Steemit Crypto Academy | Temporada 3 Semana 8 - Gestión de riesgos en el comercio for @yohan2on
In the next assignment we are going to talk about how to effectively trade the digital market, I am going to talk about risk management how to avoid not getting out in losses I will point out some examples on charts directly. thank you very much and let's get started.
Define the following business terminologies:
It is when a purchase is placed above the current price really is always done above a very strong resistance or that already tried to break this means that if you retest that resistance area possibly break it and the price soars therefore it is a good strategy for traders to place purchase positions above that previous resistance. thus ensure a very long that will leave us solid gains.
In the following chart I will demonstrate how to buy above a resistance to make profits:
We see a chart that indicates a range in temporality of 4 hours and we see a resistance we place the price above that resistance and we see that the volume increases considerably breaking the previous resistance and getting to overcome in great magnitude the previous prices. therefore my entry point was like above the previous resistance as you see in the graph to take profits. and we see that its trajectory continues with uptrend. the graph is Doge/usdt 4 hours.
It is when we create a sell order below the current price this is used to protect our operation we must be careful and not leave the free market we must place stop in case the operation or trade for its high volatility turns us the panorama, ie if we go long because a previous technical analysis indicated that it was oversold and we had a chance to get a successful operation but we turn the picture and goes against our analysis then the active stop and we leave operation without risk to be trapped or have big losses.
The buy limit must always be placed below some previous support according to our analysis is used to take advantage of the market when it goes down to liquidate funds those who go long in that way use that movement in our favor and according to our technical analysis to enter into operation at the indicated point use this movement wisely with a clear and precise strategy identifying in advance where the next movement goes we can use the RSI as a complement to know where are the oversold asset and identify patterns.
this is done in the market to sell above the current price if we see that the resistances AND we see that the levels for some reason will remain at those points and cannot be broken yet then we will place a limit order at that place to be able to sell above the current price to be able to allow for juicier profits in the future or whatever our risk management allows us to do.
So let's understand how this sell limit is done below and with the chart I am making right now.
Trailing stop loss
The trailing stop loss moves with the price at 1% is used to protect our operation of the high volatility of the market in case the market turns against us the trailing stop moves dynamically with the price in our favor is similar to the normal stop loss that is static but this moves with the price. for sure if you are new you must not know this stop loss trailing then through this the benefits are greater than a common stop loss.
is used especially when the trader enters trading on leverage or margin then if for some reason he runs out of funds he can make a margin call to the exchange platform to be able to continue trading in the market this is if he sees a movement that allows him to make a profit and thus not be liquidated.
When the investor does not make this margin call and runs out of funds, he will simply be liquidated and therefore will be out of operations.
Risk management in trading
It is the most important part of the operation the risk management there are many people who did not pay attention to this and are liquidated with nothing in their capital, then to avoid such situations we must pay attention and manage our capital well then we call this Risk Management.
For this we will understand the psychology in the market there are factors that make us lose money as the "fear" the "hope" "greed" therefore a cool calm mind that relies on technical analysis and a strategy that works can end all this that we are thinking that makes us lose money. it is true everyone wants to make money overnight and in very few cases has been seen but the % is too small. while those who are left with nothing the % is larger and this happens by not managing the risk to the loss therefore we will make a rule.
The rule of 1:1 as minimum and as maximum 1:3 of the percentage of our capital per operation in order to make 2 or 3 operations in 1 day and obtain positive benefits more than the losses is that this way we are going to operate in the market.
Placing stop losses, stop trailing, technical analysis and analysis that are needed to determine the direction of a digital asset is the main thing.
Besides knowing how to use the tools that were given in class but knowing how to really use them as well as having knowledge of all of them.
Moving average trading strategy
My trading strategy is the one I am currently using I am using the fish fin that I studied from the academy teacher I still can't do his homework but by next season I hope to be able to do. together with the 50MA and 200MA moving average that indicate me the golden crosses when the moving average crosses above the 200MA moving average and the death cross when the 200MA moving average crosses below the 50MA moving average in this case I also implement The RSI tells us when there is an overbought or oversold and together with the moving averages and identifying the shark fins I can identify entry and exit points of operations.
As I already said we have to take profits and for this to be feasible must be at least 1:1 ie 1% losses in case we turn and 1% profit for this strategy to work we must do it 2 or 3 times a day at the end of the week add see how much were the losses and gains take an average and if we find more profits than losses this strategy works for me.
Also if we see that the operation is going very strongly along the path we choose we can get more juice than 1:3 ie 1% loss 3% gain depending on our market speculation for newcomers please do not leverage too much up to 10x would be ideal and once you are a professional you can let go and go to what you want.
A chart showing the moving averages:
We can see how an overbought is formed in the BTC/USDT at the point where the RSI goes outside the 70 then a shark fin is formed signal that it corrected but the 50ma moving averages passed above the 200ma which indicates to me golden cross , uptrend in the 4 hour time frame indicated then we see that the BTC is struggling in a resistance that can break at any time it is a matter of waiting.
Every day professor @yohan2on I feel that I learn more is amazing from the first moment I entered the academy until now I feel that I am a professional but also that I can not trust me because I do not even know a quarter of everything we should know in the digital world still missing secrets to discover and much to learn today risk management opened me another mentality and now I will apply it in every operation I perform also learned about the Trailing stop loss, quite important and very useful the truth. I liked to better understand each concept I always say the study is the greatest wonder of the world.