Authored by: @hetty-rowan
Has anyone already benefited from the posts about the Technical Indicators?
Trading tools… I have already discussed quite a few, and was curious if any of you have already benefited from this. Of course not everyone is a trader, I realize that very well. There are also a lot of people who may not have enough to trade because let's face it. Trading is and remains a risk, and if you only have a small deposit, it may also be an 'expensive hobby', because an exchange also takes fees on your trades.
But for those who have now entered the traders area, I was curious if anyone has already benefited from the indicators that I have described in the meantime. Whether it has already helped you analyze the charts. Because as we know by now, there is secretly a lot more information hidden in it than you initially expect when you look at the candlesticks and only see red and green colors. We all know that red stands for something that has fallen, and green for something that has risen.
Catching myself doing the thing I shouldn't do
And while I know very well that in fact I should never buy a green candlestick, I also regularly catch myself doing exactly that in a fit of FOMO. I have always found red to be a beautiful color, but from a crypto perspective, I am someone who does not like red that much.
Even after 3 years in crypto, I still struggle when I wake up again and see my portfolio in the red zone.
Make a Plan!
Now you may be wondering if everything about trading has to do with the charts and the technical indicators. And then I say NO. Perhaps even more important is that you make a plan BEFORE you start. And that making a plan means that BEFORE you start trading you have to know which coins you want to trade, why you choose those coins, and that you have already made a plan of action before you start.
And a plan of action means that you know what your total amount is that you can use. That you know how much you can lose on your total amount, and that you set a target in advance on which to take your profit.
Below I will describe 10 steps you can follow if you want to start (Day)Trading.
- 1.) Know your Base
You really need to have knowledge about the Blockchain, because that is where the technology of the digital assets that you want to trade is located. Having the knowledge of the technology will give you a better understanding of what exactly you are going to trade, and will therefore help you to better respond to it.
- 2.) DYOR - Yes, Do Your Own Research
In other words, look carefully for all the information about which coins you want to trade. Know the idea behind the coin, find out what they are doing. Who is on the team, are there plans, is there development or is the project standing still? And what are your chances of a profitable trade in this coin? Do you want to make a quick flip for a quick profit (or a loss if you don't pay attention), or do you just step in for the longer term? A site that I used to find some more information about the coins that seem interesting to me is MESSARI, I don't know if you already know them. But at least I thought it was a very interesting website on which other information can be found. And that information can be very helpful when you want to start trading.
- 3.) Research your intended ALTcoins carefully
This actually ties in seamlessly with point 2, because you have to be careful, especially with less well-known ALTcoins. Many are in the 'pump and dump' scenario. Where you can indeed take a big profit if you are lucky, but make even more loss if you are unlucky. So again here, KNOW WHERE YOU ARE GETTING IN.
- 4.) Choose your Exchange
An open door really, because we all know that we need a crypto exchange to trade cryptos. Nevertheless, it is also worthwhile to take a good look around here because there is quite a difference between these exchanges. Think of the fees you pay per trade. Also think about KYC, think about which, and how many cryptos there are on that particular exchange, and which pairings are available.
- 5.) Start with a Trading Journal
As soon as you start, (preferably with a small amount), you start keeping a Trading Journal. In it, you write down exactly what you do, why you do this and what the result is. No better teacher than yourself. You can always read why you did something and what the result is. When reading back, in the case of a loss, you can try to see what you could have done differently, and in the case of a profit, you can look back at how to repeat this again.
- 6.) Learn to use Market, Stop and Limit Orders effectively
The market order is the simplest transaction. It is the immediate purchase or sale at the market price of the currency.
Limit order is the setting of the price you want to pay or receive when buying or selling the coin. When the limit is reached, your account will immediately complete the transaction.
Stop orders reduce the risk of losses and guarantee more profit in a successful price movement. If the price of your coin falls when you have gone long, your coins will be sold at a specific price to limit your losses. Watch out! In the event of an acute sharp fall, the price can shoot through the stop order.
Teach yourself to ALWAYS place a stop order (stop loss)!
- 7.) Find out which analysis suits you best
Various analyzes are possible. And not all of them will suit you. Discover which analysis suits you best, and make good use of it. Consider, for example, a Fundamental Analysis (this is in theory a counterpart to the Technical Analysis). With the Fundamental Analysis you mainly look at the coin itself, the team, the developments, the strategies, etc. As the name indicates, you look at the FUNDAMENTALS of what you want to step into.
Then of course there is the Technical Analysis where you mainly study the price development, the peaks and troughs in the price trend. Then you have the Sentiment Analysis and Momentum Analysis. The Sentiment Analysis will probably never be used in crypto, simply because it is difficult to get to in the first place. Who in your area will provide you with reliable information about the crypto that is flying through the roof at the time but that your neighbor has never heard of because she only knows the name Bitcoin through the news? In addition, you often do not have time to apply the Sentiment Analysis in crypto because the prices are not waiting for you. The Momentum Analysis is a different story, and I think it is even built into Tradingview as a Technical Indicator and you can use it in Binance. I will describe this another time.
- 8.) Follow the Cryptocurrency news
It is not there for nothing, and a wealth of information is shared in various crypto news sources. Also look around at LEOFINANCE. By reading the blogs here you can find a lot of information, and take advantage of it.
- 9.) Again, NEVER invest more than what you can easily lose!
When trading you are guaranteed to lose. Whether sooner or later, it's going to happen to you! It is also part of it. Accept it, learn from it, but don't let it affect your state of mind. A good trader limits his losses and increases profits!
- 10.) Have an EXIT-strategy!
Before you get into a trade, you determine how much you want to lose, then you know with how much money you can get into the trade. Also determine when you take profit. Write down the point of your target and stop loss. Place your stop order and put your alerts on your targets. It is best to only place orders with the targets if you really do not have the opportunity to trade manually. If you are, then it is better to work with alerts only. That way you don't have to hang in front of your screen all day, but you are ready for the course to approach your target! The moment your first target, it is wise to set multiple targets, has been achieved, you view the market of the moment and decide whether to sell part, sell everything or let the trade continue to your second target.
Let's do an example of a strategy here
An example of a strategy is the 2% and 6% rule. Suppose you have a trading budget of $10,000. 2% is the maximum that you can lose per individual trade. When you place a trade, my stop loss cannot be lower than the point where you lose $200. If a technical analysis indicates that my stop loss should be lowered, you don't make the trade, or you reduce the amount with which you enter the trade, so that you stay below the maximum of 2% of your trading budget. This is long-term thinking!
Remember there are plenty of opportunities.
THERE IS ALWAYS ANOTHER TRADE.
6% is the maximum loss you can have from yourself on your total trading budget. If you have three trades active with the maximum risk of 2% per trade then you would not start a fourth trade until you closed one of the pending trades, with a profit!
Even if, for example, you made 5 trades and 4 of them were aborted by your stop loss, where the added loss is more than 6% ($600 in this example). Then you stop trading for that month. You take a step back, and read your trading journal carefully to learn why you made more than 6% loss in the last month.
Remember that you have to learn to trade. You will certainly make a loss in the beginning, and your first focus should be to minimize your losses through learning to place your stop-loss order. And again, as soon as you start with trading, start that trading journal so that you always keep your own trading history documented, and can read it back where necessary.
If you don't have the discipline to fully dive into these things and everything that comes with it if you are afraid of not being able to control your emotions, or if you simply CANNOT lose money without problems. Then it's time to ask yourself whether Daytrading is the thing for you. There are other ways to still earn from crypto. But always realize, whichever way you choose, ...
Crypto has green days, but also red days. The rate is not the same for a second… 1 Bitcoin is 1 Bitcoin, but 1 Bitcoin is not worth exactly the same for 2 days in dollars. One day that is more and the next day it is less. That applies to most cryptocurrencies, and you have to be able to handle that.
If you can't stand that, if you're not looking for quick gains and you're afraid of the high risk, invest wisely in LBI… because it will never be worth less than 1.12 LEO again.
You can buy LBI at @lbi-token or on the Hive-Engine or Leodex markets.
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