Keys to Success:
- Disciplined execution - don't make trades off of emotion (fomo, make back losses, etc.)
- Disciplined planning based on both market opportunity and risk management.
- Life balance. Take Breaks. Maintain cool.
- Internalized experience (skill) to sometimes, but very rarely, change the trade plan.
Trade Management Tactics:
One tactic I use is 1 stop and 3 targets. (the number of stops and targets is based on what the chart is telling me).
The 1 stop 3 target method will create 4 scenarios:
- All 3 hit stop - this is maximum loss, and should be no more than 10% of position.
- First position hits Target 1, but 2 of the positions hit stop.
- First Position hits Target 1, the second hits Target 2, and the third hits stop.
- All 3 hit their targets - this is maximum gain and should be at least 2x, preferably more than 3x the maximum loss. (If maximum loss is 10%, this maximum target should be at least 20%)
Understanding the gain/loss for each scenario is essential to maintaining your cool.
Profile of Methodology
- Will often miss big swings and pumps because we are in and out of the market. This is a more risk focused than profit focused approach.
- Profit will be based on the margin between winners and losers. There will be numerous losers, but winners are larger and hopefully more frequent. Basically, it won't be based on making 1000x on one trade.
- Relatively high transaction fee due to short-term trades. It is also more taxing than just holding bitcoin. But hopefully the work pays off.