Your Trading Strategy on the Cryptocurrency Market
We are traders; each of us invests in different intervals appropriate for their own strategies. Some traders are daytraders (sometimes, this may even be a few seconds), while others prefer to hold an open position for several hours or days. There are also some traders among us who take positions for longer periods, measured in months or even years.
Each of these strategies can be efficient and bring in above-average profits. However, it is very important for you to realize how important a professional approach to trading is and how you can work on creating your own investment strategy on the cryptocurrency market.
Here, I would like to stress the phrase own investment strategy, as the development of your individual system is the first step on a trader’s path to attaining the goal of being successful on the market.
Today, I would like to write a longer article on this. I have practiced day trading as a profession for nearly 10 years; by ‘profession’ I mean that trading has constituted my only and ultimately my primary source of income. I have always traded for myself. I do not live off paid counseling, I earn from real trading.
No job, no boss. Just me, a computer, and the market. For me, this is the perfect situation, one in which I work only as much as I want; I am the only one responsible for the results that are generated. The most important thing is that I can trade from anywhere in the world. I only need Internet access. Could anyone wish for anything more?
To make it to that point, you need to be an efficient trader. A trader who develops their own trading strategy. I would like you to think over the aspects I have described above and use them in the development of your own strategy.
A Cryptotrader’s personality
In general, you will find a bunch of information on strategies such as momentum, scalping, and news when trading online.
But not every one of those strategies is for you. Are you a very active person? Then you may find it very difficult to follow a strategy that requires calmness, concentration, and time. Are you a bookworm? Then a very active one, i.e. scalping, may not entirely match your personality.
Every novice trader will attempt many strategies before they find the one that is for them. Very often, the strategy developed in the end is similar to the traits describing you as a person.
Psychology, personality traits, own investment method. Those three aspects, combined with consistency, are the basis for the preparation of the appropriate strategies, best reflected by the following phrase:
People make money in the markets by finding themselves, achieving their potential, and getting in tune with the market. (Tharp, Van K., Trade Your Way to Financial Freedom)
The entire period during which a trader learns, develops, and constantly gains experience may be divided into three stages, each of which plays an exclusively important role in achieving an investment maturity of sorts.
The moment when a trader begins to regard investing on the market not as a game, but as serious work, is important. They regard it just as an analyst regards their bank job, or as a teacher regards school. They regard it as work that requires them to dedicate time, to constantly develop, to expand their skills, concentrate, and do a bunch of other things. As with every profession, one person becomes a trader, another doesn’t. Vocational proficiency is a process of sorts which continues over time, in certain stages, each one different from another. I recommend reading some articles by Mr Brett Steenbarger — a trading psychologist with a lot of experience!
A Cryptotrader’s development
Trading psychologists liken a trader’s path to finding their own system, one that reflects their ego, similar to the path followed by athletes who only at a certain point of their career can select their final sport to which they are going to dedicate their entire professional life.
- Stage one — a trader learns the market, regarding it as a game of sorts to which they do not necessarily wish to dedicate their life at this stage. Therefore, they assess everything in terms of the enjoyment they derive from said activity. This stage also involves the support they receive from their superiors and senior traders, and, perhaps more importantly, from their family and friends at the time. Small successes often begin to appear at this stage, further motivating the trader to work and develop more as they see the potential within them, which may be efficiently developed by making good use of it at this time.
- Stage two — absolutely involves the trader entering the next stage of development. In this phase, they discover particular fields in which they feel decidedly more comfortable. They orient their development, beginning to regard trading as work which happens to be enjoyable. At this stage, authorities in the particular field play a bigger role; their comments, help, advice and tips are treated more seriously. At this stage, the trader gains extensive and detailed knowledge and acquires numerous skills, imparted by people who have long since completed the first two stages and are also professionals. At this stage, talented traders begin to excel among their partners, as competition with other traders is still an important aspect to them.
- Stage three — this may be called the maturity stage. It is achieved by traders for whom their activities and work become their main professional activity, but also something from which they obtain measurable and excellent results. A trader who enters stage three of their career discovers their niche — defined as their own investment strategy, which fully reflects their personality, and with which they can identify strongly. Development of knowledge is no longer the goal at this stage. What becomes the goal is the expansion of one’s own talent and skills to the maximum. It becomes important to develop oneself, to train not only one’s skills, but also one’s psyche, which will be responsible for proper implementation of the developed and applied investment method.
Stages two and three are the time for seeking one’s own niche on the market. This means finding a strategy that matches one’s psychological and personality predispositions. Some traders remain forever at stage one, unable to understand those factors that distinguish normal, actual work from a game. During a day, a person processes an extremely large amount of information from everything surrounding them. The same applies to the market — during a day, a daytrader seeks opportunities among the ten or twenty thousand listed companies. It is important for the trader to be properly focused so as to find the most appropriate trades for them because ‘jumping’ from one strategy to another will prevent them from becoming permanently focused on what they do best. Those who succeed begin to seek their own market niche, where they can base their strategy on that which makes them feel most confident. They find their own specialization, in which they become the experts for younger traders who are entering stage one of the market investment adventure.
In my 10 years of experience on the market, the key issues regarding growth and assured success in trading have been based upon the development of the following aspects:
- Psychology
- Capital management
- Trading strategy
Those three aspects have been listed in that order on purpose. I assume that if you invest, you already have at least minimum knowledge of cryptocurrency exchange. Experience comes with time. However, you need to ensure that experience enables you to stay on the market and make money. The approach of many beginners, that the way to succeed is to master a given strategy which has worked for a certain investor or to master most of the technical analysis indicators and then implement that strategy, is wrong.
Before developing investment strategies, make the appropriate assumptions and then abide by them:
- Proper risk and capital management. Constant control of those two aspects determines the risk we take when entering any position and the possible difference between the estimated profit at the point of departure from a transaction and the possible loss which a trader is able to accept under a given transactional system.
- Position sizing. In this case, the best way is to prepare a system of sorts for constantly increasing the size of positions being taken.
- Consistent observance of the rules regarding matters such as position management: opening, adding to a position, closing a position with profit and closing a position with loss.
Rules are a matter of individuality. One cannot learn them by reading a book or an article, or by listening to an experienced trader’s advice. It is actually life, i.e. the market, that teaches the rules and their observance. Before I began trading, I had read a lot and browsed numerous websites where I could read about the rules which a novice should assume as correct. What happened afterwards? I didn’t acknowledge any of the rules until I had learned them from my own mistakes :)) It was certainly painful, but also most efficient and salutary for the future. Even today, I sometimes depart from a rule. In most cases, this results in a loss. And why are rules sometimes departed from? This stems from our psychology…
The Algory Project for a CryptoTrader
In the past 10 years, I have cooperated with an enormous number of traders from various markets. I am aware of what influences their success and what results in their defeat. I encourage you to continue your cryptocurrency exchange adventure, using professional tools that will make your trading even more efficient and the profits greater. If you are still a novice when it comes to investment, Algory tools will facilitate your start.
You will be able to define potential alerts for strategies I’ve mentioned in the above text in our flagship product, Cryptoscanner. Moreover, you will be able to see how efficient specific assumptions have been in the past — based upon our Backtester. Just those two tools alone (not to mention the other 11 functions of the platform) will give you a huge advantage over other traders. And that is already an incredible ‘edge’ over the others.
If you would like to talk to experienced traders, you will be able to do so in our Trading Room, where we will show you how we use our tool for trading.
We encourage you to participate in our ICO. After all, it is largely thanks to you that the tools created by us will appear on the market and be developed in ways best desired by cryptocurrency market traders.
You can join our ICO here: Algory Project.
