When trading the probabilities of cryptopatterns, managing high probability trades successfully is more difficult than finding them. Getting in or out at the wrong time can be the difference between huge gains and losses, even if you know where the crypto is going!
Here are some guidelines to manage the funds in your trading account for long-term trading success. Of course these can and should be adjusted to your personal goals and risk tolerance.
You can see this post for terms and abbreviations you don’t recognize or understand:
Step 1 Define your funds
Step 2 Define every trade
Step 3 Determine each trade’s “buying strategy”
Step 4 DEFINE RISK WITH SPECIFIC SCALE OUT STRATEGY
Step 5 Subscribe to Cryptopatterns to trade with the probabilities on your side
Total of your trading account = 100%
Step 1 Define your funds example:
LT Trading Funds 35%
IT Trading Funds 35%
ST Trading Funds 30%
VST Trading Funds (Gambling) 5% (NEVER MORE THAN 5%!)
Step 2. Define every trade:
Define as LT IT or ST. You can use more than 1. Example: You want to buy Bitcoin as both an IT and LT trade. This means you would like to cash some out fairly soon and hold some for the “long term” (months or years)
No trade can be more than 50% of the defined funds.
Example: IT and LT Bitcoin trade
up to 50% of IT funds
up to 50% of LT funds
Step 3 Determine each trade’s “Buying Strategy”
Example: Using 50% of IT and LT funds to buy bitcoin
- 10% when you decide to make the trade (IF NECESSARY TO KEEP FROM RUSHING IN)
then break up rest of funds into 3 pieces
- Invest 20% more before “ideal entry”
- Invest 50% right in the ideal entry range
- Hold back 20% to add once trade pattern is “confirmed”
Of course you could also simply invest 100% at any price near the ideal entry range if you have the discipline to use a specific stop loss that will clearly define your risk on the trade. Many traders cannot manage stops which is why Step 4 must be completed before starting any trade.
STEP 4 DEFINE RISK WITH SPECIFIC SCALE OUT STRATEGY
If your trade turns profitable – you want a “position management strategy” We’ll cover that in a future post. We also have previously covered guidelines for expected returns for ST IT and LT trades — we’ll update again soon too.
Here we cover the more important strategy which is – what if you start losing money?
THE MOST IMPORTANT STRATEGY IS
That’s easy for those not losing money to say but very hard to do when you see your account balance plummeting. This is why you must have a plan before you trade. Here’s one way to do that.
Almost as important as don’t panic is:
Never trade funds you cannot afford to lose. AND Your risk on a trade should never be more than 50% of your anticipated profit.
No trade should be entered if you are not clear on the price where “something else is going on” = you’re very likely wrong and the trade has a low probability of reaching your profit targets.
Whales and bots know where those “trade probably isn’t going to work” points are too — so you need to be a little flexible.
This is why traders always say “they hit my stop then took off without me” Traders always say that, right? Oh, I guess it’s just me.
So a scale out strategy might look like this
Example: BTC sell range 2740-2780.
Try to set stops on your trading platform so there’s no risk of freezing up when the time comes to sell. If for some reason you can’t set stops you want to have this all thought out well before you have to act–then just act.
Sell (close out if short) 25% of position if top of stop range hit (2780 in example) – don’t wait, just sell 25%. Prove to yourself you can be disciplined and sell when your plan says to sell.
Sell 40% when the BOTTOM of your trade range gets hit
Sell the final 35% if the price isn’t back inside your stop range by the end of the day. Sell immediately if drops below bottom of range any time after that day.
NOTE: This last piece of scaling out comes with HUGE risk as price can just keep dropping — so you might want to establish additional rules for scaling out in “crash” situations
It’s a big step in succeeding LONG-TERM if you recognize when your plan didn’t work and taking the actions you decided to take when you were calm and logical about how the trade should work.
If you follow the above guidelines, or a similar scaling strategy that KEEPS YOU SAFE and works for your personal trading situation, you won’t stress about losing trades, and, more importantly, you’ll have lots of funds available for the next trade — and there is absolutely ALWAYS another trade to be preparing for by studying the charts and, of course:
Subscribing to and reading cryptopatterns newsletter so you know the probabilities
This site is for informational and entertainment purposes only and not in any way intended to be investment or trading advice. You are 100% responsible for your financial decisions at all times. It is highly recommended you DO NOT make any investment or trading decisions depending upon what you read on this blog/newsletter!