If you enter trades which make you so stressed that you can’t sleep, those are probably trades you should never have entered in the first place.
This mostly happens because inexperienced traders trade with money they cannot afford to lose and its only natural to lack patience to wait it out in that kind of situation.
You can bear me witness that trades go south most of the time. And when the market is bullish, the journey to the moon is not supersonic.
I’d want you to imagine something like scaling the Towel of Babel.
So, if you’ll survive this kind of journey, you’ve gone to pack a load you can manage.
In other words, ensure you have a trading plan and allocate a portfolio, which represents a percentage of your total net worth that you can actually afford to lose.
Investment experts recommend allocating a portfolio that’s about 10% of your total net worth.
If you’re a true cryptocurrency fan, you definitely know there was a TikTok hype to send DogeCoin to the moon early July. Even I couldn’t miss
writing an article about it.
The hype was initiated by a TikToker by the name of James Galante.
First responders who bought in immediately after James made the call to get rich with DogeCoin raked crazy profit as the hype caught on.
This is what they witnessed.
Dogecoin goes vertical after TikTok hype. Image: Binance
As usual, there were latecomers who jumped on board while the meme coin’s rocket was running out of fuel.
And as expected, they fell from the sky like a rock.
Whoa, a reversal on the same chart. Image: Binance
As we have seen, DogeCoin’s pump and eventual dump is a good example of traders acting on fear of missing out.
And when traders act on FOMO, they can’t sleep until they are totally sure they have lost all their money.
Day trading Bitcoin is a thing with rookie traders. And they love trading the short term range.
But tell you what, this is like having a crush on someone who can never love you back.
If you enter a long BTC position, the screens will likely turn red.
And the reverse is true.
In the end, you’ll toss and turn all night, when it hits you were actually playing Russian roulette with your money.
Higher leverage with less capital equals no sleep. Correct?
This was once my trading strategy. Image: Binance
When traders discover futures trading and leverage, they go nuts.
They are willing to risk significant sums of money in the hope of making a killing.
The only catch is you will never be a hundred percent sure which direction Bitcoin will go.
By trading with high leverage, you only increase the probability of liquidation.
You might actually do all the things listed above and walk away unscathed if you employ thoughtful risk management strategies.
But most cryptocurrency traders either ignore or are totally unaware of risk management practices.
This is something that Flipper always insists on his Twitter followers. He stresses that his success comes from carefully planned trades and effective risk management.
Flipper also uses relatively low leverage (6X leverage)backed by massive capital and well-planned and executed hedges to offset potential losses.
When trades are backed by proper risk management, Flipper says, he’s able to sleep comfortably because he’s assured he cannot get liquidated.
Remember we are in a bull market, the plan is to earn profit and not to lose money. Manage risk appropriately. The writer trades cryptocurrency.