Shoutout to all the newer traders trying to survive the bear market

I’ve got some advice for you.
Let’s discuss the predicament you’re in:
You’re either finally willing to show humility to the market after experiencing significant drawdown, or wise enough to know that it’s in your best interest to put in the hard work now when things look bleak
Either way, you have my respect. We’ve all been there before
You need to gain more experience trading the market, in preparation for the next bull
There are no books, videos, backtesting, etc., that you can use as a substitute for real trading experience
Button presses and forward-testing is the only thing that matters.
The issue is: you also need to preserve as much capital as possible, in order to make the most of these opportunities when they arrive
Not every opportunity is created equal; and better days bring better opportunities, in greater frequency.
So it makes sense to save your ammo for when the market is more asymmetrically skewed in your favor.
Do you see the ‘Catch22’?
- If you don’t gain experience, you essentially stand no chance even when ‘generational’ trades arrive; you will find yourself in the same position of everyone else who underestimates the markets’ tenacity, and overestimates their abilities — with nothing to show for it in the end.
- Yet, if you spend all your ammo now in preparation for those greater trades, you’ll pay ‘tuition fees’ to the market and won’t have any capital to deploy when those trades come.
Tough.
The good news is: price action is fractal.
So you can emulate what it's like to trade several full-fledged bull markets, and bear markets, just by applying the same principles on lower timeframes.
- The way you'll trade a trend on the Hourly chart requires the same discretionary applications as trading a trend on the Daily chart.
- A 2 week range has the same cadence as a 2 year range.
So the solution is to start a sub-account.
I know you’re probably thinking “well duh, that’s so obvious”.
It’s not that you couldn’t have arrived at that conclusion yourself; it’s more likely that you lack the discipline to follow through with that thought.
It’s like saying: “if you want to not be fat, go to the gym”
Everyone knows the answer; not everyone is dedicated enough to follow through in order to benefit from that knowledge.
So let’s talk proper form, workouts, muscle groups, etc., but in reference to a ‘sub account’:
Think of it as a challenge account; you need to challenge yourself in order to instill inner-confidence that you’re actually worthy of trading with your main portfolio
Unfortunately in the current state of crypto, you’ve probably come to associate ‘challenge accounts’ with ‘degenerate gambling accounts’ where I attempt to turn [a small amount of money] into [a large amount of money] in a short period of time.
I am so sorry that gurus have used this low-effort marketing bait as an attempt to sell you something, but that’s not at all what I mean.
You need to act like a professional - you need to treat your money (and yourself) with some respect
You have to treat it like you’re applying for a prop-firm
The key here is: the amount you’re using still needs to be meaningful to you, to the point where you don’t totally disassociate with trades because “I’m up pennies; who cares”.
Yet at the same time, you’re not risking enough to derail from your trading strategy and submit to impulsive actions driven by emotions.
As an example:
Let’s say you have a $50,000 portfolio
You take $5,000 into a sub account and mimic your risk management practices, and trading strategies, on a smaller scale
Your profit goal is +20%
You’re allowed a maximum of -10% drawdown
If you successfully complete the challenge, run it back and go again; develop the conviction that Lady Luck had no part in this
If you fail the challenge, top up the balance and go again; you need to figure out whether it’s just variance, poor strategy, or a flaw in your execution (usually mental)
Either way, your results will be conclusive, and you’ll refine the strategy along the way, learning more about your system, the market, and most importantly: yourself
Over time, and with a large enough sample size, you’ll develop inner confidence [not ego], which is the one and only tool necessary in order to do well as a trader.
“Everyone has the brainpower to make money in markets; not everyone has the stomach.”
Through this method, you will get familiar with:
- accepting losses, fluidly
- entering a 'high quality' trade, only to lose
- managing positions in large unrealized profit
- micro-managing positions through prolonged periods of time
- appropriately scaling position size dynamically with trade quality/confidence
As you pickup these skills (along with many other things), and refine your flaws, you can begin increasing the stakes
You’ll likely find that increasing the stakes suddenly increases the difficulty of the game as well, although the foundation and principles are exactly the same
The principles don’t start changing until you have the ability to move markets; at which point it becomes a different game entirely
But for whatever reason, it feels the difficulty has increased exponentially, or that we're playing a new game we're unfamiliar with
Allow me to enlighten you:
It never gets easier; you just get better.
I’m going to frontrun a question I foresee:
> “Why not just actually go apply for a prop firm?”
Remember that the whole point of this exercise is to mitigate the ‘tuition fees’ you’re paying to the market, whilst developing a resume to use as a crutch for confidence when bigger and better opportunities are presented
Prop-firms are best suited for people that already have trading down-pact, but are limited with capital
So if you pay money to apply for a prop-firm without having any actual edge, it’s analogous to joining a boxing gym for the first time and expecting to knockout prime Mike Tyson.
I hope you’ve enjoyed the read, and that I’ve given you a real goal to strive for.
Confidence is earned, though, not granted.
So reading a long-form thread is not enough—it starts with doing.
Of everyone that reads this, only a small percentage of those people will actually follow through, for one reason or another.
If you ever wanted to separate yourself from the rest of the pack, now is the best time.
So if that’s you,
goodluck.