So, I hear so many people say that they swing trade or day trade around here, but then I see them say things that make me curious whether they’re gambling, speculating, or actually trading.
So at any rate, I find I make more money easier when the market’s sideways than I do when it booms, so thought I’d drop a few tips for those that want to sideways trade.
Hodl bag and trading bag must be separate.
This one is pretty much essential. Hodl life and trading life are pretty inconsistent. I hodl eth, algo, xtz, and BTC, but that doesn’t mean I don’t trade those assets. I keep my trade bag on an exchange though, entirely separated from my hodl wallet.
When I buy back in at a lower price after harvesting profits, I send 50% of the extra value acquired from the price difference to my hodl bag. This means if I sold 50 xtz for $3, and bought back in at $2.88, then I’ve increased my position by roughly 4%, so I need to buy 52 xtz at the lower price, and send 1 to my hodl bag, or 2% of the initial sell.
This will slowly migrate funds to my hodl bag while also increasing my trade ammunition, allowing for higher profit harvesting and creating a small % increase in each bag, every trade. When I’m bearish I’ll move some funds to trade from hodl, and when bullish the other way around. Don’t burn your hodl bags, but you have to accept that you’ll sell things you like… The point is to buy it lower.
Don’t buy on the way up.
As a trader, your job is to harvest modest % gains each time the price oscillates. Back to our xtz example… Before this current bump, my buy in on xtz was roughly $2.81. I’d bought plenty around $2.40 at the bottom, but sideways traded them all the way up to where it is now. Those yesterday prices don’t matter though, because I’ve already realized 7-8 batches 3-5% gains on xtz’s way up to $3, so now my buy in point has moved with the market.
Buy in small when you do. Your average price on any asset should change each day if you are actively trading. You’re not going to identify the bottom correctly each time, and that’s ok as long as you can still sell at profit.
You’re going to think that the price is mooning occasionally… That’s ok, that’s what your hodl bag is for. Just stick to the plan and execute small profit sales and hold the cash for your buy orders on the way down.
Stick. To. The. Plan.
If your trade bag is conservative compared to your hodl bag, your trading bag can’t totally fail as long as you stick to the plan. When you buy, set sell orders at conservative values. If you buy 50 xtz at 2.81, set sell orders for 5 xtz at 2.86, 2.88, 2.90, 2.92 2.96, 3.0, etc. Try to focus your sell orders around the 5% mark or so, as that’s the usual bounce or dip during sideways trading.
If it runs away, that’s ok. Say that asset moons, don’t try to buy back in high. You’ve harvested profits and still have your hodl bag. As the profit harvests start to click in, set your buy orders spread below your previous buy in using your harvested profits. Spread them out in a similar way below the mark. Be prepared to change these if the market moves. There are times you may have to buy in a little above what you sold at, but the market’s fluid, and as long as you can harvest profits, that’s the new buy in.
If you stick to the plan, the worst two things that can happen are a) the market runs away and peaks hard. In this case, you have harvested profits and are priced out of buying back in, so enjoy your hodl bag during the bull with no pressure to sell early because you already harvested your profits. Our b) the market tanks, in which case you have harvested profits that don’t tank with the market ready to buy that bottom.
Don’t turn trading into gambling. There should always be cash in your trading exchange, because that’s how you buy the next dip.
You don’t predict the future.
TA and heresay are your enemy. You need to operate as if the market will continually bounce 5% up 5% down forever. Thinking you predict the future let’s your emotions into your strategy, and that’s how you lose big.
TA and market signals are nothing but a sign to harvest more profits or be more aggressive. If I think we’re headed to a bloody Monday, I don’t sell everything. I just harvest my profits and maybe buy back in 10% lower than I otherwise would, but I won’t fundamentally change my strategy, because I, like most crypto people, am wrong a lot. Following a trading strategy though will keep you with liquid USD on exchanges ready to react of necessary after big dips.
Anyone got any other points to add? I could probably go on for a while, but I think I covered the biggest things I hear of people doing wrong.