TRADING TIPS: WHAT I WISH SOMEONE TOLD ME EARLIER
By Teddy Cleps
I would like to share with you a couple of valuable of tips that will hopefully make you a better cryptocurrency trader and investor – things I wish that someone taught me when I first started, as it could of saved me a lot of time and money. Please consider identifying parts of this guide that are valuable to you, and to further extend your research as all of the topics are just an outline.
When you are going on an exchange to buy some cryptocurrencies, it is vital that you know beforehand what exactly the strategy is behind your purchase.
Are you buying with the intention of selling at the end of the day or are you ‘hodling’ for the years to come?
Can you afford to stay in front of the screen the whole day or you can only dedicate a couple of hours per week/month to crypto?
Are you looking for a 5% or 500% return on your initial investment?
Ask yourself these questions before you buy as the trade requires drastically different approaches based on your initial strategy.
Is when you open a position only for a few minutes/hours. The idea is to get in and out profitably as quick as possible. I personally like to watch extremely short time frames ( 1, 5 and 15 minutes ) when identifying entry and exit targets, whilst focusing on the 1h to 4h trend and its volatility – as the daily, weekly and monthly trend will not impact your strategy.
Is relatively similar to scalp trading, with the only difference that your trade will have slightly longer duration, anywhere from a couple of hours to an entire day. I personally consider short and medium time frames ( 15, 30 minutes ) when identifying entry and exit target, whilst focusing on the 4h and daily trend and its volatility. Similar to scalp trading the weekly and monthly trend will not impact your strategy.
Starts to require less screen time as you not profiting on the short term volatility but on the actual formation of the trend, which doesn’t happen over night but can take up to a couple of days or weeks. Entering a swing position I consider medium time frames ( 1 and 4 hours ) when identifying entry and exit targets, whilst focusing on the daily and weekly trend. Here knowing what is happening on very short time frames is not required, as they will not impact your strategy.
Is by far the most relaxed strategy, because you will not have to check charts for weeks, months or years. The purchase here is purely speculative, not based on the technicalities of the chart but on the fundamentals of the project, as you are hoping that after a time people are actually willing to spend a lot more for those coins than you initially did. Here when spotting for entry and exit targets I like to watch long time frames ( daily and weekly ), whilst focusing on the weekly and monthly trend – as anything shorter will not have an impact on your strategy.
Every strategy requires a well defined plan – it is important that before every purchase you know exactly what you are doing ahead of time. It is not enough to know that you are scalping, swing trading or hodling as you want to have clear entry, exit and stop loss targets regardless of the length of your trade.
I strongly suggest before opening any position to always know:
where you are going to buy; this can be done by identifying supports
where you are going to sell; this can be done by identifying resistances
where you are going to sell at a loss; this can be done by identifying a level below the support based on the percentage that you are willing to lose
Having clear targets will help you avoid situations where you are panic selling and fomo buying, possibly the main cause of why your trades may not be as profitable.
Automating my trades has drastically improved my trading experience for two main reasons:
It removes my emotions
Emotions are the worst enemy of traders, as you can have a great strategy and plan in motion, but your emotions are often responsible for making you take negative impulsive decisions. I’m pretty sure that we all panic sold because price retraced more than we expected to then see it bounce and hit your exit target, without you being on board.
Automating my trades allowed me to chart, set my targets and let it run alone. If you are right, good you made a profit! If you are wrong, no problem your stop loss gets triggered.
Since automating my trade I spent drastically less time looking at charts or logged within the exchange – whilst still having the same results, and arguably even better.
Traditionally you have to:
Go to the exchange and place a buy order.
Wait for target to hit and for your order to get filled.
Once you own the coins, you can set a stop loss order.
Wait for price to go higher, away from your stop loss.
Once you are ‘safe’ you can remove stop loss and place exit targets.
Wait for exit targets to hit.
This is incredibly frustrating and time consuming, as typically exchanges do not allow you to set multiple orders with the same coins – meaning that you cannot set the same coin on both an exit target and stop loss order.
With a trading bot you have to:
1.Set buy order, exit target and stop loss
2.Wait for exit targets or stop loss to trigger.
This makes your trading experience a lot better as you simply have to do your technical analysis, set your orders (all at once) and wait for the trade to execute – without having to spend unnecessary time in front of the computer.
On a daily basis I use a website called 3commas, and I am genuinely a very happy customer. Otherwise I wouldn’t recommend it to you!
Keep It Simple
A common mistake that new analyst/trader make is to immediately add a bunch of indicators to their charts, unaware of how valuable it is to have a clean and simple analysis – as it allows you to focus on what really matters, supports and resistances.
You can argue that the majority of indicators still have an element of support and resistance within it ( Moving Averages, Ichimoku Clouds, Bollinger Bands etc); underlying how important it is to have the ability to successfully identify support and resistance levels and know how to behave accordingly based on different reactions of price within those levels.
All you need for a great analysis is 3 tools:
Having many indicators at the beginning can be very overwhelming, and often they will negatively impact your analysis. People often underestimate the amount of research and study required to thoroughly understand the technicality and value of each indicator.
This is one of the most important points of the whole guide, you need to practice – a lot.
Paper trading simply means that you are not trading with real money and that you are practising; there is absolutely no point to enter the market with no experience whilst using real money. Imagine how great it is if the first time you traded you already had a good success rate, confidence within the overall market and already identified your main weaknesses and improved them. There is absolutely no point to blindly enter the market as you will certainty make a lot of unnecessary mistakes and lose a substantial amount of your disposable capital throughout your learning process.
There are various effective ways to paper trade:
Trading View will allow you to draw charts and save them, meaning that you can draw support and resistance lines and use them as reference of “entry and exit” targets – and monitor overtime how price moved within your levels.
Trading Simulators are a great way to start trading, as they offer a similar experience to real exchanges. Unfortunately way to many people join exchanges like Bitmex in hope of making a lot of money by trading with leverage, but 99% of them end up unnecessarily loosing a big chunk of their money in a short period of time. Easily avoidable if enough time was dedicated by practicing on Bitmex’s official simulator: https://testnet.bitmex.com/.
Paper Trading on a notebook is still part of my daily routine, as I thrive to improve my trading technique on a daily basis – I typically go through a list of coins and write on a piece of paper:
COIN X: entry level (X) exit level 1 (X) exit level 2 (X) stop loss level (X) And check at the end of the day how these trades performed, and eventually learn and improve from the ones that performed badly.
The tips above will not turn you in to a professional trader overnight, as the art of analysing and executing trades takes a long time to master. What I am hoping to achieve with this guide is to somehow improve the structure of upcoming traders – as all of the point above are vital to be a successful trader.
Every experienced trader has:
Spent a lot of time practicing on trading simulators/paper trading.
A strategy in place, they know exactly the potential return and time frame of the trade before they execute it.
Clear targets of where exactly to buy, sell and sell at a loss.
Started with simple a analysis and gradually, introduced indicators after they were thoroughly studies and understood.
Eventually automated part of the execution, great for emotional distance and time management.
Article written by @TeddyCleps
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