I started trading cryptocurrencies, mostly Bitcoin and Ethereum, around three months ago. Before venturing into trading, I was already an investor with exposure to Bitcoin. I have been trading perpetual futures contracts on Phemex and would like to explain my approach to trading to anyone who’s interested. I’ve been into Bitcoin since 2016 and have a background as a semi-professional poker play.
For a long time I avoided trading because I thought I had no shot at consistently beating the market, and that anyone who tried would need an enormous amount of information and tools at their disposal to have a chance at success. I actually still believe this to an extent, but my goal has shifted away from profit maximization and into capital preservation. I find this to be a much more plausible metric for newer or less technical traders.
Having exposure to bitcoin is risky, even if it’s just a spot position that one is holding long term. By holding spot bitcoin, one is essentially always “long.” While I am a long-term believer in Bitcoin, holding this position is an undeniable financial risk, and I trade mostly in order to mitigate that risk. This means that I often take small shorts, and when my stop loss hits I actually win significantly more money than I lose due to my spot exposure. I actually like it when my stop loss hits and will frequently take out another short near all time highs with the hopes that bitcoin breaks through and I will again get stopped out.
I’ll still take longs, usually low-leverage swing trades, when I find a confluence of indicators or if a number of other more experienced traders are bullish on the asset on short-term or mid-term time frames. I’ll often set my trades here from between 3x-5x leverage and step away from the charts, always with a stop loss and take profit order set.
On that last point, setting a stop loss and a take profit order are important parts of my system. When I set my stop loss, I’ve already accepted the loss hypothetically and judged that loss to be acceptable on an emotional level. It’s important to be honest with yourself here; everybody takes financial loss differently. My take profit orders are also at a plausible level with an emphasis on realizing profit as opposed to catching the absolute market bottom. Sure, I could sometimes be leaving money on a table, but a bird in the hand is worth two in the bush. You can always set more orders.
This is a basic outline of how I make my trading stress-free. Of course this system is far from full-proof: The price could shoot up, hitting my stop loss, and then quickly fall back down. For this reason I try to set my stop losses relatively high and use smaller position sizings. In any case, I’d be entirely satisfied with seeing my small trading portfolio go to zero if it meant bitcoin spiking to new all time highs in the sixty, seventy, or eighty thousand dollar range.
