What's Your Plan Anon?

This is the second installment in a series, you can find the first in the series here: https://app.sigle.io/stories/xdSJJnDsTSNKp_cRuUTgp

Trading/investing should be easy, buy low and sell high. Seems impossible to screw up right? If you have spent any time in the crypto markets, or even the stock market you know this to be much harder to pull off than one would think. As we have previously covered the emotional part of the equation alone is difficult. Having a plan in place can mitigate some of the damage that our monkey brains can do to our portfolios. So I am going to share with you some of the factors I take into consideration when I enter a trade.

Time

More specifically, what is the amount of time I plan on spending in the trade? One of the factors to consider is what is your edge? My edge tends to be swing trading, that is I can typically identify a trend and place my buy/sell orders and wait. My timeframe can be anywhere from a couple of days to several weeks. I don't particularly care for scalp trading, but under certain circumstances I will partake. Anything longer than a swing trade, in my mind at least, is an investment. Stacks falls into this category for me. Every time I buy stacks I do so with years in mind. This is why I am consistently buying in this bear market, this is otherwise known as dollar cost averaging. If I believe that Stacks will be worth $100 USD two-five years from now, then it doesn't really matter to me if I buy at $.80 today and tomorrow it drops to $.70. The takeaway here is to identify what kind of time frame you are most successful with, and then utilize that to increase your stack.

Risk

How much money are you willing to lose anon? The correct answer to this question is: all of it. I don't enter a trade without the expectation of losing the entire position. So this being the case, I start a trade with an amount of money that I am fine with losing. If the trade is going my way, I can always add to it, and sometimes do. This is a key part of mastering my emotions during a trade. It is also a way that allows me to wind up betting bigger on the next trade. For example: If I turn $500 into $2,000 on a leveraged position then proceed to take profit. I can pocket $500, let original trade ride, and then I can then put a larger sum up for the next trade. If I lose the subsequent trade, I am not going to wrecked. I can live to trade another day, which is literally impossible when you blow up your account (of which I have done many times).

Entry/Exit

I am not going to go too in depth here, because it would turn into a technical analysis lesson. There are far better traders to learn TA from, I can highly recommend several. I trade support and resistance, I don't use many indicators on my chart, but there are a few that I find very useful. I don't worry about catching the exact bottom, or even selling the exact top. This is nearly impossible for the vast majority of us, and not worthy of getting obsessed with. If you sell in profit, stop watching the chart and be happy that you were able to increase your stack. I don't always use stop losses, but there are times when they are indispensable. When I use a stop loss, it will typically be after the trade is already in profit. If I can set the stop loss in profit, that is ideal. Regardless of my time frame for the trade, I will always check the long and short term charts for that particular asset. Know where you want to jump in, and where you want to exit, and stick to it. Ideally set a take profit order from the get go. Where I fail most is when I get greedy. In another piece I will share with you all some of my biggest losses, and greed was always the culprit.

Number of positions

Another excellent way to lose your stack is by having too many open positions that you are actively trading. My number is 1. When I have multiple positions open, I find myself spending too much time watching price action, feeling like a genius, and unable to stick to my plan. When I just have one trade open I can give it the proper amount of focus, and subsequently make better decisions. Actively trading can cause an immense amount of fatigue if you aren't careful. You are competing against algorithms and dudes amped up on enough amphetamines to make Joe Biden capable of speaking 2 complete sentences. If you aren't an autist, a guy willing to risk his health, or an autist on Vyvanse its probably wise to keep your number of active positions small. So my plan is typically centered on finding the best risk:reward and focusing on it.

I am going to end this entry here for now. In the next segment we will finish up with the planning part of the trade and transition to the next part of the series: How you can be right and still lose. Take care, and thanks for reading.

The NFT featured in this post is #52 from the Mars Woman collection