A Line In The Water
It’s a pretty basic principle… if you want to catch a fish, you need to have a line in the water. Investing is no different, without exposure, there can be no gains. Gains are directly linked to exposure, and so, the greater the exposure, the greater the gains. This is where leverage can be an incredibly powerful tool. However, it can be disastrous in the hands of an inexperienced trader.
I guess you could liken it to a kid who is yet to learn how to drive being put behind the wheel of a Formula 1 racing car… it’s not going to end well! Leverage accelerates gains, as well as losses, and unless you are skilled in this domain, it can quickly become a nightmare. Even though experience coupled with leverage can be a winning formula, the risks remain. Risk can never be entirely removed.
That being said, one can mitigate risk, and quite substantially, via creative risk management. This is how I am now able to speed up my accumulation without increasing any additional risk. I build multiple positions and then make additions once the market has journeyed some distance from my entry. I am now increasing the frequency by shortening that particular “space” in the price action.
I can then match that lot size and place a trailing stop-loss on the previous position. If the market retraces significantly enough, the worst-case scenario is that the previous position is closed and I am where I was initially. If the market moves up, I am increasing my exposure at an accelerated rate. Ideally, I look for support levels on lower timeframes that are above my entry. In this way, I provide better odds of additional positions remaining open.
If the the most recent position moves considerably lower, the previous position’s stop-loss is triggered at break even, or modest profit. It all depends on how I interpret the market sentiment at that particular point in the journey. With 10X leverage, one can gain a lot more exposure, and eventually, some enormous profits. Despite BTC being somewhat restrained at the moment, altcoins are primed for an altcoin season.
Future Price Action
I expect BTC to trade in the $60K zone leading up to the halving. A bullish scenario could see BTC retesting the local top at approximately $73K. It’s during this time that I expect altcoins to perform relatively well. In a more bearish scenario, BTC loses $60K… this would most likely eradicate an altcoin season. Altcoins may chop around in the interim. However, I believe they will come to life in the coming days.
It’s this conviction that has encouraged me to look at increasing my leveraged exposure. The strategy I have chosen will either increase holdings or in a worst-case scenario, remain the same. Remember, lot sizes are replicated. A retracement significant enough erases the previous lot at break even. Essentially, a powerful market move will give a helping hand. Positions can then be easily increased in the heart of a correction.
Regardless of how bullish a market is, corrections will occur. Most are unaware of the conflict that exists between retail traders and market makers. Essentially, a market cannot move in a single direction for too extended a period. I will most likely expound on this dynamic in a future article.
Final Thoughts
To sum up this strategy, modest market corrections may allow me to increase exposure a lot quicker. In the event of a serious correction, it’s easier to deploy capital, as a bounce is usually to follow, especially in a bull market. My strategies are always designed with a fail-safe. As a trader, you always have to factor in scenarios that oppose your strategy. If you can’t accomplish this, you are gambling.
That’s my viewpoint, anyway. Risk management is an imperative and integral aspect of all my trading strategies. Without it, I don’t think I would be able to sleep at night. Anyway, happy trading… and I will see you in the next one!
Disclaimer
First of all, I am not a financial advisor. All information provided on this website is strictly my own opinion and not financial advice. I do make use of affiliate links. Purchasing or interacting with any third-party company could result in me receiving a commission. In some instances, utilizing an affiliate link can also result in a bonus or discount.
This article was first published on Sapphire Crypto.
Posted Using InLeo Alpha
What do you think of JUP?
A decent long-term hold. It's a DEX like Raydium. However, it's the top Solana DEX now, by MC. RAY is a smaller MC and might still outperform JUP even though JUP has more features. It's a buy when it corrects. Also need to be careful of ongoing airdrops in the future, which will cause pretty decent corrections like we saw during JUP's formative weeks.