Blog

Trading Strategies

Here are some some basic rules as a trader that I have written on stickies in front of me so I never EVER forget them (again) and find myself in a position of regret (loss) and the reasons behind these rules.

 

#1 Protect your capital.

 

This is an obvious one but when your in a trade, and as discussed in other blog posts from other traders, your emotions can conquer your rational mindset and take control of the trade usually resulting in lost gains or lost capital which is in contradiction to the first rule. All of these rules that I have created for myself are a subset of big #1 because they were the obvious pitfalls that I fell victim to, and as a fresh trader, that I found myself in constant need of reminding myself of.

 

#2 Set PROPER stop losses.

 

If you’re trading on Bitmex then you will know what I mean when I put extra emphasis on the “proper” part of rule #2. Being on the same page as the ones who actually control the movement of the market really helps. They are going to be seeking liquidity and driving the price to where most people would put their stops in for the most obvious setups. Understanding that fact, and also the general mentality of other retail market investors can keep you from being that flea that gets scratched off of the dogs back and no longer gets to hitch the free ride. (Analogy added for emphasis of the common retail traders position size and market sway vs. institutional money’s). 🙂

 

#3 Never FOMO/FUD!!! (FOMO=Fear Of Missing Out) (FUD=Fear Uncertanty Doubt)

 

When you FOMO into or FUD yourself out of a trade, that is a general term for when you are letting your emotional mindset instead of your rational mindset take control of where the trade is going. These are very common emotions that traders feel when they are in a position and learning to not let them take control is key to keeping a rational mindest and respecting almighty rule #1.

 

#4 Don’t get greedy.

 

Again, these are rules that I was breaking that I personally had to be reminded of when I was in the midst of a trade, so that’s why I have some sticky notes with each one written down on my wall in front of my trading desk, but I feel that they are universal feelings that are probably the dominant aspect of most trader’s regrets (losses). #4 does not need a whole lot of explanation other than when you’re in a trade with profit don’t beat yourself up for not catching the wick. Don’t get me wrong, you don’t want to FUD yourself out of a good trade, but also don’t feel bad about taking profits while the candle you’re riding is still green. Which is relevant to my next rule of…

 

#5 Research your exit & entry/reversal point.

 

Try and follow your given expectations of what price you will enter or exit into or out of the market! This was another one which I felt I needed reminding of so I did not step out of rational decision making and inevitably give in and break #3.

 

#6 After a big win or loss, reflect.

 

When you take a loss or a win it’s important to take as long as you need to reflect on what went well or what went wrong. After all, our experience can be our own best teacher and if we want to respect rule #1 then we need to take into consideration what has brought us to that point so we can learn from your experience. Plus, just taking a minute to step away from your desk after winning or losing allows your emotions to settle and the task of reflecting on the technical aspect of how your trade went down brings you back into a rational mindset. After all we are all humans (mostly) and we all feel emotions. I for one, no matter how hard I try cannot completely shut off my emotions when trading, but I can learn ways to not let my emotions take over my mindset. Recognizing those feelings of FOMO, FUD, and GREED is important so you can prevent them from controlling your trade.

 

These have been a list of my rules I had to keep reminding myself of and also the reasoning behind them. Others may have an entirely different approach for basic rules that they feel will keep them in shape, so that may vary, but all in all I feel that as traders it’s obvious that we are here to make money, so these types of rules we establish for ourselves are created, in the larger picture, to keep us from losing our capital and are probably pretty universal.

 

Thanks for reading and I hope that these reminders help you as much as they have helped me! I’m sure that as I progress as a trader there will be others to add. Shoutout to everyone in the chat room! I have learned a lot about my own trading style by understanding other’s and have been honing the perfection of my strategies thanks to the group reflection and input that can be had in solid company of like minded traders.

 

Written by ChartBulls member -Baxter

Trading Cryptocurrency – Emotion, Fear, Uncertainty and Doubt

With thanks to Trotsky, Matt M. & various other members of the ChartBulls community

 

What is meant by Emotion in Trading?

 

A trader will typically experience emotion numerous times throughout trading, and the above are all a derivative of emotion. Emotion is one of the single largest downfalls of one’s portfolio, efficiency, profitability and enjoyment throughout their time trading, yet there is a lack of material that covers emotional trading and how to negate the ill-effect it has on one’s trading ability.

To trade efficiently and effectively, not only do you need to have sound understanding of the fundamentals of technical and/or fundamental analysis, but one must also proactively make a conscious effort to master control over their own emotions.

Throughout my time participating within the chat medium of the ChartBulls group, I’ve witnessed countless members fall prey to their emotion, only to find their portfolio entirely liquidated, or a large portion of sequential losses crystallised, not so much through incomplete or ill-prepared TA, but more through poor control over emotion.

The following are prevalent when subject to emotion when trading:

  • Closing a position too early through fear of not maintaining the profitable position.
  • Closing a position in a loss for fear of crystallising more substantial losses by holding.
  • Chasing losses by entering a position without sound TA to back up their entry choice.
  • Participating in the ‘FOMO’ mentality by market entering a position during a pump without a defined exit strategy.
  • Ignoring their own trading strategy entirely and ignoring fundamental risk management rules.

 

All of us have been subject to at least one of the above when trading, but in order to maintain consistent profits greater than the losses incurred, one must learn to separate emotion from trading.

Anton Kreil maintains a philosophy that one must ‘treat money indifferently and remain impartial toward it’. This is a quote that sticks with me as to truly experience emotion, a trader cannot trade on a paper account or Testnet and simultaneously experience the emotions that are inherent with trading on a real market.

Exposure of one’s true capital to risk brings forth emotion, and that will only be applied in a real market.

 

Begin Separating Emotion from Trading

 

Firstly, step away from any trading you’re doing if you’re feeling stressed, worried, angry, upset or elated.

Assess your feelings, recognize them, understand them. Recognizing your feelings is the first step to taking them out of your trading equation. If you feel any of the above, step away, relax, read through your trading diary (I highly recommend creating one if you haven’t already!), or find some study material that you can sink your mind in to, just simply take your mind off of trading.

Once you’re able to maintain self-awareness of your emotions and recognize when they will have an adverse impact on your trading, implement a strategy that works for you to keep them out of your trading.

For me personally, I always endeavor to identify my entry, set my planned exit price and my maximum acceptable loss to place stops where those defined points are.

The below key points should be taken into consideration at all times:

  • Always remain vigilant with your own strategy and follow your rules like the bible. No matter how well you think you’re doing, never deviate.
  • Always maintain proper risk management and abide by it.
  • If you lose on one trade, don’t go into the next with the idea that you will recoup those losses, but take a new entry on its own merit, which leads me on to –
  • Always forget about your previous trade, assess a new trade on your TA, and always ensure your TA is well performed.
  • Never forego TA because you’re doing well.
  • Set a stop and leave it if you struggle with emotionally closing.

 

These rules are for those who do find it a struggle to identify, separate and deal with emotion when trading. My thoughts are not applicable to everyone and each trader will have their own defined strategy.

If you’d like to talk about trading concepts or any of my above thoughts, join us over at the ChartBulls trading community!

 

Written by Xivias, ChartBulls Chat Moderator