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?
I found these rules a couple of years after I started trading back in the 1990’s, after I lost all my money, twice.
I had learned all about entry patterns, but I hadn’t learned anything about risk control.
When I created my first crypto trading course in 2015, I reorganized all the random information I picked up over the years, and placed it into the order I wish I would have learned it.
So I’m introducing these rules in this video series before I reveal my trading plan entries and exits. I want to help new traders establish a foundation that will help ensure that you don’t lose all your money, like I did.
You don’t need to make these mistakes to learn these lessons, you can learn from observing my mistakes. And I’m happy to share them. I paid a lot for them.
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
When I first reveal Rule #1 and Rule #2, they may seem over simplistic. So before I do that, I want to uncover the subtle elements to these rules and consider the consequences over a long time frame.
By the end of this video. you will come to understand the profound impact this approach can have on your trading and any other risky thing you are doing.
No matter what kind of risk you are taking. you want to incorporate Rule #1 and Rule #2 to help you protect yourself against negative consequences, and to make the positive results even bigger.
Once you see how the effects work together to help ensure your profitability – Rule #1 and Rule #2 will naturally become a part of all your trading.
By practicing these crypto risk control rules with your micro-investing, you can develop habits and wisdom that will help you gain similar mastery over your fiat cash stack as well.
Rules for Life
Often these rules can also apply to other areas of your life where you can use them on setting goals, correcting missteps quickly, and boosting the successes of any of your endeavors.
Growing your mirco-investments is a lot of fun! Dealing with money should be fun! And this is a great place to learn and practice success habits with money!
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.
When trading a crypto market, you have to give it room to move. That means you have to trade a small enough position that you can comfortably give it that room to move within the technical levels.
Before starting each trade, it is vital that we prepare the correct position size according to the size of our account equity. It takes repetition and practice. Like learning anything, it will start out difficult, but soon it gets easier, and with practice, it becomes second nature and almost effortless.
Our premium community of traders refer to these two rules all the time. Lets review a few examples in order to appreciate the profound implications that each rule brings to your trading strategies.
Behavior modification, without doubt, is the key to trading success — it starts with how we think, yet we also need to change our beliefs in order to truly change how we act in certain situations.
We must be very clear about the trading situations we can control, and the situations over which we have no control.
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, you must be properly prepared for the trade.
- Second, you will do your work and you will let your money do it’s work
- last, you will do the cleanup, trade tracking and tax reports with CoinTracking.co
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.
In the beginning, it didn’t ever occur to me that I should be preparing for the possibility of a big move against me. I was over-positioned, even though I thought I had a good protection plan, and, I was mistakenly doing the work that my money should be doing.
Everything I did in my trade planning was based on estimates of how much I could take out of the market. My trades were actually designed to lose and the worst part is that I don’t even know my strategy was ruining a good trading system.
Many times, when I thought I was smarter than the market and kept sticking to my predictions… I ended up taking a big loss in such a little period of time. Maybe this has happened to you as well.
Why does it happen? Mostly because my plan didn’t consider, “What if I am wrong?” My thoughts are always expecting to be right… after all, why would I put on a trade if I didn’t think I was correct?
Herein is the key to being a successful trader. I have learned this over and over again in my trading career. I haven’t found any crypto youtuber who will tell you what I am about to reveal.
In trading, if you have bad luck, you will eventually have to stop trading. To be prepared for that bad luck is a requirement in trading. You will not survive if you do not plan for bad luck. My first steps in trading remove the bad luck altogether.
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!
This will be the surprise side in trading. The surprise side is a possible outcome but not a very high or likely probability. Most traders plan only for the probability side and that, to them, is always what they consider the winning side. This is the biggest mistake you can make in trading. Instead, you must plan for the losing side.
Trading is not a favorable game in most circumstances, and that is what we must use as our assumption in trading. The big mistake made by traders is thinking and expecting trading to be a favorable game.
The correct way to control positions is to only hold them once they prove to be correct. Let the market tell you your position is proven correct, but never let the market tell you that your position is wrong. You, as a good trader, must always be in command of knowing and telling yourself when your position is bad.
The market will tell you when your position is a good one to hold. Most traders do the opposite of what is correct by removing positions only when proven wrong.
Think about that. Your exposure and risk is much higher if you let the market prove you wrong instead of your actions removing positions systematically unless or until the market proves your position correct.
You never want to be in a position that is never proven correct. If you only get out when the market proves you wrong, it is possible to have higher risk due to the longer time period required to prove your position wrong.
So here is Rule Number one:
In a losing game such as trading, we shall start against the majority and assume we are wrong until proven correct!
Positions established must be reduced and removed until or unless the market proves the position correct!
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.
If you are hoping your trade is correct, it obviously wasn’t ever proven to be correct. Remove the position early if it doesn’t prove correct. By waiting until a position is proved wrong, you are asking for more slippage as you will be in the same situation as everyone else who is being proven wrong.
What makes this strategy more comfortable is that you must take action without exception if the market does not prove the position correct.
Most traders do nothing and let the market stop them out – and then it isn’t their decision to get out at all — it is the market’s decision.
But this approach will increase your losses. Instead, consider this thinking: When your position is right, you have to do nothing instead of doing nothing when you are wrong!
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.