Savitar
Member
- Joined
- Sep 23, 2017
- Messages
- 235
DiscipleOfSatan said:
I received some e-books as bonus present of online webinar/trainings, I will upload the ones that do not focus on one particular instrument and can be useful for you (and help to sort out the things you might need)
If you want to invest imto crypt as a form of gambling/betting, then you will only need to learn money-management and basic chart reading, maybe one or two indicators for the application of money/trade management.
An example of money management:
-Do not risk more, than 1-3% of your total account equity (all the money you want to use for crypto investing) if you have overall 2000$ on your account, risk only 20-60 dollars per trade.
This is important because it helps you to avoid drawdowns and blasting your whole account in a few trades. It keeps you in the game long enough to win. Its incredible hard to get back on track if you ignore this.
-If you lose 20% You have to profit 25% to reach breakeven level.
-If you lose 50% of your account, that means you have to profit 100% (=double your money) just to get back at 2000.
-If you lose 75% You need a 400%(!) four-bagger profit get to the level where you started.
The situation gets worse and worse exponentially.
If you risk only 2%, and lose 10(!!) times in a row, your total drawdown will be 20%
Now if you risk 20% your account will reach zero after the 5th losing trade in a row.
The other aspect is risk-reward ratio. If you risk 2%, aim for at least 4% profit or even more.
With a 1:3 risk-reward ratio you can lose 70% of your trades and still be profiatble.
This in pratice would look like this:
1.Your intuition tells you, that GoyCoin will rapidly increase in the future.
2. After looking at the chart and Avarage True Range (an indicator attached to your chart which shows volaitility) is around 5% in the given period (lets say 15 min chart) That means its normal to expect Goycoin to go down 5% even if It's an uptrend. It's just that volatile.
To avoid being stopped out by the normal volatility ("market noise"), you take the double of ATR and set your Stop Loss 10% below the current price at which you entered. (Stop Loss = Entry Price -(Avarage True Range x2) )
3. Calculate your risk :Your equity is 2000 and will risk 2% = 40 Dollars.
That means you proceed to buy 400$ worth of GoyCoin. If worst case scenario happens and the price drops heavily, you willl automatically exit at 10% and lose only 40$, which means you would succesfully manage and limit your risk.
4. Set Take Profit Level: You will aim for a profit triple the amount risked, that is exit after Goycoin value increases 30% and Bank your 120$ profit automatically.
Now this is just a random example, I do not know if this particular strategy would work with cryptos, the point is how to apply risk/money management with only minimal amount of chart analysis.
There are many other ways to trade and manage risk. Some prefer to use a thing called Trailing Stop, which moves your stop level upwards if the prices increases. If Goycoin increases 15%, Stop Loss will be in 5% profit, therefore from this point your playing with the markets money, since its impossible for you to lose money now, in fact you cannot help,but to win at least 20$.
This makes trading a lot less stressful and psychologically challenging.
Determining the timeframe you plan to use and how,often you want to do this is also important, as your entries, stop and take profit levels will all depend on this.
