How To Build Crypto Market Positions
I recommend the 3:2:1 ratio for building a long-term, trend reversal position out of a 1-2-3 bottom. But often, in my current state of skill with trading, I find portfolio fully invested right off the start. Because I am focused on strategies for cryptocurrencies in the year 2018, my actual trading has skewed toward anticipating sharp spikes in prices, as I refer to as my ‘popcorn strategy’, below.
My studies are ongoing for correctly building a long term trade.
I use Rule #2 and reserve cash so I can add on to the trade if I am correct. Then I start buying my position with a percentage of the total I allot to this market (max size: 20% of my total equity into any one market).
The beginning of a trade is the highest time-requirement to monitor and make choices. I want to use Rule #1 and assume I am wrong to enter at that time, and I want to get out of that trade if it hasn’t proven me correct – there is a window during the start of a trade that, if it hasn’t proven me correct, then I want to get rid of it and re-evaluate.
Rule #1 Is Hard
And this is hard to do initially. Because you are taking a loss for sure. The loss of the trading fees at least, and it has likely gone against you a bit because it has not proven you correct… so you are taking a loss. But, you will get good at it after putting on successful trades that prove you correct immediately. Know that you will be wrong most of the time is part of the game. And do not permit yourself to feel any loss of self esteem as a result of it.
Starting with a percentage of my trade onto that position – I’m at the highest risk, most dangerous period of the trade – but once it has proven me correct, I start to consider when to buy more so I have a larger position when correct.
Once the trade has moved 1 or 2% above my entry point, I put a stop loss order just above my entry.
At this point of the trade, I’m trading risk free, and can relax and let the market do the work.
When To Take Profits
Knowing when to take profits and exit a trade takes just as much study and practice as learning when to enter a trade. I have profit targets set when I’m entering the trade, and sometimes I have very different profit target strategies for portions of the trade – also prepared at the same time the trade is placed.
Exit targets are set by identifying recent historical support and resistance areas, while profit targets with Popcorn Trading Strategies must allow for surges in prices over a much longer period of time.
Learn three keys to spotting top formations where you should take profits in crypto trading and why you might consider going short.
Learn basic concepts of Hedging your cryptocurrency portfolio rather than selling part of your coin holdings.