Building & Establishing A Trading Account To Become A Business
The Laptop Lifestyle
Along with content creation and passive income mechanisms comes another laptop-friendly form of income generation… trading. Yes, trading can be a highly profitable side hustle or even a source of full-time income. However, two very important aspects determine the outcome of such an endeavor. The first is an adequate allocation of capital. Depending on what you are trading, and the amount of income you are looking to generate, appropriate capital allocation is imperative.
One needs to consider what a typical day’s trading can generate. This is ultimately dictated by the strategies being utilized, as well as the size of the trading account. One also needs to take unproductive, and even unprofitable days into consideration. The market is often predictably unpredictable, and you have to realistically factor this into your strategy, as well as your calculations. In a scenario where you are looking to build up an account, I prefer to make use of scalping and intra-day strategies. I find that making use of every little bit of price action is a lot more effective than swing trading.
For example, in the time that a swing trade takes to mature, there are often multiple smaller trades unfolding on an hourly basis. When you are looking to maximize time and build your account, quick trades tend to be a lot more effective than swing trading, or even day trading. Futures traders should look to using Crypto as collateral, as opposed to fiat. This is however only advisable at the commencement of a bull market. Essentially, this ensures that your collateral grows in value, as Crypto valuations begin to increase.
Compounding Your Account
When you are looking to build your trading account, and are not focused on realizing your gains, you can compound your profits over time. Essentially, this works to increase your trading capital, and ultimately, your daily income. If you are earning a percentage of your trading capital, and that capital is growing, then so is your income. This works to create a “compounding machine”, especially if you are a reasonably skilled trader. It’s amazing what can be achieved, simply by compounding your profits.
In the world of TradFi, Dan Zanger is well-known for turning a 10K trading account into a multi-million dollar trading account. If my memory serves me correctly, it was approximately $10 million. He achieved this by trading tech stocks on leverage in the early 2000s. I think one can compare the early tech boom to the Crypto boom, at least in terms of the returns. Micro-cap altcoins have way more impressive moves. All that Dan did was to compound his profits.
This is enormously powerful, and something I have addressed several times in various blog posts. It’s really that simple, and yet developing successful strategies is however not that simple. Many new traders tend to blow up their accounts during their formative years. It may seem rather unappealing, but developing and testing trading strategies via a demo account is the safest way to go about it.
On the other hand, if you are a fairly experienced trader, you can begin building a new trading account to build a business. An account that you can build until the average monthly income is in line with your goals and expectations. I have been working on a new strategy for the past week or so. Essentially, it’s an amalgamation of some of my key principles and strategies.
Final Thoughts
So far, I am impressed with the results and am hoping that I can maintain these results over an extended period, as that is the most crucial aspect. Results need to be consistent. Fortunately, scalping gets you in and out of the market within minutes… sometimes a little longer. It’s probably a great time to begin with such an endeavor, as we are in the formative stages of a new bull market.
At the peak of a bullish phase, I will look to shorting, which means I will have to utilize modest leverage. Currently, I am trading spot, so the stress levels are pretty low, and my risk management is pretty strict and allows me a lot of breathing room. This helps a lot. There’s nothing worse than having to defend a losing position. It can become rather stressful, especially with leverage. Thanks for the visit, see you next time!
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.
