tracking the S&P 500 at a higher leverage would remain a lucrative prospect.
- Understand timeframes – even though we trade on smaller timeframes, we typically keep the long term at the forefront of our minds as our risk management strategy. We try not to put ourselves in a position that we get stopped out by putting in a place a sufficient buffer in both time (when we need the physical cash) and margin for the long-term trend to resume itself.
- Stay in the game – the first rule in the book is to not lose money. If you made a mistake by over-leveraging and a margin call will likely be triggered due to a trend reversal, reduce your exposure or simply sit it out. Opportunities are plentiful. Stay in the game; win the next round.
The point was to make our trading strategy as simple as possible. Here were the results:
Sure, we didn’t buy at the very bottom of the dip but there was enough room for us to earn a healthy profit by turning $1,000 into $44,000. Prices have dipped since then, but as we mentioned above, by keeping the long term in mind, we were able to protect our profits. We even took out $4,500 to help finish off renovations in the flat. Definitely some much-needed money! It’s also a good reminder that this stuff is real. It’s not real money though until you actually realise your profit.
We’re now in the middle of February, and it looks like post the dips we saw last week, we’re back on track for the continuation of the main uptrend across the board, not only in equities and commodities, but also in crypto (finally!) It certainly has been a long wait and kudos to all those who managed to hold on for so long. This extended downtrend was epic in many proportions and it certainly taught us a thing or two, and toughened us up!
It’s natural to have feelings of regret or hindsight may tell you that you’ve been greedy by not cashing out at the peak. We certainly felt the pain of not cashing out at $0.90 on XLM but our faith in the long-term recovery meant that we did not panic. As we’ve said before, the party has just started, 2018 will be a great year; a year of consolidation and unimaginable profits. And we’re not alone in making this call. Kraken’s CEO has just come out with a statement predicting that the crypto market is likely to surpass the $1 trillion mark in the near future. What we’ll say is stay focused and vigilant. Don’t get complacent from speculative predictions. Spot opportunities as they arise but also remember that whales and FUD still dominate the markets. The only way to combat that is to ignore all of it!
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