Doctor, I Think My Crypto Isn’t Feeling Well
Does your crypto investment need help?
I belong to a small Facebook group community called ‘Filipino Bitcoin Traders’, and there are times that I receive several private messages from co-traders asking for suggestions on how to improve their trading performance.
The scenario I have in mind is like playing a doctor in trading (and no, I’m no doctor, not even a financial advisor). As with anyone else, I’m also a trader/investor in the cryptosphere. The only thing I have is I’m more passionate about sharing my ideas in the group.
When you go to the doctor’s office, saying ‘I’m not feeling well’ is not enough. The doctor needs to identify your problem and examine your symptoms, and most probably request you to attend additional screenings like blood tests, ultrasound, etc.
Likewise, you asking ‘I’m losing on cryptocurrency trades, and I don’t know what to do’ is like hypothetically asking, ‘my crypto isn’t feeling well’. It is not enough to assist the trader in reaching the other group’s other mentors and me.
We understand that everyone will experience bumpy trades. The market goes up and down, and that’s how it’s going to be. It’s not a straight uptrend all the time.
Despite having a strategy, disciple and process — it’s all based on probability. The market doesn’t give a f*ck about us. The market will move in the direction it wants to go.
If you found yourself in this situation, here are some of the things you need to get through with it and possibly become a crypto winner in the end.
Know what kind of trader are you
First, assess yourself if you are a :
Scalper — trades the market within minutes. The maximum chart timeframe the scalper should go for is within 5–15 minutes. The trade should be strictly closed every 15 minutes, whether for a profit or loss.
Day trader — trades the market within the day. The chart timeframe should be set for four hours, eight hours to one day. The transaction should be strictly closed for the day, whether for a profit or loss.
Swing trader — trades the market within several days to weeks. The trader should set the trading timeframe for a day, but the transaction can be open for several days.
HODLer — HODL means holding on for dear life. It is also a meme word that entered the cryptosphere that came from a wrong spelling of HOLD. This position is more into holding and investing for an extended period regardless of any market trend.
Once you know what kind of trader are you, you can now set your chart timeframe and strictly open and close your trade on that specific timeframe.
Set a risk-reward ratio
Every trader should know how to put a stop loss on every buying opportunity. For every trade, the maximum amount of loss should be -2%. You are risking that -2% for a potential reward that you may gain.
This does not apply to HODLers because most of the time, people who invest in cryptocurrency does DCA (Dollar Cost Averaging) and doesn’t watch the chart closely nor the market on daily basis.
Keep a trading journal.
Every trader should do a self-review process on past trades to investigate if the strategy works or not. You should know what works strategy works for you and want doesn’t so you can assess your future movements.
Set aside your emotions.
The hardest part of trading is trading-with-emotions. As human beings are emotional on a winning/losing trade. We act extremely happy when we gain profits and extremely hurt when we lose. Those times, we tend to forget the strategy and we get greedy and fearful.
Practice not to let your emotions control the outcome of each trade. Being a consistently profitable trader is not about how well you gain on that trade; it’s about how well you execute every trade.
Do not use LEVERAGE.
Leverage is like gambling. If you are using even a minimum x2 on your trade as leverage means you are already using the money that you don’t own in the first place.
Do a 50/25/25 rule.
A 50/25/25 rule for cryptocurrency suggests owning 50% of the largest asset, 25% on the second largest and 25% on other alternative coins.
*For example, I invest on 50% bitcoin, 25% ethereum and 25% other alt coins. (not a financial advise).
I invest largely on bitcoin is bitcoin is the king of all cryptocurrency. If you have been in the market long enough, you will find that if bitcoin is winning, so does other coins, however if bitcoin is losing, other coins almost do the same. Alt coins mimicked the movement of bitcoin.
The other 25/25 rule is to invest in coins that have well-thought projects that will have a significant part in changing the future in terms of new legal tenders.
Cryptocurrency trading is not for everyone.
Harsh words mean unpleasant truths. The most volatile market there is cryptocurrency because the market is open 24/7. That means no timeframe is perfect for cryptocurrency trading.
Why is that?
Let’s say, for example, you are a swing trader. You have your strategy set and already at a 10% profit. It’s 10 pm, and you want to go to sleep. Unfortunately, you forgot to put a stop-loss. You woke up at 7 am and found yourself at a -15% loss because some well-known guru tweeted a crypto FUD in a different timezone.
Yes, this happens during the time you thought everything is smooth sailing then put a crap in your head while you sleep.
Before you invest yourself in cryptocurrency, you have to study the market and its influence in the world first. Gain some knowledge in blockchain and the projects behind each coin, then check to see if you will just play the trends or stay for a longer period of time because you believe that cryptocurrency will be the new currency of the future.