Systemic and intuitive trading

By Your Crypto Boss on The Capital

There are two approaches to trading.

The first one — the trader trades according to the system, which regulates the conditions of entering the deal, profit-taking, exit from the deal by stop, and other important points.

There are no conditions for entering a deal — there is no entry.

There has come a situation that provides for exit from the stop — the trade is closed at a loss.

The second approach — a trader enters and exits a deal, guided by his or her understanding of the market situation.

Today he can enter the long-range at the levels of strong support, and tomorrow at break-down of resistance.

Today, when losing, he averages as much as possible, improving the entry price, and tomorrow he immediately fixes the loss.

Today he opens short positions on crypto assets, and tomorrow he excludes this possibility.

Which approach is better?

The answer is the system. As people say, order beats class.

But it’s not that easy.

Have you ever wondered why technology allows the use of unmanned cars, robots with artificial intelligence can support a meaningful conversation on many topics, we can calculate what will happen if the annual air temperature rises by a couple of degrees, or what comet will pass near the Earth in 50 years, but no AI or supercomputer will not answer the question — how much will cost Bitcoin or Apple shares on January 1, 2021? Not to mention an interval of 3–5 years.

Because markets are not mathematics, they are psychology. They’re irrational.

And the irrational cannot be calculated.

That’s why all the achievements of technology over the last 100 years have made the markets more massive and accessible, make it easier for a trader to analyze information, to generate new strategies, but the main thing remains unchanged — trading decisions remain with the trader, all bots and algo trading can successfully work only under the control and setting of a person.

Crypto market is even more irrational due to small capitalization and specific composition of participants.

And like every young market, it’s constantly changing. Not in terms of asset prices, but in terms of the overall picture of the market.

Before 2017 — small capitalization, quality market audience, lack of a targeted game on downgrading.

2017 — worsening audience quality, FOMO wave, vertical growth, mass scams.

2018 — crypto winter.

2019– in general a big flat.

2020 — growth, corona crisis, systematic growth for 5 months on inflationary expectations.

These markets required a completely different approach. In 2017 — buy on pullbacks, build up positions, forget about the shorts button.

2018 — to fix profits in time, sell on kickbacks, overcome fear, build up the portfolio.

2019 — the first half is like in 2017, the second half is about bears. The key to success is to have time to enter the shorts or to fix the profit as high as possible.

The beginning of correlation with stock markets.

2020 — strong correlation with stock markets.

The key to success will be clear at the end of the year, but I think it’s in the understanding of the overall market picture, and the main events will unfold far above 12K.

Market capitalization during this time has changed from 18 billion in early 2017 to almost 800 billion in early 2018, with failures to 100–150 billion in early 2019 and spring 2020 and growth above 300 billion in summer 2019 and now.

Obviously, these are completely different markets, and the approach that led to success in one of them will not work in the other.

If we take only 2020, it’s clear that the growth period (January to the end of February), the collapse (end of February to mid-March), growth to the end of May, the 6-week Flat in June-July and growth in the first half of August require completely different approaches, which cannot be formalized within one system.

But intuitive trading can help you make the right decisions quickly in volatile and rapidly changing markets.

Intuitive trading (it’s also called discrete trading) is making decisions depending on the market situation, without being strictly bound to any formal rules.

A trader sees the market situation and reacts to it (opens or closes a deal.)

Theoretically, this approach is more effective. But it all depends on execution.

Intuition doesn’t come by itself, it comes with experience. And it works only in those areas where a person has this experience.

I was once at one seminar, there was an exercise — sparring in total darkness (a room without windows and with the lights off and a balaclava dressed backward).

Everyone was physically and functionally prepared there. But only a part of the participants during the last year had constant experience of sparring several times a week, and the rest had experience in martial arts, but not regularly.

All were in the same conditions, really nothing can be seen, you focus on the movement of air, and when you touch at all no time to think, only muscle memory works.

But the results of those who had constant experience were many times better.

The basis of intuitive trading is your own experience.

And the more this experience, the more chances for success.

But only on the condition that the trader can analyze his or her experience, both positive and negative, to see and avoid making mistakes in the future.

Intuitive trading concerns entering and exiting a deal. And money management, of course, must be systematic, because there is pure mathematics, and no experience will help, if it will not be in your favor.

Conclusion — start with the system trading (provided you are confident in the system).

Confidence in the system is when you have accurate information that this system is used in real trading and brings profit.

Then, having achieved stability in system trading, develop your market vision, checking the reliability of your hypotheses on a demo account, or in paper trading.

With stable results, start intuitive trading on your account, keeping the system of money management.

I trade in a combined way. There is a system that implies compliance with certain principles ( to buy) (always cheap, to sell expensive, to enter with an overweight, to have a plan B, to have money for a share, etc.).

And in the framework of this system, I trade intuitively, defining entry points and profit fixation, relying on the experience and sense of the market.

There are still a lot of things to work on — and the manifestation of FOMO is not exhausted to the end, and excessive confidence and other shortcomings. But the ratio of profitable and loss-making trades about 10:1 is still not bad as a whole.

Please don’t forget to follow us on Telegram and stay updated!


Systemic and intuitive trading was originally published in The Capital on Medium, where people are continuing the conversation by highlighting and responding to this story.

Post fetched from this article