A little background: In all modesty, I’m not an unintelligent guy. I have a degree in physics and several decades experience designing and programming custom business software. I’m a dedicated empiricist, a systemically-adept professional algorithmic thinker, and no stranger to mastering conceptually difficult things. I’m also an avid lifelong musician who (I’m told) plays a handful of instruments well, so I’m not, like, a straight-ahead wonk. I see the art in things and understand intuitive approaches. (Programming is more like this than people think, too.)  I believe it’s possible to rationally examine mysticism and more subtle phenomena than most pure pragmatists spend time thinking about. I do believe it’s likely that there are more things in heaven and earth, Horatio, than are dreamt of in your philosophy. 

I started learning to trade in 2017 on the assumption that profitable algorithmic trading strategies are possible and that successful trading is not a game of chance. My primary goal was to codify the decision-making processes of successful trading into an algorithm — essentially the same exact thing I’ve made a successful living doing professionally with business rules for many, many businesses over my career as a developer and consultant — and ultimately use it to generate passive income from the extreme volatility of cryptocurrency.

I very quickly became involved in Reddit (which is a cesspool, by the way) and between working on algorithms, studying and learning to trade, and even a brief stint on the mod team of one of the largest crypto trading subreddits, trading became a full-time job and more.

In the last 3 years I’ve become extremely skilled at TradingView’s Pine scripting language, extremely familiar with the rationales and calculations behind many of the most common indicators, and spent the better part of a thousand hours developing and backtesting both my own strategies and implementations of others’. Since then I’ve whittled a substantial initial trading account down by about 70%… a five-digit loss… and never found a successful strategy, nor ever found a single person, book, or website that could offer any trading advice or knowledge that turned out to be more reliable than flipping a coin.

I’m sparing you a very long rant, but at this point I’m 99.97% certain, based on evidence and careful examination, that trading crypto is purely a game of chance, primarily consisting of elements more closely resembling tarot card reading, astrology, and dice or roulette than any kind of discipline, knowledge, or learnable skill; and, that most “successful traders”, if any really exist, are basically coasting on luck and survivorship bias. The people for whom the exact same knowledge and techniques did not work, who didn’t get lucky, simply didn’t stick around on #CryptoTwitter to keep talking about their experience, so we’re left with a bunch of people who made a lot of money, saying, “Look, we ALL made money, it must because of skill, we couldn’t ALL have gotten lucky.” But the unlucky people just dropped out. 

Every person I’ve talked to, every book or website I’ve read, every video I’ve watched, that tried to teach a “technique” or “strategy”, that technique or strategy was just as likely to lose money, and in at least equal proportion to how much it won… which, which you consider the “house odds” of a market strongly manipulated by whales and the small, constant friction of trading fees both stacking the deck against a retail trader, mean trading crypto is necessarily a money-loser, no matter how you slice it. Unless you get lucky. In my experience, no matter what you do, no matter what you try, the losses must always add up to slightly more than the wins. If you can find and correct for any part of what’s losing you money, you just lose money in a completely different way when the next trade goes completely differently. Anything you do that will help you more if the price moves your way will hurt you more in exactly equal measure if the price moves against you. There’s nothing that wins you more money part of the time that will not lose you equivalently more money the rest of the time, and any effort to reduce the size of your losses or increase the size of your wins will increase the frequency of your losses or decrease the frequency of your wins in like proportion, or vice-versa.  There is no “edge” or “alpha” except luck.

As an empiricist, though, I know there’s still a small chance that I’m wrong unless proven otherwise, and the reason I’m still around talking to people is on the basis of that diminishing hope. If I ever do become 100% convinced that it’s just gambling, I’ll be one of those people who walked away. That day keep getting closer. 

Prove me wrong. 

May 21, 2020

Follow by Email173