Although getting started in trading might be challenging, there is no better time to do it than when the market is in a bearish trend.
During a bull market, trading is seen as being more simpler, and as a result, traders rapidly develop inflated egos as a result of their sudden rise to the position of being the finest trader in the world. Because of this, it is true that if you are able to trade effectively in a bad market, you are light years ahead of the bulk of traders. Bear markets may serve as a significant reality check.
1- Determine what category of trader you fall into.
This is a really significant point from which to begin. You have to choose a strategy, and on the most basic level, you have to figure out what kind of trader you are going to be. Traders that engage in swing trading, arbitrage trading, trading based on fundamentals, scalp trading, and so on are all instances of different types of traders.
There are a variety of elements that might influence the kind of trader that you end up becoming, but some sound advice would be to base your choice on the following two considerations:
- a) What actually fascinates you the most at this moment? If you despise the way it sounds, it is quite unlikely that you will put in the amount of work that is necessary to be successful.
- b) What is effective for your way of living? Dave works a full day in the office, which lasts for a full 12 hours. After that, he returns home to find a wife, five children, and a dog. In all likelihood, he won’t be able to find the necessary amount of spare time to make a living as a good scalp trader.
Bear in mind that it’s possible that the very first item you test out won’t work for you for many reasons. First, you should do some research, then you should make an informed estimate about what you believe would work best, and then should try it out. The worst thing that might happen is that you go through it having picked up a few useful skills and then moving on to explore other options.
2- Risk management takes precedence over technical analysis in terms of importance.
When uninformed individuals think about traders, they typically see elaborate charts with squiggly lines on them that are used to make predictions about the future. Now, when it comes to trading, risk management is more essential than technical analysis for many traders.
However, technical analysis is still quite significant. It is easy to forget how important it is to be able to prepare effectively in order to not just survive but also flourish. Although unpleasant to look at, it is necessary.
The topic of risk management is one that no one likes to discuss since it is laborious and uninteresting. In a word, it involves calculating the possible downside in terms of the amount of money that might be lost in a single transaction in comparison to the potential gain. In addition to this, you need to make sure that you are effectively controlling your exposure to the various markets.
As an example, a competent trader who is consistent may risk one percent of their account on each transaction. A real scumbag, on the other hand, may gamble 100% of their account on each transaction, lose it all, and then start again the following day with a fresh balance. This is the defining characteristic that differentiates traders from gamblers.
3- Establish a standard of conduct, and be sure to adhere to it.
When entering and maintaining a trade, successful and experienced traders will always adhere to a set of rules that they have developed for themselves. In most cases, the rationale for adopting these guidelines is to prevent errors in judgment that are caused by emotions. Trading should never include your emotions, and having a set of rules that you have to adhere to is helpful in achieving this goal.
Now that you are a newbie, there are no rules for you to follow, and you may not even know where to begin. To begin, the development of these regulations is going to take some time, and even if they are finalized, there is no guarantee that they will remain unchanged in the future.
However, I think that in order to even get started, you need to begin trading, reflect on these early deals, begin to see trends, and then allow these observations to mold your rules via your own experiences in the market.
Some examples of trading principles include the following: – Always make use of a stop loss.
- Only risk 1% of every transaction.
- If you’ve lost 5 games in a row, you should take a break for 24 hours.
- Don’t enter fresh transactions on weekends.
If you don’t follow any trading rules, you run the risk of being an emotional trader, but there’s also the possibility that you won’t ever develop any consistency. When it comes to these guidelines, there is no such thing as right or wrong; all that matters is how well they work for you and your approach.
4- Maintaining a trade log for yourself
The next one is directly connected to the concept of having a set of rules. Another essential aspect of trading is keeping a log of your dealings. This aspect of trading is not very appealing, but it is absolutely necessary. When you make a deal, you should keep a journal to record a variety of information about the transaction. Some typical examples are:
- Time and date
- The combination
- The range of time
- Long/Short \sEntry/Stop/Target(s)
- Justification for engaging in the trade
- the capture of the chart from the screen (if not using pen and paper)
- The results of it
Journaling is vital since it will give you data, and you can do it either on paper, using a spreadsheet, or using some sophisticated software. If you do your research properly, you will start to see patterns and find out what strategies have been successful for you. It is possible that it may demonstrate that trading in a certain way has a high success rate or that it will demonstrate that you are a terrible trader while focused on the one-hour time frame.
If you want to improve, looking back on data can help you improve when you can see these tendencies and have the facts to back them up rather than simply ‘having a feeling’ to back them up.
5- Do not make contact with the leverage.
It’s possible that you’ve already listened to this one, but it’s imperative that you do so once again. Utilizing leverage is completely inappropriate on your part. You may be thinking at this point that individuals on Twitter make use of leverage. There’s a good chance that 90 percent of them shouldn’t be employing leverage either.
People are able to trade with higher sums relative to their accounts thanks to a practice called leverage trading. Some exchanges provide leverage that is more than 100 times their capital; nevertheless, this comes with the risk of having prices that are perilously near to liquidation.
It is a powerful instrument that, when utilized in a responsible manner, may be put to use to avoid placing an excessive amount of money on centralized exchanges (we have recently seen the importance of this). On the other hand, it is often used by individuals with the goal of attaining wealth rapidly, and the results are frequently unsatisfactory.
Trading on the spot market is more than sufficient for you as a novice, and it will continue to be so for a considerable amount of time. Trading spot lowers the risk of you blowing through all of the money in your account. When you already have a lot on your plate, you shouldn’t have to stress over learning about leverage since it’s just one more thing you don’t need to worry about.
6- Pay attention to what the market is trying to tell you.
To a large extent, this boils down to recognizing trends; however, keep in mind that the importance of each of these points is contingent on the kind of trader you are and the timeframes you use. Does your trading log inform you that the current market circumstances are ideal for you to engage in trading, even if the conditions are choppy? Is it true that a long-term downward trend is more favorable than an upward one?
Now is the time when we begin to put all of this information together, so let’s get started. Experience is the best teacher when it comes to being able to comprehend what the industry is trying to convey to you. It is the ability to recognize certain market situations and trends based on one’s prior experience.
When looking over a larger timeline, it is unmistakable that we have been in a downward trend (also known as a bear market) for the last year. But for a trader working on a lesser period, who may make money by being bullish at the appropriate moments, this information is meaningless (during a bear market rally for example).
As I said before, it’s possible that the market is fluctuating and turbulent right now. You take a look at your diary and see that trading ranges are really quite successful for you. As a result of this discovery, you come to the conclusion that the market could provide you with an opportunity. Keep in mind that your diary might help you understand this more clearly since it has real facts that support what you’re saying. Trading is a game of probability, not sentiments; thus, you should always base your decisions on the figures.
7- Don’t allow your emotions to affect your trade
Although we’ve touched on it once, separating your emotions from your trading is a very vital practice. Emotions may be a source of many different kinds of difficulties, in addition to having an effect on the decisions that you make.
You may tell that your position has an emotional effect on you if it prevents you from getting a good night’s sleep because you have an open trade. You are probably overexposing yourself, which is not ideal, and you are also breaching your guidelines. You will have an emotional effect if you decide against entering a transaction despite the fact that all of your trading requirements have been satisfied because you are afraid of incurring a loss. Trading is not the place for behavior like that; it is not tolerated.
Trading in the Zone, written by Marc Douglas, is an excellent book that I read to better comprehend the game in which we are now participating. This book led me to become much more robotic while trading, and it helped me perceive trading in terms of zeros and ones, which was really helpful.
If you are unable to control your emotions and this is having a bad effect on your trading, you need to seriously evaluate the possibility that trading is not the right career path for you. It is not for everyone, and that is just OK with us. It’s possible that you’ll come to the conclusion that investing is a superior choice for you; in fact, the vast majority of individuals who go down this rabbit hole come to the same conclusion.
8- Refrain from letting choices be influenced by Crypto Twitter.
When it comes to cryptocurrency and more especially trading, Twitter can be both a boon and a burden at different times. If you know where to search, Twitter can provide you with an incredible amount of useful information and tools. The disadvantage of this is that if you find yourself in the wrong areas, it can be absolutely horrific.
When it comes to trading, I do believe that Twitter can be useful for things such as prompting you to take a look at a specific coin or setup, maybe you find information that you weren’t aware of such as an event that could impact the markets, and so on. I think that Twitter can be useful for things such as prompting you to take a look at a specific coin or setup.
The one thing it shouldn’t be utilized for, though, is to affect your decision-making in spite of the fact that your rules warn you otherwise. There is always going to be someone who disagrees with the concept you have. If you initiate a deal based on your rules, you should go through with the trade and learn from it regardless of the result.
9: Make the most of the opportunities presented by notifications.
This seems like a simple but essential point to make. Not only alert helpful for initiating and exiting trades, but they are also helpful for managing existing positions. Before I describe how I make the most of alerts and their benefits, I want to make it clear that you have access to a wide variety of free alert tools and applications. They aren’t hard to track down at all.
In the long run, reducing the amount of time spent staring at a screen should be the goal of employing alerts. If you have a smartphone, you do not need to spend 12 hours a day looking at charts in order to be successful. All you need is a smartphone (again, relevant to what type of trader you become). If you want to join a trade but don’t want to use a limit order for whatever reason, you may establish alerts that will trigger a message if the price interacts with that level or area.
This is something you can do if you want to enter a trade but don’t want to use a limit order. If you are already involved in a trade and have your stop loss established, but you want to oversee the transaction much more closely if the price reaches X, then you may configure the alert to activate in that circumstance as well. These are only a few instances, but maybe you see what I’m getting at.
It is certain that you will be required to leave the home at some time when you have an open position. You will never find yourself in a bind or be taken by surprise if you are able to access your trading account and have an alert app installed on your mobile device.