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- TSP#26: Don't blow your account
Marco Johanning
Hello everyone!
Welcome to edition #26 of my newsletter! Every Saturday I’ll be sending out a quick newsletter on how to master crypto.
Today, I focus on risk management.
Thank you very much for subscribing! The Summit Post has over 500 readers now!
And happy birthday to my dad! 🎉
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How to not blow your account
Protecting capital is more important than making gains.
Each one of you has experienced successful trades. That's not the issue. The challenge lies in not to lose it again.
First step: Have a trading idea.
Next step: You need one point in the chart, where your idea is proven wrong. That’s your invalidation.
Third step: Put your stop loss there. If you don’t have a plan and an invalidation, don’t take the trade.
Don't trade without a plan.
Adjust your stop loss according to your plan.
I bet you know this: the trade is going against you, and the price is just about to hit your stop loss. But you have this feeling…
If everything isn't deceiving you, the price will turn around soon, and you'll end up in profit after all! Quickly move the stop loss and then hope that everything will be fine.
Unfortunately, that's wrong. As soon as you have to hope, as soon as you trade based on feelings, you're on the path to losing!
Never move your stop loss.
Never add to losing positions.
If your idea was wrong, don't get discouraged, don't get angry, never revenge trade.
Always remember, trading is about the process, not the outcome. It's a long-term game.
If your process, your analysis, your trading strategy work, then in the end, you will win more than you lose, even if you are wrong sometimes. And if your process is lousy, then you will end up losing, even if you are right sometimes.
Get these things right and you will succeed!
Always set a stop loss (Did I say this enough now?).
Adjust your position size and leverage to limit potential losses to a maximum of 2-5% of your account if your stop loss is triggered. If you loose 20% of your account in one trade, you made a mistake. If your account size is $100, accept that you can’t trade with $100. Don’t try to get rich fast. It will not happen. But small wins add up and you can make it, if you don’t lose your capital!
Learn to make good technical analysis. Make it emotionless and don’t get too much influenced by the opinions of others. That’s where you get your ideas and invalidations from.
Repeat.
Twitter Reads
Solid advice
Remember this pattern for the bull run #crypto
— Solid 堅固 (@SolidTradesz)
6:21 PM • Oct 25, 2023
Crypto’s future bright?
To expand on this point, I think in the next 3-5 years Bitcoin/crypto will become large enough/integrated enough into the traditional financial system that its failure becomes systematic to the global financial system broadly.
— Will Clemente (@WClementeIII)
6:34 PM • Oct 17, 2023
With my best regards and wishes, I hope you have a wonderful weekend.
Marco Johanning
Thanks again for 10k!