Hello Traders,
I have been full time trading for a little over a year now so I do consider myself very fresh but I wanted to share some things I've learned in my last year for anyone just starting these are in no ways facts and are just my opinions. These are just a few things that I have learned or done that have helped me become a better trader, obviously others are going to have there own techniques and feel free to share. I understand that most of this is going to sound pretty basic to most people and if it does then its not for you and you can continue on. I am writing this series for people that are very new to trading and feel confused with everything on where to start cause I remember how that was for me not too long ago. If that sounds like you please read on.
First of all and a golden rule that I follow to control my FOMO (fear of missing out) is id rather watch a trade happen and miss out on profits then to enter a trade and get caught at the top or bottom of a candle and lose out because price comes down or goes up. Usually when a breakout happens either to the downside or the upside, I take the time to identify the signs that lead to the breakout because most of the time the signs are there and what sets a good trader from a bad trader is identifying them.
Lets talk technical analysis, this is done differently for every single trader, between what indicators they use to how they interpret them and there is a lot of them. My advice is to take this slow, instead of trying to use 10 indicators at once, instead start with around three and really learn how they work with the market and what there signaling to you. Then when you feel like you have a good grasp how they work keep adding to your list but don't rush it or only rely on one. A good four that I would recommend is the MACD, Divergence indicator, Bollinger Bands, and DMI there basic but very easy to read and pretty reliable. The great thing about trading view is that they offer explanations for these indicators and what to look for. After you have found an indicator that you like I highly advise you to test it before you use it, and what I mean by this is pick and crypto that you like and do your own technical analysis on it and predict which way its going to go but don't enter the trade. If your right, that's great, I like to repeat doing this at least three times before doing any entrees, and if your wrong try to analyze what you missed interpreted.
The next part of technical analysis (TA) that can bring you to the next level is learning chart patterns. These together with indicators can keep your portfolio growing. However identifying them correctly is the tricky part because they are interpretative. Some very basic ones to use are head and shoulders, double bottoms/tops, and cup and handle just to name a few, there's a lot. These patterns usually have rules to them that don't necessarily happen all the time, but can help you confirm that the pattern is taking place, from things like volume, and hitting certain Fibonacci levels. That's why just seeing a pattern isn't enough, you need to support it with evidence.
So after you have taken the time to do a TA and your feeling confident to enter a trade its important to have a plan with proper risk management. Having a plan is the difference between trading being fun and stress free or pulling your hair out and making bad emotional decisions. Risk management is a simple concept when it comes to trading, how much am i risking to lose with my stoploss to how much I gain from my intended profit targets. So if your stops loss is set with a 5 percent loss and your profit point is 10 percent then risk to reward ratio is 1:2. We want the ratio to be the best as possible like gambling at a casino but its important to be realistic. Like a 1:1 is not a very great risk to reward but something like 1:10 you feel a lot better on and anything like 1:100 is a lot less likely. Lets talk stop loss, this is very important and something that really takes time to get good at. one big issue that I faced when first starting is that I would set a stop loss but it would be too tight get triggered and then the price would rebound back up. Now the market works in a very basic way where after any increase there's going to be a retracement. Hard part is knowing how much retracement, this is where knowing the Elliot Wave is pretty handy tool. So knowing this when setting my stop loss instead of taking the full amount of what I want to purchase and placing it I will only take a portion of it instead. what this allows me to do is make my stop loss larger at the same risk. Example being if you have 1000 you want to spend on BTC and you only can risk 2.5 percent, place the order for 500 and have your stop loss be 5 percent and now you have a larger stoploss incase of a candle that just quickly falls under the support line and moves back up. Then if the price rises wait for the retracement after the rise and enter the other 500, its again important to know where in the Elliot wave your at so I highly advise you to understand it before you start trading.
Now we're in profits YAAAAAAAA but what now? This is subjective to you and your style of trading. If you follow this example above you can move your stoploss to become what's called a risk free trade. Example being if your first buy was a 10 per BTC and the second buy was at 20 per BTC you can move the stoploss to 15 per BTC and the profit from one would cancel out the loss from the other. This is a nice place to be because now you are either going to make money or breakeven. So now if we see the price continue up wards what now where do I take my profits? Its important to identify the supports and resistances are for crypto cause these can be good places to enter or exit and there easily identifiable by where the price has struggled to either push up or down through. Also very important you will have the Fibonacci levels, they are also very helpful in identifying supports and resistances so I highly advise you familiarize yourself with them. So one technique I've seen people do is what I call the chasing stop loss, basically you just continue to move the stoploss up further guaranteeing profits however you don't what it to high and get triggered and the price continue upwards nor have it to low and lose out on profit. Another thing to do is to have targeted goals where you take some but not all profit. An example of this would be at the first resistance you take 25 of your purchase out then if it reaches a major resistance (one being that the crypto has struggled with many times to break through) or perhaps the all time high (ATH) you cash out 50 percent of your original purchase. Then the last 25 percent can be placed at the next resistance or this is where I like to switch to the chasing stoploss because no matter what your in profit YAAAAAA.
Now one piece of advise I would give is always use a stoploss, some traders chose not to with the mindset that is not a loss until you sell and just chose to stay in the trade until the price returns to the buy in spot. The reason I disagree with this is because while yes this is true, I believe your missing out on other positions that the money could of gone to while the moneys tied up in the losing trade, because you never know what's going to happen in the market (FTX) and it could be days, weeks, or even months before that price returns to that point.
Lastly I will add that sometimes it doesn't matter how much research or TA you do, your not always going to win. All you have to do is win more then you lose. so when you lose try to figure out why before you reenter, keep your emotions out of it. Emotional trades are almost always losing trades, so before you enter review the evidence that supports your decision instead of hoping or wanting the price goes your way because the market doesn't care about what you want or hope for.
The examples used in this are just for educational proposes.
I think I will stop there for now, I have more to share but will probably wait and see if this gets any attention before adding more, so if you found any of this helpful or you think someone would feel free to hit the boost button.
-cub
I have been full time trading for a little over a year now so I do consider myself very fresh but I wanted to share some things I've learned in my last year for anyone just starting these are in no ways facts and are just my opinions. These are just a few things that I have learned or done that have helped me become a better trader, obviously others are going to have there own techniques and feel free to share. I understand that most of this is going to sound pretty basic to most people and if it does then its not for you and you can continue on. I am writing this series for people that are very new to trading and feel confused with everything on where to start cause I remember how that was for me not too long ago. If that sounds like you please read on.
First of all and a golden rule that I follow to control my FOMO (fear of missing out) is id rather watch a trade happen and miss out on profits then to enter a trade and get caught at the top or bottom of a candle and lose out because price comes down or goes up. Usually when a breakout happens either to the downside or the upside, I take the time to identify the signs that lead to the breakout because most of the time the signs are there and what sets a good trader from a bad trader is identifying them.
Lets talk technical analysis, this is done differently for every single trader, between what indicators they use to how they interpret them and there is a lot of them. My advice is to take this slow, instead of trying to use 10 indicators at once, instead start with around three and really learn how they work with the market and what there signaling to you. Then when you feel like you have a good grasp how they work keep adding to your list but don't rush it or only rely on one. A good four that I would recommend is the MACD, Divergence indicator, Bollinger Bands, and DMI there basic but very easy to read and pretty reliable. The great thing about trading view is that they offer explanations for these indicators and what to look for. After you have found an indicator that you like I highly advise you to test it before you use it, and what I mean by this is pick and crypto that you like and do your own technical analysis on it and predict which way its going to go but don't enter the trade. If your right, that's great, I like to repeat doing this at least three times before doing any entrees, and if your wrong try to analyze what you missed interpreted.
The next part of technical analysis (TA) that can bring you to the next level is learning chart patterns. These together with indicators can keep your portfolio growing. However identifying them correctly is the tricky part because they are interpretative. Some very basic ones to use are head and shoulders, double bottoms/tops, and cup and handle just to name a few, there's a lot. These patterns usually have rules to them that don't necessarily happen all the time, but can help you confirm that the pattern is taking place, from things like volume, and hitting certain Fibonacci levels. That's why just seeing a pattern isn't enough, you need to support it with evidence.
So after you have taken the time to do a TA and your feeling confident to enter a trade its important to have a plan with proper risk management. Having a plan is the difference between trading being fun and stress free or pulling your hair out and making bad emotional decisions. Risk management is a simple concept when it comes to trading, how much am i risking to lose with my stoploss to how much I gain from my intended profit targets. So if your stops loss is set with a 5 percent loss and your profit point is 10 percent then risk to reward ratio is 1:2. We want the ratio to be the best as possible like gambling at a casino but its important to be realistic. Like a 1:1 is not a very great risk to reward but something like 1:10 you feel a lot better on and anything like 1:100 is a lot less likely. Lets talk stop loss, this is very important and something that really takes time to get good at. one big issue that I faced when first starting is that I would set a stop loss but it would be too tight get triggered and then the price would rebound back up. Now the market works in a very basic way where after any increase there's going to be a retracement. Hard part is knowing how much retracement, this is where knowing the Elliot Wave is pretty handy tool. So knowing this when setting my stop loss instead of taking the full amount of what I want to purchase and placing it I will only take a portion of it instead. what this allows me to do is make my stop loss larger at the same risk. Example being if you have 1000 you want to spend on BTC and you only can risk 2.5 percent, place the order for 500 and have your stop loss be 5 percent and now you have a larger stoploss incase of a candle that just quickly falls under the support line and moves back up. Then if the price rises wait for the retracement after the rise and enter the other 500, its again important to know where in the Elliot wave your at so I highly advise you to understand it before you start trading.
Now we're in profits YAAAAAAAA but what now? This is subjective to you and your style of trading. If you follow this example above you can move your stoploss to become what's called a risk free trade. Example being if your first buy was a 10 per BTC and the second buy was at 20 per BTC you can move the stoploss to 15 per BTC and the profit from one would cancel out the loss from the other. This is a nice place to be because now you are either going to make money or breakeven. So now if we see the price continue up wards what now where do I take my profits? Its important to identify the supports and resistances are for crypto cause these can be good places to enter or exit and there easily identifiable by where the price has struggled to either push up or down through. Also very important you will have the Fibonacci levels, they are also very helpful in identifying supports and resistances so I highly advise you familiarize yourself with them. So one technique I've seen people do is what I call the chasing stop loss, basically you just continue to move the stoploss up further guaranteeing profits however you don't what it to high and get triggered and the price continue upwards nor have it to low and lose out on profit. Another thing to do is to have targeted goals where you take some but not all profit. An example of this would be at the first resistance you take 25 of your purchase out then if it reaches a major resistance (one being that the crypto has struggled with many times to break through) or perhaps the all time high (ATH) you cash out 50 percent of your original purchase. Then the last 25 percent can be placed at the next resistance or this is where I like to switch to the chasing stoploss because no matter what your in profit YAAAAAA.
Now one piece of advise I would give is always use a stoploss, some traders chose not to with the mindset that is not a loss until you sell and just chose to stay in the trade until the price returns to the buy in spot. The reason I disagree with this is because while yes this is true, I believe your missing out on other positions that the money could of gone to while the moneys tied up in the losing trade, because you never know what's going to happen in the market (FTX) and it could be days, weeks, or even months before that price returns to that point.
Lastly I will add that sometimes it doesn't matter how much research or TA you do, your not always going to win. All you have to do is win more then you lose. so when you lose try to figure out why before you reenter, keep your emotions out of it. Emotional trades are almost always losing trades, so before you enter review the evidence that supports your decision instead of hoping or wanting the price goes your way because the market doesn't care about what you want or hope for.
The examples used in this are just for educational proposes.
I think I will stop there for now, I have more to share but will probably wait and see if this gets any attention before adding more, so if you found any of this helpful or you think someone would feel free to hit the boost button.
-cub