Reflections of a Resilient Trader (Part 1)
My Worst Trading Mistake- Turning $1000 into $6200 in my first week of trading Forex.
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Bitcoin was my gateway into the financial markets. I stumbled upon it in mid 2016 on some blog. And being the crazy risk taker that I am, I only researched about it for a week after which I bought my first bitcoin from localbitcoins.com at N220,000 (Bitcoin was around $600 at the time).
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As the months progressed, I got to learn about Altcoins. But I was basically just throwing money here and there and doing things I really didn't understand. All my investment decisions were based on information I gathered from Youtubers and Whatsapp groups. Both of which helped in providing me with useful and timely information but none of them made me an independent thinker/investor.
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I was so fascinated with Bitcoin that I converted all my savings into crypto and a large chunk of my salary would go into buying Bitcoin in the months that followed.
Even with my very limited knowledge and mistakes, fortune smiled at me because the cryptocurrcency market just kept going higher and higher in valuation with bitcoin rising from $600 when I first bought to close to $20,000 at the end of 2017.
So, I made an incredible ROI for just being in the market and holding on.
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As I would later get to find out in 2018 that after every parabolic rise in prices comes a significant fall in prices. To put it in proper trading parlance, every bull market is succeeded by a bear market and I was caught in the jaws of the bear in2018. And since the only strategy I knew at the time was to buy crypto and hold with the hope of selling at a higher price in the near future, it meant that I couldn't make profit since prices were moving sideways and downwards.
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It was at this point that I started looking at the Forex market.
And I began my research again on how to trade forex, I watched Youtube videos and read the School of Pipsology Technical Analysis book. Without even first practicing on a demo account, I jumped straight into funding my live account with $1000. In the first week by trading based on support/resistance filtered by a moving average baseline, I was able to turn that $1000 into $6200.
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I was so excited at my future because I thought to myself. If I could turn $1000 into $6200 in a week. Then I should be able to turn $5000 to at least $20,000 in the succeeding week, and if I could repeat that weekly for 50 Weeks of the year, then I will automatically become the richest man in my village. (haq haq haq) Looking back now, I can't stop laughing at how dumb and unrealistic my expectation was.
I am sure you can rightly guess what happened in the weeks that followed.
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I consider my turning of $1000 to $6200 in one week to be the worst mistake of my trading journey because of the wrong mindset it gave me as a beginner. Having this highly unrealistic expectation about trading left me exasperated and in my frustration I started my search for the holy grail strategy for beating the markets and the more I searched, the more I got confused. In the process, I ended up imbibing a lot of bad trading habits which would later prove difficult to unlearn.
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It was only after I decided to seek the help of a good trading mentor that I realized that I had been focusing on the wrong things all along.
First, there was nothing wrong with the initial strategy that I started out with. The very one that made me 6X my forex account. The reason the strategy didn't work the following week was not because it was bad but because NO trading strategy works 100% or every time since trading is a game of probabilities and market conditions change often.
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Hence, my search for the holy grail strategy would have been futile even if I sought it for 600years. What I should have done was to focus on my trading psychology and risk management while allowing the winning probability of my strategy to play out over a series of trades.
Knowing what I know now, what will I do differently if I am given the chance to start afresh as a beginner?
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First and foremost, I will get a good trading mentor that I can easily reach via phone or even one-on-one. I will digest every material he/she suggests and do every assignment he/she gives me.
If I am still not making significant progress despite doing all he/she suggests, I will be patient and keep practicing because some things just takes time and their is no short cut around that. But while practicing, I will share my progress or fustration with him/her.
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I will still endeavor to research wide even outside the materials that my mentor recommends so as to see how other experts view the same topics. I will share the new things I learn with my mentor so he/she can help filter which of the new ideas will work long term and the once that wont.
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Following this mentorship-learning route doesn't just apply to trading but to any other new endeavor that we may want to embark upon. A good mentor saves you valuable time and makes the learning process less frustrating by pointing you to the areas you should be focusing on.
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Thanks for reading. Do you trade? What is the worst trading mistake that you have made so far?. Do share in the comment so I can learn from you also.
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My name is Ken Akure. I am a resilient human. I trade Forex and Cryptocurrencies. I teach trading. And I also write about trading and how it intersects with key areas of human existence.
