This is the official Yves talks Bitcoin Podcast, here you will find every new episode posted weekly and daily. This Podcast will cover everything from trading and investing in Bitcoin and cryptocurrencies, but it will also focus on the economics behind Bitcoin and Austrian economics. Moreover, it will be covering tips and tricks for mental health, self-improvement. Be sure to subscribe, so you don’t miss out on any new episodes.
Risk assessment describes how hazards are identified and analyzed that may cause a negative outturn in the planned process. Potential negative impacts on individuals, assets, or a company are assessed and eliminated or avoided. Risk assessment while trading is looking for factors that keep you out of a trade. Hazards or unusual movements are quickly identified, and if appropriately assessed, they may even keep you out of a trade.
Three steps to assess risk:
- Identify the hazards – Write them down, save them. Learning while trading is the only key to success. Learn what works and what does not. Strategies are a great way to avoid risk and trades that should not be taken. For example, if there is a general uptrend, but there is a significant negative sell-off on the way. This usually keeps me out of a trade because it does not fit my rules and messes up the chart.
- Assess the possible outcome – Be sure to understand what it means if you decide to ignore a risk factor while trading. Sure, it is a game of probabilities; however, the chance of finding another chart with a better build-up is very likely.
- Take the necessary steps to reduce a negative outcome – Reduce your order size if you feel like it is not the best build-up. Take your stop-loss close to your entry to minimize losses. Average your entry out, if possible, by opening 2-4 positions.
- Record every detail – I repeat it often, but I can not stress this enough. Record your trades, learn from your past mistakes and misjudgments. Making a mistake once is fine, but you wasted the experience if you are not learning your lesson from it. Review your recordings after a fixed amount of time, judge yourself for taking dumb trades, cherish the good ones.
Why is risk assessment important while trading?
The proper risk assessment will kick-off your trading career. Focus on what you see, match it with your rules, execute consistently. Trading is grinding, reduce the probabilities of having a negative outcome; if your focus is on that, you increase the likelihood of having a positive outcome. Moreover, assessing risk also helps you to identify your costs. Many beginners forget about taxes, maker or taker fees, and transaction fees to be considered in their risk assessment. Identifying every detail is not easy and involves a lot of reading and thinking, but it is well worth it. As soon as you experienced every risk situation, your trading will surely improve.
My own experience with risk assessment
Risk assessment is something every trader or even an investor needs to know. Risk assessment helps me to stay out of a trade. While I am looking at every timeframe, identifying hazards, and scanning with my strategy, I am not looking for trades to take, and I am looking for trades not to take. Risk assessment taught me to think differently. My trade assessment changed from FOMO driven trading to a calm and objective scanning. When I find my trade to take, I get excited for sure. The ability to anticipate future events and create processes or methods to alleviate the possible outcome is vital for every trader.
Three methods to reduce risk:
- Stay out of the trade – This is obvious but not an easy one for everyone. Fear of missing out is the biggest enemy of every beginner, and I experienced first-hand FOMO by myself. Remember, you are here to stay. Making an uneducated decision is never a wise decision.
- Use a stop loss – Using a stop loss is crucial; if you want to find out more about why that is, click here.
- Reduce your order-size – By reducing your order-size, you reduce your potential gains and your possible losses. Going in all-in is something I do very rarely. If I feel that my risk is too high while trading the markets, I only trade with an amount I feel comfortable with.
To conclude, every trader needs to know how to identify his risk and reduce them if possible. Trading means failing. Failing isn’t cheap, but failing without reducing risk first is more expensive. Use those tips to become more successful with your trading.
If you want to find out more about trading and investing or the economics of Bitcoin, go and check out my blog, subscribe to my newsletter, and get insight into how I am trading.
What is day trading/ swing trading?
Day trading is the selling and buying financial tools and buying or selling them within the same day. Short-term action and lower timeframes are used to execute strategies based on indicators and trigger signals. Whereas swing trading is the buying and selling of the financial tools executing a strategy focused more on the long-term. The difference lies in how long a trader prefers to stay in a trade.
5 reasons why you should day trade:
- Easy to enter — Day trading not only allows you to do what you like full-time but it also allows you to learn and see changes in real-time. This is a game-changer, learning how markets behave and executing trades daily is perfect to give you the understanding of the markets you need in order to see the long-term aspects of trading or investing.
- You can become independent — Day trading is a business if you think about it. If you manage to trade enough value and your execution is good, day trading might be the key to get you off your job and into a new field. But do not forget, trading is not easy, take your time learning it. You will only become successful when you practice and stay consistent with your approach.
- Work from wherever you like — This one sounds too good to be true, but it isn’t. All you need to trade is a stable internet connection, your laptop, and your everything else you need to be in the mindset. Trading even got easier through most of the exchanges offering Apps to download onto your mobile phone which enables you to execute your orders or manage your portfolio on the go.
- Day trading gets you off the idea “get rich quick” — I know, this one might sting. It is the truth, nonetheless. To become a successful trader, you need consistency, know-how, and the willingness to make mistakes. 90% of new cryptocurrency traders that just started out, end up with significant losses and no funds left after a month. Try to avoid being one of them, use a Stop-Loss, and manage your risk, if you need help with that, click here.
- If you can afford to lose money — The most important lesson to take away here. Be prepared to pay for your experience. Learning is a hard process, make mistakes but try to learn from them. Take screenshots, review your misjudgments, and don’t do them again.
5 reasons why you should swing trade:
- Less time consuming — Since you will not find yourself scanning the market all the time, you will have more time to work, do stuff with the family, or just enjoy some time off-screen. Swing trading is perfect for you if you need time off, all you need is a solid strategy and check on your investment once or twice a day.
- You can stay in the market for longer — Day trading needs you to set your Stop-Loss very close to your entry value which involves the higher risk of being taken out of the trade to early, swing traders can average their entry out by opening 3 -5 orders normally. However, by staying longer in the trade you increase the chance for a negative outcome and the risk.
- Rewards are usually way higher than day trading — Since swing trading allows you to adjust your Stop-Loss to a level that takes volatility into account too. Day traders normally use trailing Stop-Losses that take them out on the declining top of a candle. Swing traders are fine with giving back if it means that they can get more gains later.
- Cut out the noise markets are creating — Swing trading helps you to stay away from low timeframe charts. Hunting for news and trends is not necessary, just sit back and enjoy your strategy.
- Fit trading around your routine — Day trading is the other way round, to be successful you need a daily routine. Swing trading offers you the chance to plan your schedule when you check the graphs. You decide whether it is necessary to check the news for valuable information. Swing trading helps you to analyze the markets in a much shorter time since you are looking at the higher timeframes of the chart.
What is my recommendation?
Trading daily is fun and very good to get the hang of trading in general, having daily exposure to the charts and the movements of the markets will make you become a better trader. However, do not get lost in all the buzz out there. Day trading is full of people telling you what you should do and where you should invest. Keep it simple, stick to your strategy, and question everything you hear about trading. Do your due diligence and be sure that you invest in something with value. However, swing trading will help you to cut all that noise out of your trading, swing trading is the optimal way to test new strategies or prefect the ones that are already existing.
To conclude, I recommend starting with day trading, find the edge. Get yourself into it and learn what makes sense to you. There are many people out there trying to sell you something. First, find out if trading is something for you by using free material. Secondly, if you find yourself at a dead-end, get a mentor, and pay for a course. It is well worth the price if you find the trader that suits you best. I always imagine myself swing trading with 60 when I can’t be bothered looking at the charts anymore, that doesn’t have to be that way, swing trading is worth trying out as soon as you got your fundamentals right. It might be even perfect for you!
If you want to find more educational material covering trading, investing, and the economics of Bitcoin, check out my blog and subscribe to my email, I will be posting all my knowledge and experience for free on there.
The most common misjudgment of volatility always happens when people think using a Stop-Loss is not necessary. A Stoploss is a trigger that takes you out of a trade because the trade outcome is negative. This trigger will take out the value you decide and convert it into your standard currency. Using one effectively means that you reduce your risk of losing more than you want to, it will make what you dictate, so if you are on the toilet and price changes rapidly against you, you will not miss the moment to sell. Using a Stop-Loss is crucial to becoming a successful trader or investor, and Stop-Losses will help you regret bad decisions less than not using one at all.
Five reasons why you should use a stop-loss while trading or investing
- Risk assessment – By determining the Stop-Loss, you calculate your immediate risk. Let us say you own a portfolio of 1000$ in Bitcoin; you decide to set your Stop-Loss to 5%. What that means is, when the price reaches the level of where your money is only worth 950$, it will take you out of the trade no matter what. Price movement can be very sudden, and these moves are often ruthless in kicking you out of your trade at a loss. However, trading is about winning and losing money. A good trade with a negative outcome is better than a bad trade with a positive outcome since this seduces us into the thought that what we did is right (which is wrong). If you just traded poorly, the Stop-Loss will be your friend. Bad Trades are common; your only friend reducing the damage is the Stop-Loss. So, use one, or the market will be greedy.
- The market can and will go lower — No one could have foreseen the huge impact the pandemic had on this world’s economies. Supply chains have been disrupted, economies have been stopped, and many businesses went out of business. 90% of new traders lose their capital in the first month because they underestimate the volatility or the risk of the market; many never used a Stop-Loss. Trading Crypto is anything from easy, but if you are dedicated to being successful and get a second chance on your trading career, us the Stop-Loss, you will not regret it. Moreover, beginners always think they must predict the market, do not be one of them. Predicting markets is rubbish—Trade what you see, not what you think.
- Trade what you see, not what you think — I wish I would have known this one earlier. Being new in space is very exciting. As soon as you realize how much money and potential there is in cryptocurrencies, you will probably never want to go back to the fiat currencies you came from. Please do not get too emotional about it while you trade, be clear, trade your strategy, and stick to it.
- Make mistakes — Without making bad trades, there is no learning. Make negative trades, lose some money, get a feeling of how the markets work, and try to learn from the mistakes you are making on the way. The best way is to screenshot every trade, review the trades after a few days or weeks, and assess your mistakes again and again. Be learning from your mistakes; you will prevent future mistakes. Successful traders know precisely when a trade is good to take or not. You can only get the hang of this if you do those mistakes repeatedly. By taking screenshots and judging yourself on your past misjudgments, you will see a fast improvement in your trading. To improve, you need money to trade with, so use a Stop-Loss to use the money to learn and not to waste.
- Take your time — Learning to use a Stop-Loss in a volatile market such as the cryptocurrency market is not easy. Use it as often as possible and find out which values work best with your strategy. Try to adapt too. Finding the perfect spot to place a Stop-Loss will never exist. Markets move unpredictably, so wrongly placed Stop-Losses will happen. Try to place your Stop-Loss with the thinking: “how much can I afford to lose?”. By limiting yourself through this thought, you will not be able to trick yourself into changing the value again due to misjudgment or FOMO (fear of missing out).
To conclude, trading is risky; using a Stop-Loss is reducing that risk. It reduces your risk to a factor that you can lose. Using no Stop-Loss will stop you out at zero. Moreover, Stop-Loss knows no emotion. Getting out of an investment that makes an unpredicted move is never a bad thing. Opportunities for gain further down the path might open a new entry, and securing profits is more fun than being pissed about losses. Both are trading. Changing the probability of one can have a massive impact on your success rate.
How to start a business?
March 2020. The pandemic was raging through Europe and forced me to go into the home office. Due to the insane amount of extra time, I thought to myself: how to start an online business? The answer is, there are thousands of options.
There are many ways to make money in crypto; trading and investing are the standard methods of getting your fair share. Thanks to dApps, you can game yourself to being rich, or even starting your nod to mine cryptos is already a business idea. As you can see, there are tonnes of options. Find the one that suits you, and let me display my favorites.
Cryptocurrencies as a business
I know, this isn’t probably the thing you expected to read as the first thing to recommend as a business idea but hear me out. The cryptocurrency niche is a fascinating one. It plays with the idea of an alternative monetization system while our government prints their fake money as if it was not relevant. With inflationary money (commonly referred to as fiat currencies), the longer you save your money, the less it is worth. Crypto’s taught me that not only what money is and what money should be, but they also inspired me to become independent and take the risk of becoming an entrepreneur. Understanding crypto means understanding risk.
Risk as the first step to a successful business — Trading
Cryptocurrencies are risky, very risky! So be cautious and do your due diligence. Understanding the risk of cryptocurrencies and using that risk to eliminate probabilities will help you understand the business world more comprehensively. Trading cryptos is already a business. However, by trading with your own money, you increase your risk factor dramatically. So let me give you some tips on how to handle the risk and become the best trader you can be.
1. Understanding cryptocurrencies
This is a hard one. Cryptos are super complicated and very hard to comprehend since they come in such complexity. However, resources like Youtube and Reddit are a fantastic way to get started. Learn about Bitcoin and Ethereum at least. Do your homework here. Understanding something takes away fear. I will link to relevant links at the bottom of the blog.
2. Never invest or trade more than you can afford to lose
Probably one of the most important ones, the golden rule of trading with your private assets. Limit yourself by using the stop-loss function that most exchanges provide and be consistent about your approach.
3. Make mistakes, lose some money
Right now, you are probably asking yourself if you should stop reading but hang in there; I will explain myself. By making mistakes while trading, you definitely will lose some money. However, look at this as an investment. The money you lose is money you paid to learn, but you get knowledge in return. Learning must be painful to be the most efficient. Trust me, if you ever do something stupid while trading, you will understand me.
4. Be consistent
Have an approach or a strategy. By trading with your strategy, you will get a reference point. You can go back to the trades you failed and revise them. By doing so, you will get better with every approach. Don’t do courses if you don’t know what you are doing. Start learning by yourself, educate yourself as much as possible, and then make the most important trade, your first one. Get courses if you are at a point where you need help. However, be careful of what you are buying, find the strategy that works for you, and then go with it. Tailor it until you trade the best way you can.
Being able not to use spare money — Investing
1. Learn how to HODL
HODL is a crypto term and often referred to as “holding.” It means to be able to leave a certain amount of money in a currency with the expectation that this currency’s value will increase over a period of time.
2. Understand what you are investing in
Is the project aligned with your principles? That’s a super important question because it will help you to believe in your project and keep your money where it is. Don’t be too emotional about your approach; keep your cash in for a determined amount of time. Don’t get distracted by buzzy short-term news.
2. Never invest or trade more than you can afford to lose
Only use money that you can afford to lose. Once again, the golden rule of trading applies here as well. If you understand this, there is nothing that can stop you anymore.
3. Be consistent
I know it isn’t easy to see your money increase and not able to touch it. Be consistent with your goals. Being able to avoid the urge to retrieve your money will make you successful.
Noding and dApps
Since I am very interested in trading crypto, I did not have much time to dive into dApps and Noding, but I made 275 USD while playing a dApps game called Axie Infinity. It’s basically Pokemon, but with Axies instead, you can sell them on a marketplace where people are super willing to pay you insane amounts for one of these Axies that you trained and raised. It is exciting, and I got to dig into it deeper. I will update here.
I looked into operating a stake pool for Cardano. However, the incentives of owning a nod are not very appealing right now. If you want to know more about dApps and Noding, check out Reddit, there are tons of lovely people out there who have the same questions as you have.
To wrap things up
Cryptocurrency is the market that brought out the most millionaires in the last 10 years. You could be one of them too, dig into it, and find out more about cryptocurrencies and how they might be able to change your life.
If you want to know more about me and my business journey, do not hesitate to contact me and check out my business and it’sits social media.
Stetterrings.com– My Website, where you can find more information and future blog posts if I get some reactions.
Check it out and leave some love if you like what you see, if you have any tips to become a more successful writer or anything else, please do not hesitate to contact me.
Coin market cap — That website is a must-have to get started.
Tradingview — For the in-depth analysis of the markets.
Kraken — My recommended exchange.
WRITTEN BY Yves Hofstetter