Category: Crypto

Crypto markets extremes can be BIG PROFITS. Once we know markets go to extremes, and we know how to measure it, we can put that on our side. Very few traders wait for that advantage, and fewer still are prepared in advance to exploit that advantage.

And that’s what this video is all about.

I’m sure you’ve heard the Cliche ‘cut your losses, hold your winners’, this will keep losses small, but it misses a second factor every pro uses to exploit the advantage of market extremes – for the big profits.

Most of your money from trading is going to come from trades that take off rather quickly from when you put them on. That is the reason today’s video is so important.

As crypto traders, we are after a better return than most would consider fair in any other investment.

Many crypto trading plans have the trader in a position at all times, the thinking being that the market is either going to go up or go down. Perhaps you have been trading crypto this way, and maybe making 60% correct calls and still struggling to consistently grow your portfolio. Often, trying to guess every market move just encourages over trading, second guessing and a string of small losses.

1. Our first risk control rule for crypto trading keeps us protected from our lack of certainty and the second risk control rule helps to enforce the certainty in those crypto market extremes that do prove correct.
2. This is the second part of two special videos on risk control. If you haven’t watched the first one already, be sure to go back and watch the video on Rule Number One.

Without a correct method to keep you in your winning trades and to press your correct positions, you will never recover much beyond your losses.

When your trade is correct you must be bigger at that time. This will require a rule, a strategy, which is designed around adding to winners in an unfavorable game to come out ahead in the long run. And here it is:

Rule #2

Press your winners correctly without exception.

Sounds pretty elementary but correctly is the key. What you hear quoted most of the time is “cut your losses.” Cutting your losses is vital for survival, but you need this pro strategy if you want to make profits.

There certainly will be debate on how you know when to add to a correct position and on how a market can turn a correct position into a wrong position. I’ll get into specifics in a later video when I show you the flow chart for ‘The Five Stages Of The Trade’ – it is so important because Rule Number Two shows up in three of the Five Stages Of The Trade.

I’ll share our most important add-on plan at the end of the video, but first, let’s unpack this – and get a birds eye view of this Pro Tactic.

Press your winners correctly without exception.

Rule #2

Be sure to watch our video on ‘the 2 mistakes that all traders make’.

Rule 2, it states only that you must add to correct (proven) positions and that it must be done correctly. The rule makes no exception on adding to correct positions. The intent of Rule 2 is twofold: Reinforce your correct position both mentally in your thinking and your execution and to increase the size of your position.

The rule does not tell you how to add, as this is your requirement in the trade plan you develop.

Trend traders will start small and get larger when they are correct, but day-traders will start larger and get smaller when they are wrong.

Trading Crypto In The Long Term

These two rules are to give you the long-term ability to continue to trade with the least amount of drawdown and the best possibility of making the most money in the long run.

Huge drawdown is the critical reason some traders go out of the business. You must start your trade plan with rules created to protect your equity. I am presenting those rules to incorporate into your plan. Experience has proven these rules a necessity in survival and reaching your objective of making the most return with the least amount of risk.

It’s easy to focus on the predictions, on the potential profits, and unknowingly put the risk control rules on the back burner.

In the last video we focused on Rule Number One, the strategies that will keep you in trading for the long-term. This keeps risk small at the start of the trade – but there are times when we want to increase our exposure to a market when our position has been proven correct.

You will become the best trader you can be by being wrong small, not right small! Get that in your mind now. You are going to have to press your winners if you really consider yourself to have the ability to make a living or extra income from trading.

Otherwise, face the truth that you are only playing to break even.

Strategy For Adding On To Successful Trades

Correctly adding to a proven position must be organized so that a top-heavy trade isn’t established because that will ruin a good trade in a minor reversal. Each add onto an original position should be done in smaller and smaller steps.

As an example, if you had a $6000 trading account, and you planned to put 10%, or $600, into a specific trade. Put $300 on as your initial position, add on another $200 if your criteria are met, and be prepared with an additional $100 to add if the position continues the trend. This gives you twice the original position size when all three positions are in place. I practice using a 3:2:1 ratio in establishing a full position.

All credits for this work go to Phantom of The Pits and thanks to Art Simpson for permitting me to share this work.

What would happen if you could go from struggling to profitable in your trading with two simple rules that could shift the odds into your favor?

Crypto Trading Risk Control Rules

Many of you have experience with trading already. These trading rules have provided some of our students with a flash of insight that immediately improves their crypto trading results, and others, like myself, may need a bit of study to build the belief around the profound shift.

And if you are new to trading crypto, and you are looking for a Beginners Guide to Trading Crypto, learning this approach at the start will definitely improve your odds of success.

Before you consider placing a speculative trade,
you must be able to repeat these two key rules
from memory – out loud – without reading them.

These two rules are simple to memorize and state. That’s part of their beauty. But these two short and simple rules have profound implications on your trading – no matter what trading methodology you may favor, be it chart patterns and technical analysis or be it fundamental analysis and news events… these two rules can shift the odds in a game that is normally stacked against you.

If you are serious about making money trading in any markets – learn this before you trade, think about it, practice it, just as a pilot learns and practices in simulations before they fly for real.

Profitable Trader Shares Common, Learned, Habits

The people who are profitable generally share common methods, common standards and common rules that they all abide by, even if they are wrong 70% of the time and right 30% of the time – they can be profitable in today’s difficult crypto markets.

You may have been trading cryptos, maybe making 60% correct calls and still be struggling to make profits. If this is the case, I invite you to imagine what would happen if these two rules actually did tip the odds into your favor and help ensure smaller losses and bigger profits!

More Than Buy Low Sell High

Correcting Common Trading Mistakes

One student wrote in: “I was trying leverage trading this week on gold and silver and I noticed I was really anxious of being at loss and I notice that I would get out very quickly if I’m in profit.”

This is a wonderful example of natural human emotion, and it’s the reason you want to start off small, with no leverage at the beginning.

Just play. Just get used to it. At the beginning you have to learn not to be anxious about a loss, you have to expect it, plan for it. It’s part of the work that your money is doing on your behalf.

We must change our thinking about the difficulties of a loss. Instead, start with the perspective that the loss will help protect you against the nasty things the market can do.

They who lose best, are the biggest winner in the end.

I’m so very grateful for that comment because I also have the same emotions many times in my trades! …especially if I’m over-trading with a position that is too large, or if I’ve put on a trade with too much leverage and my stoploss is too close to the market.

I offer these lessons that I have learned, and that I am practicing – as guidance, but it is your own determination that will make you a success. I can share the knowledge, but it is your efforts that will make these rules into a belief and a habit.

These two rules will be responsible for protecting your assets, and will help to keep you in the trading game forever.

I can be very costly to make mistakes in trading. You don’t need to learn from your own mistakes in trading, you can learn about correct trading from observing others. I am happy to share them if they shorten your road to success.

Preparation For Crypto Trading

First, in your crypto trading career you will find that the markets go back and forth without going anywhere a lot of the time. Second, in your trading you will find you do not ever control the market but only your position. You can stop your position wherever you wish. I want you to drill that into your thinking also. You can stop the market’s effect on your equity any time you wish. Simply stop (remove) your position.

You must realize you are required to work with your positions and not let the market work on your positions.

The main reason I’m creating these video tutorials is so that I can become a better Trader myself. There have been times where the market did a total surprise to me and I got killed in the market, taking big losses. And after the fact I wondered what I did wrong in my Trading and what I discovered was I didn’t even know what the right thing was.

Fact is I had not taken the time to consider what a big move could do to my trading account. You may hear the cliche that the BIG money is on the surprise side. What this really mean is that the BIG LOSERS are on the familiar side or the expected side of a trade.

Today we’ll uncover the two keys that separate the big winners and big losers.

Plan For Bad Luck

We must plan for the assumption that the trade will go against you as long as it is a possibility and not just when it is probable. This is a very important point in trading correctly!

So here is Rule Number one:

In other words, the one criteria for removing a new position is because it has not been proven correct. We do not wait to remove a position until the market has proven the position incorrect.

There is a big difference here.

If the market does not prove the position correct, it is still possible the market has not proven the position wrong. If you wait until the market proves the position wrong, you are wasting time, money and effort in continuing to hope it is correct when it isn’t.

Hope is a beggar.

Lets consider the kind of thinking that might keep you in a losing position too long

Who is to say a position that was not proven correct turns from a bad position to a correct position?

If we fear being wrong when they get out and we are worried that the market will show us we should have stayed with the position, then we don’t take early losses when they are small, and it becomes more difficult to take a loss as it gets larger.

It’s the occasional big losses can take away the money you had working on your behalf,
and it’s the big losses that demoralize you, and take you out of trading.

Our first job, our primary responsibility is practicing the swiftness needed in keeping your losses as small and quick as possible. It won’t always prove to be correct, but you will stay in the game this way, you will avoid the big losses this way.

I didn’t know what my choices were when it comes to assumptions about what is possible in trading. I started with the assumption that my job was to make money by trading, but this totally backwards. My job in trading is to take losses quick and small. 

I now know that these ultimate crypto trading risk control rules assume my position is wrong until the market proves my position is correct. It is my job to know my trade is wrong.