After sometimes trading Crypto Currencies I found that I can not make money when the market is in the downtrend because the risk and reward ratio is not good. So during a huge downtrend, I am doing something else other than Crypto trading to avoid loss in trading.
Fortunately, I just found a Crypto exchange that can do many things that other exchange can not. The features I am talking about are:
Long Position (Buy)
Is a normal position where you buy low and sell high, in the uptrend you will only want in a long position to profit, this is what normally exchanges do. In below picture, I order the sum of $593 at bitcoin price $9,250. So when the bitcoin price touch $9,259 my order will be executed.
Short Position (Sell)
Short a cryptocurrency is a process to sell a Crypto at a higher price and later buy them at a lower price. The price difference between selling and buying is your profit. This does not require you to own the Cryptocurrency first when selling them (you can borrow from the exchange). This is what normal exchanges cannot do.
You can leverage your buying or selling power up to 100 times. This means you can buy or sell 100 BTC with only 1 BTC in your account. Doing this will greatly leverage your trading power but also will increase your trading risk if you are not using proper risk management. One of the risk management implementations is using a stop loss. This is also not available in the most exchange.
Stop limit or stop market
Stop market or stop limit is a step that you have to take to limit your losses, without using this strategy you can suffer a bigger loss even wiped out your all your money in the account when your trade position is wrong.
Take profit limit or take profit market
When you plan your trade you already know at what price you will take profit then you can set it on the system so when it reaches the price it will execute automatically without you have in front of the computer.
By putting the stop loss and take profit in the system you can do other things in your life. This is very helpful to me as well as to you.
You cannot expect to win on every trade, you will experience win and loss. Knowing this odd you can mitigate the risk by not risking all your money.
I am only risking 3% or 5% of my money in the account every time I took a position. I will give you an example of how you can calculate this:
Let say you have 0.0415 BTC with BTC price at $10,049 your 3% is only $12.51
Your entry price at $9,250 and stop price $9,055 (long position).
You need to divide 12,51 with % of entry price and stop loss, in this case (9,250 – 9,055) / 9250 = 0.02108
12,51/0.02108 = $593
If you are curious I am using this exchange. Using this link will give you a 10% fee discount for 6 months.
Profit or loss Calculation
You can use profitloss calculator below, with calculation above your ROE is 750%, pretty good right? The calculation below is in in XBT or Bitcoin. Most people will call it BTC.