Crypto & Forex Investments Chronicles - Always Lose small and Win big

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I always say in your Investment endeavors "You might Lose the Fight but make sure you Win the War" so in Crypto and Forex Trading your losses have to be smaller than your gains. Let's say you have $1000 in your trading account and you start trading and you are making losses of $100 on each day, so if it happens that you have a consecutive losing streak it means that it will take you 10 days to blow that account. Let's say you are making profits of $50 and losing $100 eventually that account will blow because your gains are way much lower than your losses.

Maybe I would say account blowing might be inevitable but at least as a good trader, you can narrow the chances of blowing the account. You have to make it impossible to blow the account by doing a few things.

  • Trading Your Plan

  • Not Losing more than you are making

Trading Your Plan

Um, pretty sure about 90% of Traders know that failing to plan is planning to fail, "just to be short and precise failing to plan is the recipe for disaster". So for one to be a good trader you should make sure that you have a well-structured trading plan which will guide you in your daily trading routine. After a trading plan is in place the next thing will be to "Trade your plan". Some might not understand when I say to trade your plan but well it's simple. Let's say in your plan you are planning to enter a trader after certain conditions are met, the lot size you are going to use, your take profit and stop loss, and lastly when to stop

Lot Size. When it's Forex Trading there are Lot sizes, in Binary Options there is a stake and in Crypto, it's just an investment amount, so let's say you are planning to trade or buy a certain Crypto asset and on your trading plan you had planned to take the risk using a certain amount. Then it happens that the asset looks to be lucrative and you are being tempted to increase your investment amount, then it's a sign that you are going off the root.

Take Profit. You executed your trade and you are floating in profit and obviously happy but remember don't get too excited and forget about making a profit. If your take profit is 100 pips when you reach that target just take what the markets gave you off the table and call it a day. Do not ever get tempted to keep on holding to get extra pips as long it's against what you planned to stop. I used to trade without a plan and I remember the other day I opened a position and it went to $200 profit and I closed, but instead of calling it a day I opened another trade and lost $20. Then I got frustrated and tried to recover that lost $20 and boom I lost another $60. So I learned the hard way and from there um trading my plan.

Stop lossStoploss is tricky because there are stop hunts and whiplashes so it must be handled with care because emotions are triggered to shake off the weak traders. Before you open a trade the first thing you should know is how much you are risking then stick to that. You can either set your stop loss and let your trade run or wither you can mark your zones and close your losses manually depending on what type of trade you are. 

When to stop. A lot of traders know when to enter but 90% do not know when to get out or close their positions. If you open a position and your target was 100 pips and when you reach that amount stop and when your loss is limited to 30 pips when you hit that amount just call it a day.

Not Losing more than you are making

When you are trading you just have to make sure that there is growth in your trading account by winning big and losing small. Just make sure Your profits are always greater than your losses and your cash outflows (withdrawals) are always bigger than your cash inflows (deposits). The ratio is the most important thing when trading or investing e.g if you use a ratio of 1:3 this will mean for every $1 that you are risking you are expecting a return of $3. You might lose $100 now and if you happen to win on your next trade and you win $300 it means you will cover the previous loss of -$100 and you will be left with a $200 profit.

Mistakes happen but just don't make it a habit by repeating the same error over and over because it will consume you. Always learn from your mistakes and losses and find out how they happened and take necessary measures. It's always said that about 90% of traders do not make money in Forex and Crypto trading so just make sure that odds are in your favor.

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