How to enter a perfect trade and stop being a loser.

[mikeywith]

  
 I have been trying to tell people that risk/reward ratio is key, but some people just don't understand, in a perfect life you get more than 50% of your tradings right and you end up making profit, but this is not a perfect world ,so chances are you are going to make more losing than winning trades, but the key to remain profitable is to use a proper risk reward ratio entries, for example if you are aiming for 100$ you should not risk more than 50$, any trade that doesn't have at least 1:2 risk to reward ratio is a bad trade to begin with.

i usually go with 1:3 , some times 1:5 , rarely 1:2 and never 1:1.

and the only way to get those trades is by trading at near major support and resistance lines, where your SL is below support or above resistance.  never enter a trade in nobody's land because then your SL will be meaningless and only based on your emotions.



This an example of current BTCUSD 4h chart, plain and simple,

https://bitcointalk.org/index.php?topic=5071613.msg48868678#msg48868678

in this post , i closed my short position, and entered long positions at 3600-3700, as that was a great support area, i risked about 1.3% for 7% and 14% ( two different targets).  

this is a simple example of a perfect set up that can't go wrong even if you were to lose the trade.

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 ok forget about the past, look at the future, we are approaching a major residence area ( marked in red), there are 2 potential great set ups.

1- short with a SL above the red area
2- long with a SL below the red area ( if we manage to break it )

always keep in mind that price usually goes the easier way, the easier way at our next station is down, it takes less market "effort" for price to retrace down from resistance than to break it, however we have a H&S formation which suggest a break to the upside but that's a whole different topic.

long story short, whatever indicators or methods you use to enter your trades, if you are not sticking to a good SL - TP ratio chances are you are not making any profit in the long run, you might get lucky a few times but i am willing to bet the house that nobody is successful in trading without a proper risk/reward ratio applied.

 I talked about this in another topic but i think many people have difficulties applying a good SL-TP ratio due to their wrong entries.

guys i can't stress enough on this topic, there is a lot of profit to be made in trading,don't bother about those who say TA is bullshit, they are just to lazy to learn.

 if you have any questions regarding TA, feel free to ask, i am not a pro by any means but i have been trading for a long time and i am willing to share all the knowledge at my disposal, if you are a hodler from 20k or a newbie waiting for 100$ per BTC go hang around the off-topic board.

[1713566836]

1713566836

[raven7886]

You do not even have to understand charts to understand where bitcoin rallies and where bitcoin drops at this stage. We have seen bitcoin moving to same prices over and over again so many times that anyone that sells at 4200 will profit when the price goes down and anyone buying at 3600 will be profiting.

I did it twice already and made a decent profit back, 4200 was the top it can see and I realized it at third time price went down after reaching 4200, so I said next time I see 4200 I will sell, also when the price hits 3600 its harder to go back down and usually goes higher so I said I will buy next time it hits 3600. So last time it hit 4200 I sold all my coins and I rebought it at around 3740 (couldn't wait until 3600 ) and now I am in profit, that was without bitcoin going up, with this new 4000+ I am in even bigger profit. Never looked at any charts neither, was just too obvious.

[reactorjuno]

You do not even have to understand charts to understand where bitcoin rallies and where bitcoin drops at this stage. We have seen bitcoin moving to same prices over and over again so many times that anyone that sells at 4200 will profit when the price goes down and anyone buying at 3600 will be profiting.

I did it twice already and made a decent profit back, 4200 was the top it can see and I realized it at third time price went down after reaching 4200, so I said next time I see 4200 I will sell, also when the price hits 3600 its harder to go back down and usually goes higher so I said I will buy next time it hits 3600. So last time it hit 4200 I sold all my coins and I rebought it at around 3740 (couldn't wait until 3600 ) and now I am in profit, that was without bitcoin going up, with this new 4000+ I am in even bigger profit. Never looked at any charts neither, was just too obvious.

I can see where you are coming from, but believe me it is not easy. For instance in November we have seen a massive drop from circa $6K to $4.2k. At this stage, many would have thought it was time to buy. I did this mistake. It went back to almost $3k very quickly (if my memory is correct), now we struggle to get past $4.2k again.

Thanks Mikey for a solid thread, not many of these threads around here.
I personally go for -1 / +2 or -1 / +2.5 (I lack discipline once in a while ) because I am more comfortable with this strategy and it works better for me.

[mikeywith]

if it was this simple everybody would have been a millionaire by now, without looking at the charts , following a good portfolio management and a good risk management you are simply just gambling.

[exstasie]

You do not even have to understand charts to understand where bitcoin rallies and where bitcoin drops at this stage. We have seen bitcoin moving to same prices over and over again so many times that anyone that sells at 4200 will profit when the price goes down and anyone buying at 3600 will be profiting.

I did it twice already and made a decent profit back, 4200 was the top it can see and I realized it at third time price went down after reaching 4200, so I said next time I see 4200 I will sell, also when the price hits 3600 its harder to go back down and usually goes higher so I said I will buy next time it hits 3600.

......

Never looked at any charts neither, was just too obvious.
 

Sounds a lot like beginner's luck. I'm sure you'll find over time that trading is infinitely more difficult than you make it sound.

I'm also not sure how you sold $4,200 and bought $3,600 twice since price only bounced between those extremes once.....

[Thanasis]

You do not even have to understand charts to understand where bitcoin rallies and where bitcoin drops at this stage. We have seen bitcoin moving to same prices over and over again so many times that anyone that sells at 4200 will profit when the price goes down and anyone buying at 3600 will be profiting.

I did it twice already and made a decent profit back, 4200 was the top it can see and I realized it at third time price went down after reaching 4200, so I said next time I see 4200 I will sell, also when the price hits 3600 its harder to go back down and usually goes higher so I said I will buy next time it hits 3600.

......

Never looked at any charts neither, was just too obvious.
 

Sounds a lot like beginner's luck. I'm sure you'll find over time that trading is infinitely more difficult than you make it sound.

I'm also not sure how you sold $4,200 and bought $3,600 twice since price only bounced between those extremes once.....

Just luck tho,or he may have some future predicting powers.

Using charts may increase our chance of profits and also will help us understand what our coins is actually doing but many people just doing crypto trading as pure gambling.

[oegarod]

With trading one need to learn more about the market fluctuations and the way to make use of it. There are several factors like buy support, sell support, holding and so on. Going through the chart it is possible to understand what is the present scenario. If it is at the buy support point it'll help you get at the lower price and holding will profit you. Same is with the sell point, beyond some trading volume there will be price drop, before which it need to be sold to avoid loss.

[arpon11]

We have many technical indicators out there and this should be one of them.  To some extent this can work perfectly but I don't think we have an absolute perfect technical indicators as this market deals with emotions. Remember that some of us that have forex trading knowledge has this that the market has it own mind and some times it goes the way it wanted.  I think we should trying and reduce our risk as op started and that is what will safe us from the unreasonable price movement.  I will try to read the strategy and see how good it is.

[ecnalubma]

I also want to learn short trades maybe after I recover most of my investments. Good trades are always profitable regardless of the market conditions, once you have strong analysis and experiences you can always have good profits in short period of time.

[buwaytress]

I generally don't really believe in any of these ratios, but if you have to find a good balance, maintaining profitability, then you're right, the ratio should be 2:1 at max. Risking less for more sounds better too, but it just means that that will be harder to obtain, or less frequent anyway.

Also, don't play around with leverage and margins, even if you understand it well. If you don't have $50, then don't use $5 as if you had $50. No point in gaining X times more if you're also losing X times more.

[reactorjuno]

I also want to learn short trades maybe after I recover most of my investments. Good trades are always profitable regardless of the market conditions, once you have strong analysis and experiences you can always have good profits in short period of time.

If you've never done any trading before, I strongly recommend not to invest real money at first, or try with a very little investment, but the best is to test different strategies by placing "blank" money and see how it goes.

Huge difficulty in this field is to control your emotions. There are thousands of reasons why even the most experienced traders will take bad decisions because they did not comply with strict money management rules.

[Upgrade00]

but the key to remain profitable is to use a proper risk reward ratio entries, for example if you are aiming for 100$ you should not risk more than 50$, any trade that doesn't have at least 1:2 risk to reward ratio is a bad trade to begin with.

This is dependent on the capital invested. With a very high capital, one could target a profit of 30 - 40% and realize a substantial gain and trading with lower risks. It does not always have to be a 100% gain.
Its also dependent on the duration of the trade, and when you plan on pulling out profits.

As a beginner, profit margin should not take precedence, more emphasis should be placed on learning and all profits should be appreciated, regardless how little.

[dothebeats]

The ratio and said opportunity doesn't always present itself to a newbie trader so it's really hard to make a stable stream of money solely on trading if you are only beginning to get your feet wet. Also, it should be common sense to not risk any trades for a 1:1 reward as you only wasted time in the end without gaining something significant for your toil. While I agree on the thought that any profit is profit, one should also consider the risks accompanied with it to minimize the loss should things go awry and not in favor of the trader.

[deisik]

I did it twice already and made a decent profit back, 4200 was the top it can see and I realized it at third time price went down after reaching 4200, so I said next time I see 4200 I will sell, also when the price hits 3600 its harder to go back down and usually goes higher so I said I will buy next time it hits 3600. So last time it hit 4200 I sold all my coins and I rebought it at around 3740 (couldn't wait until 3600  ) and now I am in profit, that was without bitcoin going up, with this new 4000+ I am in even bigger profit. Never looked at any charts neither, was just too obvious.

It works until it doesn't

You make profits from a few trades, then you expect more to come (as you say yourself) and end up losing badly. If things start to repeat themselves (like in your example), think repeatedly, maybe you are in for a big trouble? In this case, you implicitly start believing that the same cycle will be repeated again and again (this is natural as this is how human mind works) but nothing can be further from truth as the only thing you can be certain of is that the market always fools the majority of traders in the long run

[carlfebz2]

I generally don't really believe in any of these ratios, but if you have to find a good balance, maintaining profitability, then you're right, the ratio should be 2:1 at max. Risking less for more sounds better too, but it just means that that will be harder to obtain, or less frequent anyway.

Also, don't play around with leverage and margins, even if you understand it well. If you don't have $50, then don't use $5 as if you had $50. No point in gaining X times more if you're also losing X times more.

Or simply using up technical on full scale.Seen above using up some Fibonacci and trace levels on 4h frame signifies price swing trades but overall set-up isn't bad at all as long it do give profitability on OP.

About margins, you cant blame other traders as well on gambling it up they do either know the equivalent risk or just simply look forward on the prize not on the risk.

[exstasie]

Also, don't play around with leverage and margins, even if you understand it well. If you don't have $50, then don't use $5 as if you had $50. No point in gaining X times more if you're also losing X times more.

Leverage is really important to me for cryptocurrency trading because of third party exchange risk. When I need to hedge the value of my coins, I much prefer to short at 5x while keeping 80% of my coins in cold storage. Selling without leverage just implies too much exposure to custody risk. It's acceptable for long term traders who are wiring out USD for a while, but as a day trader, it's an unacceptable risk. One of these days, another major exchange is going to get hacked and customers will eat the losses.