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Crypto Blog

Why using a Stop-Loss is crucial while trading?

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

  1. 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.
  2. 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.
  3. 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. 
  4. 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.
  5. 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.

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Crypto Blog

How to start a business with cryptocurrencies

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.

End word

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.

Stetterrings — On Instagram and Facebook

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.

Recommendations:

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