Last night I opened three trades but was only able to close one out in the black before shutting down for the night.
In two of the trades I went long, first on Bitcoin and then on Ethereum, remembering to run with the bull, not to try and fight it.
Going Short On XRP’s Dodgy Surge!
On the other hand, and this is my favourite trade so far this month, I noticed that our old friend XRP (Ripple) was trading at a heady $0.36, up from the upper teens and lower twenties of a couple of days ago.
Before shorting XRP I did a quick bit of research on Google, and the only bit of news I found about Ripple was negative – Bloomberg reported that an investor was suing Ripple to force a stock redemption. So I shorted XRP.
Red Alert… Red Alert… Red Alert!
Of course, I then watched as Bitcoin and Ethereum fell in value while the Ripple fans went into buying mode and pushed the price up. Three positions instantly in the red! But they were also three positions that I was willing to stick with.
When You Are Happy With Your Position You Can Sleep Like A Log!
By the end of the evening Bitcoin had recovered enough for me to close out the trade on a measly $6.3868 profit, but the other two positions were still deep in the red. So I decided to leave them open for the night. I set both positions to “Auto Invest” with “Take Profit” set to “ON” and “Stop Loss” set to “OFF”, went to bed and slept like a log. 🙂
The next morning I felt vindcated when I saw that both positions had reached their “Take Profit” threshold and closed out in the black.
My long $100 punt on Ethereum made a $39.2472 profit and my short $100 punt on XRP made me a nice $100.8231, for a total profit today of $140.
The Risk Of Setting A Stop Loss
In both cases, if I had set a “Stop Loss” the positions would have closed out in the red. Instead, the “auto invest” had kicked in and raised the original investment in each position to $759.37. By coincidence, XRP rose by the same margin relative to my investment as Etherium fell, before they both changed direction and delivered my profit.
I should also add that the Etherium punt was at 11x leverage and the XRP one was at 10x leverage.
A Sudden Awakening to the Power of “Auto Invest”!
The sudden “auto invest” insight that these trades confirmed is a real breakthrough for me. It seems obvious now, but the implications were not clear when I first used the “auto invest” option.
Before last night I was setting up bigger trades with bigger leverage margins which quickly eat into your capital if your position goes the wrong way – and if you have “auto-invest” on, your capital gets eaten faster and faster if the trade keeps falling away from you.
BUT, and this is CRUCIAL… each time the “auto-invest” kicks in, it buys at the CURRENT price, which will be the new LOW in the case of a long position, or the new HIGH in a short position. So if the market turns back in your favour, your position can quickly recover and head into profit.
That is how I accidentally made over $2,600 the other day! And that is how I “made” $140 while I was sleeping last night.
(Note, these trades are the demo-account only, so it is all “imaginary money” – this is just practice.)
I am MUCH happier with the $140 profit from last night than with the very nice $2,600 profit earlier this week. Why? Because of the way I set up the trades.
The big win the other night came with massive unconsidered risks. The trade was set up as $500 with 30x leverage. It actually chewed through over $28,000 of my “demo account’s” $50,000 capital before yielding the profit as the market turned. With $28,000 in play, the profit came quickly once the market turned, but had it continued to decline I could have lost 100% of my $50,000 demo capital!
A Much Better Approach To Using “Auto Invest”
Compared to that, last night’s positions were just $100 each with 10x or 11x leverage and so they were able to sustain a lot more negativity and each time the “auto trade” would buy at the new price and improve the chances of a quick recovery.
And so it proved. I believe it is also because, in the case of Ethereum, I I was “running with the bulls” and in the case of XRP, the fanboys were fighting the bears and the XRP bears won!
(Note: a Coinbase news update on XRP’s surge provides some interesting extra detail, which I have only just seen.)
Anyway, another $146 or so in the positive over the last couple of days suits me! Sure, with Bitcoin surging to a new $41,500+ high today, I probably could have made a lot more IF I had not had other stuff to do most of the day! As it is, I am now well ahead of my target of making $1,000 over the 30 days of this challenge. The question is: Can I keep my profits as I place or close trades in the Stormgain demo account every day until the end of the month?
Exact total profit so far = $3,054
Come along for the ride as I try to learn how to trade my way to a profit!
If you are an experienced trader, any advice would be welcome. Let me know where I’m going wrong, or post some tips in the comments below.
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Disclaimer: I am not a financial advisor and this is certainly not financial advice. Simply the musings of a rookie trader playing with pretend money…