Advantages Of Complex Trading Strategies
Skill Provides Independence
When it comes to income generation within the Crypto space, trading trumps every other model, in terms of independence. DeFi can be great (in-season) for producing passive income. However, DeFi tokens can be exceptionally volatile, and there are always risks involved. DeFi hacks and exploits continue to dominate the industry. This ultimately puts you in a position where you are constantly at the mercy of others.
Content creation has a similar dynamic, in that you have to please the algorithms, those who wield the financial power, and ultimately, your audience. Trading, on the other hand, comes down to one key aspect: Skill! If you are a skilled and experienced trader you can simply open up your laptop anywhere and begin generating income. Your success is solely dependent on you and your abilities. It’s this particular aspect that has inspired me to continue developing different strategies over the years.
Essentially, I have been working to enhance a particular strategy for several years. There is never an arrival, you can always improve. That being said, if you can continuously enhance a winning strategy, you simultaneously ameliorate your risk management. Many traders have successful strategies, but they are lacking in terms of risk management. In other words, the strategy works well until the market turns against it. At this point, previous wins are often erased.
You Can’t Buy Or Fabricate Experience
This is where years of trading experience begin to work in favor of the disciplined trader. As you learn and experience the “ways” of the market and trading, you can understand, interpret, and execute with a greater degree of accuracy and confidence. You simply cannot become an effective trader by theory alone. A trader can have a solid foundation, in terms of knowledge and understanding. However, is he able to control his emotions?
Applying complex strategies together with years of experience provides an enormous amount of security. Complex strategies often incorporate multiple deployments of capital at very specific points. This is done with an awareness of various relativity ratios, together with a deep understanding of the law of averages. The success rate of such a strategy is generally quite high. Multiple allocations simultaneously reduce risk.
This, in particular, is imperative. If you go all-in on a trade, you have no counter-move… no comeback. If the price action moves outside of your range, what are you going to do? Very few traders actually “build” positions. They simply buy… and wait for the price to go up or down. Not much skill is required in such an approach, which is why 90% of retail traders lose money, as opposed to producing consistent returns.
Trading is a journey, which often tends to make a few stops at the “school of hard knocks”. Unfortunately, many lack the tenacity to keep persevering. However, over time, skills are developed and honed. Together with progress comes the ability to create more complex trading strategies, which are not only able to provide improved risk management but also increased profitability.
Final Thoughts
Professional traders who operate trading desks at large institutions will be able to tell you about the times they had to protect a position by utilizing hedging strategies, as well as additional trades. A more complex strategy or approach will aid in prolonging and protecting your trade during unfavorable conditions. It’s not a case of having access to dry powder, but rather an artillery.
Success can be very encouraging. However, failed trades can leave one feeling rather despondent, and even frustrated. That’s why developing strategies that take negative scenarios into account are so very important to develop. I have been experiencing some rather promising results, in terms of my latest strategy, which is super encouraging. Hopefully, the results remain constant. All the best and happy trading!
Disclaimer
First of all, I am not a financial advisor. All information provided on this website is strictly my own opinion and not financial advice. I do make use of affiliate links. Purchasing or interacting with any third-party company could result in me receiving a commission. In some instances, utilizing an affiliate link can also result in a bonus or discount.
This article was first published on Sapphire Crypto.
