Risk management is key
You really don’t want to put all your funds into 1 coin. I recommend a maximum of 10% per signal. If you don’t know where to put your money, then you can always stay in BTC or BTCUP (leveraged token without risk of liquidation). Risk management is the most important thing in trading and you can’t underestimate it at any cost!
Profit target and stop loss
I provide all the necessary information about a trade. After you buy a specific coin, you should immediately place your stop loss and profit target. You place your profit target by setting up a “limit” order, and you place your stop loss by setting up a “stop market” order. If you trade on Binance, then there is no “stop market” order available on the spot market. In this case, you have to set a “stop limit” order.
Binance offers a great order called “OCO”, where you can place your profit target and stop loss together in one single order. This is what I personally use and recommend.
What happens if I do not set my profit target / stop loss ?
Usually, my profit targets are set at a strong level because there is a great chance that they will be hit really quickly, and you have no chance to do it manually. In general, if you do not set your profit target, it’s considered very unprofessional.
If you do not set your stop loss, then there is a great chance of a huge crash, because my stop loss order is usually on a key level, and if we breach the level, it can be very nasty. You probably don’t want to be in a trade anymore.
What is the “Risk to Reward” ratio?
The risk/reward ratio measures the difference between a trade entry point to a stop-loss and a sell or take-profit order. Comparing these two provides the ratio of profit to loss, or reward to risk.
How to buy a breakout?
You really don’t want to sit at your computer and watch a key level to buy a breakout manually. You should use “stop market” or “stop limit” order, unfortunately – “stop market” is not supported by Binance on spot market, so you have to choose “stop limit”.
Let’s say i want to buy a breakout above 2.5 USDT, because there is a very nice base (rectangle) and if the price reaches 2.5 USDT – above the resistance (base), I want to buy immidiately at the best possible price.
- The first field is STOP. That means at what price you want to trigger your order.
- The second is LIMIT, which means at which price you want to set your limit order. You want to buy immediately, so it must be much higher than “STOP” to make sure you will get filled at the first available market price. For example, you can set this field to 5.0 USDT and the algoritm will try to buy it for 5.0 USDT, but there are always offers from different traders just above the current market price, so the algoritm will choose the best possible price for you.
- The third is “Amount” – How much RAD do you want to buy.
- And finally, the fourth field is just a recapitulation of how much USDT you theoretically pay. This is calculated based on your limit order. In reality, you will pay slightly above 2500 USDT, so you can totally ignore this field.
How to set an “OCO” order?
Let’s say I just bought 2 Bitcoins for 20,000 USD. I think the price will go up, so I am going to set my profit target at 40 000 USD. If the price reaches 15,000 USD, I will exit this long position. I want to sell immediately for the best available price.
- The first field is price. That means at what price you want to sell.
- The second is STOP, which means at which price you want to trigger the third “sell limit” order.
- The third is your limit order to sell it. It must be much lower than “STOP” to make sure you will get filled at the first available market price. For example, you can set this field to 1 USDT and the algoritm will try to sell it for 1 USDT, but there are always bids from different traders just below the current market price, so the algoritm will choose the best possible price for you.
- The fourth is “Amount” – How much BTC do you want to sell.
- And finally, the fifth field is just a recapitulation of how much USDT you will receive if the trade is successful.