How do I take profits in the crypto market?
The first thing is to learn to save ur earned profit and prevent losses.
Instead of booking more profit .. let’s say if you start with a $30,000 account and take a loss of 5%, your account value will fall to $28,500.
This is also referred to as taking a 5% drawdown.
Now, if you make a profit of 5%, you will make $1425. This only brings the account back up to $29,925. You’re $75 short.
This can seem insignificant, but as the drawdown percentage increases, it becomes extremely harder to recover losses.
For example, it may not seem like much if you lose 1% of your trading account, as it only needs an increase of 1.01% to recover to its previously held position.
However, a drawdown of 20% requires a 25% return, while a 50% drawdown requires a massive 100% increase in profits to recover to the same balance.
The bigger your losses, the exponentially harder it will be to recover. That is the main reason we always limit our losses at 1%. If you’re in a situation where you lose 50% of your account, you’ll have to double your money just to get back to your original point.
Drawdowns Are Normal
For you to become a high-profit trader, you must create a trading strategy that will enable you to withstand these periods of losses.
Part of your trading plan is the risk management strategy.
If you practice these money management strategies with patience and discipline the reward will be amazing.
Periods of prolonged drawdown periods will occur at some point in your trading career.To think otherwise would be irrational.
Even the best hedge fund managers, and investors on earth post entire years of drawdowns in a row.
It’s easy to let greed creep up on you after three winning trades, and try to seize an opportunity by risking too much on a single trade. You can get badly hurt &repeating this behaviour might even lead to you quitting trading completely.
Remember, consistent profits will take you much further in life than gambling. If you master these principles in your trading, you’ll get very far in life.
