How To Trade Cryptocurrency With Leverage Beyond Technical Analysis
If you want to do something wrong, DO IT RIGHT.
If I were you, I would not trade cryptocurrency with leverage, and any ordinary trader will tell you the same way. But then again, I am no ordinary trader, and I am only human.
As humans, we want more of something like applying trades with maximum possible gains using a minimum amount in a short span of time.
If you are a fanatic of FRIENDS tv sitcom, there is an episode where Phoebe (who has claimed to be vegan) got pregnant and craved meat. Her excuse was, ‘the baby wants meat.’
Phoebe, who has been fighting the cravings for meat, tries to eat meat substitutes to try and satisfy the baby but ends up nauseous when she eats soy burgers. She finally snaps at the party and devours Chandler’s sandwich. Joey, who is in disbelief at first, introduces her to the more tasteful aspects of meat when he cooks steaks for him and Phoebe.
Joey then proclaimed, ‘if you want to do something wrong, do it right.’
Like Joey, we crave something that is out of the ordinary. As a trader, we crave for more possible gains even if we have the lowest capital ever.
If you want to trade with leverage, DO IT RIGHT.
Any trader will tell you that we do not trade the same way (even if we have the same strategy, indicator, timeframe, etc.). No trader is alike in any way. It’s more about psychology, really. You can memorize all the indicators in a chart, but without a proper mindset, you can never be a trader, and that’s how 90% of traders lose their money.
The only thing we do think alike is to MAKE A PROFIT.
The first time I tried to trade using FUTURES on Binance, I was hooked. I already knew how to trade in a spot, so what was the harm in trading with leverage, right?
One day, I began my journey on trading FUTURES. After only a few days and in a blink of an eye even after a span of winning trades, my entire account got liquidated. I got traumatized that day and was even physically sick. I didn’t see it coming because I was focused on my strategy, my PNL ratio was 80% wins and 20% losses, but I have set leverage at x100 ONE TIME. That one trade swipe off my entire capital.
It took me months to go back to futures trading again when the crypto-verse went down, and I was itching to sell short.
Now, as a self-proclaimed ‘trader-extraordinaire goddess’ (even my proclamation is extraordinary), I have established a well set of future trades with nice profits.
Here are some pointers on what to do and what NOT to do (and if you give me a clap at the end of this article, I will post my profit and loss analysis in a not-so-distant future *insert smiley face here*).
Disclaimer: This article can make you wiser, but I’m not a financial advisor. Always trade at your own risk and do your own research.
Before you read further, the list below is not for someone who is a complete beginner. You should know how to read a candlestick, how to identify trends, how to spot support and resistance, and how to place indicators. Oh, and you should already know how to trade on SPOT.
Here is the list of what to do and what not to do when using Leverage Trading:
- Exercise and meditate in the morning
You might be saying, ‘huh,’ wtf has this something to do with trading?
Let me tell you something. Most of my gains came from a clear head after a strenuous exercise and a 5-min Headspace meditation.
Speaking of exercise, you don’t have to go to the gym either — you can do whatever physical activity you have in mind like dancing, walking, running, have sex, stretch, etc. - anything that will give you those endorphins and glowy skin in the morning.
After I finished my exercise/meditation, I had a shower and ate my breakfast (with a big cup of coffee, of course) then that’s the only time I enter the market.
Having a clear mindset will make you more focused on trading rather than being sleepy or tired.
If you are sick, please do not trade! Rest is as important as being in the trading zone.
2. No phones/tv / no social media should be turned on aside from your chart and your exchange.
Focus is the primary key here. Cryptocurrency is a highly volatile market, and one wrong move will blow your entire account. Why?
3. Focus on your strategy and keep it simple.
There are countless strategies that we can find in social media. Even a simple candlestick reading or support and resistance is better than having no strategy at all. Focus only on 3 indicators and keep it nice and simple. Too many indicators can clutter your trade.
Always keep in mind that there is no such thing as a PERFECT strategy. If there were, all traders would be billionaires by now.
4. Put a stop loss effective immediately.
For every trade, I put a stop loss of 20 USD if my trade went on reverse. You can also have a specific risk percentage or amount per trade. You don’t have to put the same stop loss as mine.
5. Leverage should NOT be more than 10x per trade.
Higher leverage can double your profits but can also double your losses. So don’t be greedy and apply leverage only up to a certain amount, so you don’t risk losing all your capital.
Leverage also means higher trading fees.
Here is the difference of fees as per Binance:
Futures vs. Spot prices — Cryptocurrency prices are determined by buyers and sellers through an economic process of supply and demand. The spot price is the ruling price for all transactions in the spot market. The futures price, on the other hand, is based on the prevailing spot price plus the futures premium. The futures premium could be either positive or negative. A positive premium indicates that the futures price is higher than the spot price; conversely, a negative premium indicates that the futures price is lower than the spot price. Changes in supply and demand may cause the future premium to fluctuate.
More info about trading fees can be found here — https://www.binance.com/en/support/faq/c-4?navId=18#/4/18.
6. Have a maximum amount to trade per day.
I only do a total of 7 leverage trades per day. You also set a different number of trades. For example, you can do a total of ten trades per day. Start from there and don’t trade any more than ten trades.
Suppose you ask me why I make seven trades per day because seven is the lucky number in the bible. I am a believer in the Higher Power. Number seven is a spiritual number with inner wisdom and knowledge. 4 is several hard work and personal efforts, 3 is mysticism and creativity, and that makes a total of 7 . If you are not a religious person, stick to having a specific number of trades.
7. Based on the above, have a maximum of only three losses.
On that seven trades, my maximum daily loss is three trades. If I enter the market on my first trade and lose three times continuously, I will not finish all those seven trades. I completely stop my trade on that day and go back to trading the next day.
8. The chart timeframe should be set from 5–15 minutes max.
Unless you’re not doing any leverage or just using x1, you can do up to 1-hour timeframe. As we are trading with leverage, close the trade on that same day. Don’t even think of having an open trade overnight.
We need to protect our capital at all costs.
9. At the end of your trade, write a journal about your trades and strategy.
It doesn’t have to be complicated. You can do type it in excel or google sheet. You can also write it on paper.
Since I am only doing a total of 7 trades in a day, I can easily write it in my trading notebook.
10. Reflect, rinse, and repeat.
Schedule some time in the afternoon to reflect on your trades. Check on what you did great and what needs to be improved.
If you have made a good trade today, reward yourself with your gains from time to time.
If you are new in futures trading and want to trade on Binance, you can use my referral link — https://www.binance.com/en/futures/ref/jessievi, and you will receive a 10% kickback rate in your first month after your Futures Account Activation.