A professional trader is someone who makes their living by trading. Different people will have different opinions on what it takes to be a professional trader. Nobody that earns income from trading is wrong about how they earn, some of them may just earn differently. There are, however, a few guidelines most successful traders will present to you.
First things first, you need to start saving. You need capital for anything in life, not just trading, but especially for trading. If you are an average trader, you can look to take 5-10% in profit away from the market each month. That is a pretty high standard to be calculating your projected income. Even at this standard, you will need a balance of approximately $30k to yield roughly $3k per month.
The futures myth
Do not let anyone talk nonsense into your head about leverage. I will be straight up with you here and now. It is entirely possible to win big with a small amount of capital and leverage applied. It is however not practical, and you should not expect that it will happen to you. It takes precision and risk tolerance in order to successfully trade futures consistently.
You should not attempt to begin a trading career based on the idea that leverage will provide for you. Leveraged trading is a tool that can be beneficial if utilized properly. Using leverage is trading with someone else’s funds. You need to have your own funds to trade with. You can try to play futures and win big, but that is almost like trying to win big at the lottery.
Don’t go thinking that if you do not have $30k ready to go that you can’t get started. You can get started with $100. In fact, it is recommended to start with a small amount of funds. There are many things you will need to understand and work through before you can become consistently profitable, so it is not advisable to show up with your life savings. You can gradually trade up your account until it is of a larger value that can sustain your lifestyle and free you from your day job. Until then, keep saving.
Make Time to Study
You have to study! There are so many things you can read up on it’s not even funny. It almost seems as if there is new information that comes out each day in regards to crypto. The most important things to study related to trading are:
– Technical Analysis
– Risk management
– Emotional management
You will also need to take the time to study the price action history of assets you are interested in trading. Becoming familiar with an assets market structure is key to making decisions about price movements.
Some of the most basic tools you should familiarize yourself with are TradingView and CoinGecko. TradingView is used by many traders to analyze and document data about price action. CoinGecko is where many traders go to get reliable information about tokens and where they can obtain them.
Create a Trading/Investment Plan
You need to have a plan for retaining profits in a volatile market. Emotions can take over a trader without them even being aware sometimes. One example of this is a time of great market growth where traders feel invincible and start overexposing themselves. If a trader has a solid strategy, a solid risk to reward ratio, and a plan to keep everything in line, then that trader is far less likely to succumb to emotional rationalization.
Additionally, a trader needs to know how and if he wants to compound trade the account (% of equity) or if they will be using a standard base. If they are using a standard base, at what increments will the base be adjusted?
For example, a trader with an account size of $1,200 wants to compound trade their account and decides their base entry size will be 16.67% of their account value. They would trade with $200 starting out and maintain an entry size of 16.67% compared to their total account value whether it increases or decreases.
The trader that wishes to use a standard base would take each trade with the same amount of money per trade. This type of trader would set overall account guidelines to increase or decrease their base amount as their portfolio grew or shrank. Using the example parameters above, the trader may wish to enter every trade with $200 until their account value reaches $2,000. At that point they may increase their base amount to $225 until their account value reaches $3,000, where they would increase their base entry again.
Make Time to Trade
After you get comfortable with your TA, introduce a small amount of money to start really training your risk and emotional management. Trading requires a great amount of pre-study, but it also requires a great amount of active study. You have to take what you have learned and apply it to the markets. ALl these patterns you have read about, the trend lines, support/resistance, you must put it all together now and start sampling trades.
Test different strategies until you can find a few that will increase your balance in the most efficient way. When you find winning strategies, figure out how to recreate them. Take hundreds of trades, thousands of trades if you can. Amateur traders lack the confidence to execute trades due to a lack of execution. You have to get out there and expose yourself to the different market conditions in order to analyze them. Interpret the data you are witnessing and figure out how to work it into your future trades.
Taking trades is not something that will come easily. It will become easier, but never easy. Before you take each trade, you will likely face some type of irrational thought related to losing your money because after all, nobody wants to just throw money away. That’s what a losing trade is though, money thrown away. Get over the fear because it will never go away. The fear will be reduced as you become more aware of the possibilities of the market and how you can combat them. You can visit Crypto University to start your crypto trading journey!
By viewing any material or using the information within this publication you understand that this is general education material. You cannot hold any person or entity responsible for loss or damages resulting from the content or general advice provided here. Trading cryptocurrency has potential rewards, but also potential risks. You must be aware of the risks and be willing to accept them in order to invest in the markets. Only trade with funds you can afford to lose. This publication is neither a solicitation nor an offer to buy/sell cryptocurrency or other financial assets. No representation is being made that any account will or is likely to achieve profits or losses similar to those discussed in any material on this website. The past performance of any trading system or methodology is not necessarily indicative of future results.
Written by Edward Gonzales © Crypto University 2022