Two Rules to Become a Successful Crypto Trader!
It is Wednesday and as I am watching videos and reading about cryptocurrencies, I thought I would share with you two important rules I learned and try to implement in my trading to become a successful trader.
Two Rules to Become a Successful Crypto Trader!
These two rules are not new to cryptocurrency trading, but were given by a very successful stock trader, Phantom of The Pits, who used them to protect himself from losing all his money on a bad trade and to earn more on a successful trade.
I learned these two rules from the cryptocurrency trading course I am a student of, and if you are interested to join me, use coupon code "michelsentme" at check out, I will get a small commission and you will get a 20% discount.
Two rules
What do they mean?
Rule #1
Assume you are wrong unless the market proves you correct.
This seems simple when reading that rule for the first time, but how can this help practically?
Imagine that you want to trade $100 and what you read on the chart tells you that it's going to go up. Are you going to place your $100 trade assuming you are correct, and then wait that the market proves you correct or wrong?
If you enter with your $100 trade and you are correct, all is good, but if you are wrong, this will be painful.
So what the rule says is that don't assume that you are correct and place a smaller amount first, like $25 on the trade and wait to see if the market proves you correct.
If the market proves you wrong, then exit the trade immediately and take your losses. You will have lost just a little on your trade. It is tempting to say, "I'm right, and it's going to go up later," and stay in the trade, but if it doesn't then you can lose big. It's better to re-enter the trade later than to gamble hoping it's going to go up.
This is your risk management rule and this will protect you from losing your whole account, and allow you to continue trading for years to come.
Rule #2
Add to your winners without exception.
When the market proves you correct, then you can add to your trade progressively. You may add another $25, and if the market still proves you correct, add the remaining $50. You may even add more to it as the market already proved you correct.
If you already have entered the trade with all the money you have, you have nothing to add to it, and then you took a bigger risk than it was necessary.
Rule #1 and rule #2 work together.
Rule #1 protects your account in reducing the risk of a big loss and rule #2 allows you to earn more on your trade.
I hope this is helpful for you.