1. Understanding the chart for best Entry and Exit
2. Money management.
We could keep our opinion aside about this matter for some time and talk about our money management experience and strategy. I think no one will deny that money management is one of the most important things that we need to trade and reduce our losses. It is not possible to be 100% accurate about all of our trades no matter how experienced we are. A combination strategy with our experience in the market and money management skills we could reduce our chance of losses by almost 90%.
Many of us actively trade in the crypto market, so most of us must have our money management strategy to approach the markets. Let us share our money management strategy here so that we can develop or adjust a perfect money management strategy according to our trading behavior. I am going to share the money management strategy that I am using till now.
# Diversify portfolio: I know many people give bitcoin first priority when investing in crypto but I do not trade in the BTC market. Most of my trade is with the altcoin market and here is the strategy I use to diversity my portfolio from small risk projects to high-risk projects.
- Small Risk project: In these lists, most of the coin is for the long term and their market cap must be above 1 Billion. Some project where I think putting money is safe for the long term. 50% of many portfolios for these projects.
- Medium Risk: A project below a 1 Billion market cap is a medium risk project on my list. My investment for these projects is for a few months to 1 year. 30% of my portfolio is for these projects.
- High risk: All of these projects are a startup and their development is still ongoing. Most of the time these entry is for low cap news-based project. 10% many is for high-risk projects.
And I keep 10% of my portfolio in reserve for any difficult situation.
# Investment strategy: Putting all of your bags in a single trade is not a great idea that most new traders do. We have to understand that investing in crypto is not a lottery but a business that grows over time with fluctuations.
- small risk project: When investing in a project I do put money based on risk and their allocation from my portfolio. For the first entry 10% for small risk project from its 50% allocation and keep investing 5% from that allocation in every market correction happens. This continues for every correction no matter what the coin price is.
- Medium risk project: 40% for first entry another 30% for above 25% to 30% market correction and the rest of the 30% cash for the worst-case scenario. If I had to put the last 30% of my money into that project then my aim is to exit at break-even or with small profits.
- High-risk project: 50% for the first entry and another 50% for more than 30% market correction. Always exit with small profits or start booking profit from when trade is on 10% profits.
In most cases, I do not use stop loss because I think it is a proven way to lose money. I do DCA for exiting from a bad trade. I think a plan is better than no plan so make your own money management strategy first before investing in the crypto market.