All language subtitles for 13. Risk Management Strategies

Hello and welcome back to cryptocurrency trading masterclass by wealthy education.

This video, we'll take a look at risk management strategies.

So the very first thing.

And that as a trader, you should be thinking about is what's my risk, because a lot of professional

traders out there will tell you that your job is to manage risk.

A lot of this comes down to recognizing what momentum is falling when participants are interested or

not interested in the market.

You know when to take profit, when to place your stop losses, support resistance comes into play.

You know, you can use Fibonacci levels, multiple different ways to do it.

But at the end of the day, you must have.

A strategy.

Because if you don't, then the market will make the results for you and you don't want that, you want

to be in control of your money, unfortunately, far too many of us.

Get involved in this world and don't understand the terrorists, so I would highly recommend that you

think about any risk of a trade being taken.

And most importantly, you have to understand.

When are you wrong?

So here's an example.

Of a breakout.

And.

You know, let's say for whatever reason, you decided to sell maybe on a short term chart.

When we tried to break above 700 and really couldn't, then you thought, OK, well, I think a theorem

is going to fall from here.

It's gotten a bit ahead of itself.

I'm willing to sell it.

Unfortunately, what happens is a lot of traders will, you know, they'll sell it there and they'll

say, OK.

You know, it's going against me, so I saw a little bit more because I want to get my money back and

maybe it only needs to get to this point for me to get to breakeven, because this one will be, you

know, four hundred dollars while this one is down and then they'll sell it again.

And then the next thing you know, they're in a huge, huge hole.

So the first thing that I would say is when you recognize that you're wrong, get rid of it.

You have to be very quick to get rid of your losers.

So.

I'm going to go ahead and go down to the hourly chart on a theory, and I'm going to go back to that

time.

And we're going to pretend like for whatever reason, we believe that theory is going to fall and there's

a reason this is something called a shooting star.

We'll talk about it later.

The candlestick formation, but it's Burish and you can see that, yes, we did fall, but we turned

right back around.

This was a bullish candlestick, for that matter.

So as you.

Start to look at various reasons to be in or out.

You know, you can put a few indicators on just do the RSI and volume for now on this hourly chart,

your overbite, you're overextended, volume is shot straight up.

You've shown exhaustion.

You couldn't stay above 700.

So you figure, OK, I'm going to short.

However.

If you're basing it on this candle.

The market went as high as 720, so your stop loss has to be somewhere in that area because at this

point in time, you're wrong.

There's nothing wrong with being wrong, you're protecting your account.

Furthermore, you want to limit what your losses might be, so might be one percent of your total equity

that you're risking once you lose here, you're down one percent.

You saw plenty of your account, but notice for those who would be particularly stubborn and then say,

you know what, it fell.

I kind of shot back up, but now it's pulling back a little bit.

Volume comes into play.

Oh, it's overbought.

So I just have to wait.

Right.

And you get back down here, you get roughly close to break even.

But you notice that now we can't break below 700.

So you definitely need to get out at this point.

And unfortunately, far too many people don't.

The simple solution is whatever Candlestick or set up that you have based the whole thesis on, if it

gets broken, just let it go.

I cannot stress that enough.

So this is an example of where the market moves against you, and if you aren't quick enough about it,

it's going to move against you quite drastically and yet all the time in the world to get out.

But yet people will stubbornly hang on to it because they don't like being right or wrong, know they

want to be right, which is an excellent way to lose money in the markets, in any market, not just

cryptocurrency.

So.

Here's a scenario where.

You could have gotten in based upon a fib.

You know, you pull back to the 50 percent Fibonacci retracement level, but you never make it back

to the top.

Well, that's the whole idea of a fab.

You're going to continue the trend.

That should tell you it's time to start thinking about getting out.

Well, if you got in down here, you're in profit.

So don't be afraid to take it.

We the 50 again, and we bounce, but we don't bounce as high this time, so the market is giving you

a second opportunity to get out, get out.

I can't I can't stress that enough.

Volume.

So we put in volume notices, big, massive volume spike, that makes sense, but as we rally, the

volume isn't picking up, it's just kind of petering out.

Lower and lower, so pay attention.

If the price is kind of slacking off and so is volume that tells you there's a lot less interest, put

your stop loss behind the candlestick that you got involved in.

I mean, or the 50 percent Fibonacci retracement level.

Doesn't matter if you get taken out.

Eventually, we'll look at this.

We try to break down below the sixty one point eight percent Fibonacci retracement level a couple of

times only to bounce.

So here's the thing.

You have to realize this is happening in real time, so, yes, in theory, you could have just hung

on.

But.

You wouldn't have known that.

Furthermore.

When you see this set up here where we try to break down below this sixty one point eight twice and

fail and then we start to rally, that's a completely new trade.

This doesn't matter anymore.

You shouldn't be worrying about this trade.

And in fact, before it was all said and done, you made all that back.

Assuming that you did let it hit your stop loss again, lower highs, that's a sign of weakness anyways.

You know, listen to what the market's telling you.

That's that's the most important thing that I can tell you.

So where to take profit, put stop loss of that type of thing, the most basic and simple way to do

that is, OK, so we have what is known as a double bottom here.

We rally.

You know, where are we going to run into trouble?

Well, I would suspect that we would run into trouble there because, as you can see, we struggle to

break up.

But there in a theory.

We finally break above where I put my stop loss just underneath there.

And in this case, you got taken out, that's fine because you're an opportunity to buy back down here

again.

Now, I would point out.

That this area that was previous resistance.

And then support.

Offered a little bit of resistance here, but it offered support going forward.

So.

You would have recognized this as a potential area, it would have put your stop loss somewhere behind

it, and then when we got this big, massive candlestick on strong volume that tells you that it's time

to move your stop loss, to break even and see where it can go, because unlike the other setups when

this was going on, Ethereum was already.

Taking off, so when you don't have a reference as to where to go forward, you could do a Fibonacci

extension, that's fine.

And I'll go ahead and draw one, but.

The reality is.

That you don't.

Know how far it can go when it's in its own world, when it's truly taking off to the upside, when

it's reaching all time highs, the best thing you can do instead of aiming for one of these Phibes.

FIB Extension's.

Is to mark the charts as you go along.

So this was your breakout point, that's fine.

You can see that there was a lot of action right here, a lot of whippy action, so that's an area that's

going to be important.

You rally a bit, you go sideways, so there's a lot of interest in the market right there.

So as you're drawing these lines, you just plop your stop losses behind them, so you shot higher there

and then you got taken out.

But you know what?

That's OK, because that was based upon a trade that started down here.

The market told you it was time to get out, the market also has told you that it could possibly be

time to get back in here.

Same areas are going to come into play.

So you move your loss off.

You may have gotten taken out another entry here based upon a candlestick formation.

Put your stop loss underneath the candlestick once we break a little higher than you can move to break

even.

You know, the thing about trading is we all dream about being on a boat somewhere, pressing a few

buttons and making all this money, but unfortunately a little bit more challenging than that.

And then people want to sit in front of a computer nonstop.

And that wasn't the dream, the dream was to make a lot of money and to let the market work for us.

So that's what you need to do.

You need to let the market work for you.

So let me put volume on.

And I'm willing to bet.

At this candlestick right here, yep, huge volume.

We bounce from there.

That was a good sign.

Can secure huge volume.

Candlestick here, huge volume turning around, so that's that volume.

You do not want to risk too much in one trade, I've seen far too many people blow up their accounts

by risking 10 percent of their potential capital or worse yet, risking maybe two percent or one percent

on a trade.

But, you know, constantly moving your stock losses back.

Or up or down, whatever direction you're going, in order to not take the loss and you end up turning

a one percent loss into a 15 percent loss.

You know, for every if you lose 10 percent in your account, you need to make an 11 percent gain.

And it gets and it expands from there.

It's not it's not linear, it's exponential.

So.

That's something to keep in mind.

Plus, you're better off just letting the market tell you when to get out.

Sometimes it'll come back and it'll take you out and then I'll go on without you.

But the reality is, sooner or later, you're going to get one of these trades that runs much further

than you could have ever anticipated.

And.

Over the course of a year, you may find there's a handful of those trades that make up a huge part

portion of your gains, and there's nothing wrong with that.

You definitely need to be cautious about trying to over trade, let the market work for you, so let

it tell you where it's trying to find support and put your stop loss underneath it if you're long or

resistance if you're short.

It sounds simple, it is simple, but unfortunately, that's where the psychology comes in, most states

are so terrified of taking a loss that they don't stick to a mechanical setup, mechanical setup to

the most important things.

You can do look for stop losses behind support or resistance, look for take profit at areas where we've

seen trouble before.

You can see, OK, had you been long here, that would have been.

An area where you would expect a little bit of resistance or profit-taking, just like if you got long

here, you would expect it there again, eventually we break out.

But there's no need to be hoggish about it.

So.

By using a little bit of common sense support resistance, look what the market is telling you.

In this entire run, the market was telling you, for starters, the market is telling you that it's

going higher, that it wants to go higher, it's telling you that it's still I mean, we pulled back.

You should have you shouldn't even be thinking about selling.

You should be thinking about buying when it drops.

Now, that will change some day, but until the market shows you that it's willing to make a lower loan,

you should only be buying.

And if you trade with the trend.

That will make up for a lot of sloppy mistakes because you will make the occasional mistake, but if

you're with the trend, you're more likely to have the market work with you and not against you.

That's the most important risk management bit that you can keep.

Never trade against the trend.

Use reasonable position sizes, don't go all in on one trade, you know, it's great that perhaps you

get two or three wins in a row and you make an astronomical amount of money, but sooner or later,

you're going to get a loss and you can wipe out your entire account very quickly.

I cannot stress that enough, it has to be small enough risk that you're not concerned about it, you

don't fiddle with it, you let the market do the work for you.

So in the next video, we'll begin module two profitable patterns for crypto trading.

And that module, we'll start to talk about grouping of candles and the way the market moves, using

these patterns as a hint to buy or sell a little bit of a preview.

This is something called an ascending triangle.

That is a buy signal.

And you can see that it did, in fact, go higher.

But there are other patterns, obviously, that we will talk about.

We start to get into the meat of various trading strategies.