How to Avoid Big Losses When Crypto Trading.

in Project HOPE4 years ago

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Your Basic Results.

One of the first lessons you need to learn when trading crypto is on how to eliminate big losses. When you come to think of it there are only five results you are expecting to get every time you have placed an order. The first is to get a break-even result, second is you get a small profit, third is you get a big profit. the fourth is you get a small loss and the fifth is getting a big loss. Just by eliminating the fifth result, you already have improved your winning strategy to another level.

M.A.E.E.

The said principle is true and can be applied to numerous strategies or approaches in trading. And the way to achieve this is actually part of the basic steps in placing a well set up trade. I don't know if you are familiar with a trading formula called M.A.E.E. where M stands for Market Structure or the Market Trend, A is the Area of Value where you're supposed to place your position, E is the point of Entry where you actually placed your exact trade position and last but not least is your Exit strategy whether you Take Profit or Stop Loss.

Of course, it is quite obvious that in order to minimize big losses you need to have a stop-loss strategy which all depends on your personal risk tolerance. The not so obvious but is equally important is on how to follow the Trend or the Market Structure in order to avoid big losses. The often application of observing the Market Trend is to follow the trend, by doing so, you always have winning results and not the other way around. The other good way to benefit from observing the Trend is you avoid big losses, because you already placed your position in a favorable price position and that you can immediately stop loss or break even when the market moves in the opposite direction.

The Bottom Line.

The bottom line is the first thing you need to check when you are placing your trade is determine where the market is going. Is it Bullish or Bearish? Then place your position in that direction, this way, you not only place yourself to more winning results but that you also avoid big losses. Sometimes, all you need to do is observe some basic steps and it is enough to get a profitable strategy. When you over-complicate your approach that is where you get confused and most likely will get failing results.

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It is even harder to determine if a market is bullish of bearish, remember things could change in a second in the crypto space, it's a very turbulent street but these are good advice by the way

Yes, it can be confusing at times. The technique is to focus on the time frame where you are trading. If you want to see the bigger picture view it in just one higher time frame. What I mean is if you are trading in 1-hour time frame, see it in the 4 to 6 hour time frame or if you are using a daily chart you can see it in a weekly time frame.

I have always believe crypto trading is for crypto expert because the more I tried crypto trading, the more I run into losses

It is a skill that is hard to learn, but it is also the reason why it is very rewarding.

Hello friend, the truth the world of crytocurrencies is not so easy, for many it is difficult at the beginning, it is a matter of practice and of course of study, I am still learning, it is a very wide topic and there are many things that I do not know, but I do know that it is important nowadays.

Yes, learn the basics then create your own trading style. It all depends on your personality and risk tolerance but please don't ignore time tested trading principles.

Thanks for this great post...
It was very useful for me

It was great to read! Kindly take a look at this article, which be helpful for beginners — https://tradesanta.com/blog/risks-of-automated-trading-and-how-to-manage-them