Overweight trading — how to win over the market already at the entry?
I have talked a lot about the importance of writing Trader’s Diary and analysing it, revealing what “bad trades” have in common to make your trade better. I have trades, which bring losses, once in 8–10 times less than profitable ones. But at the same time 90% of all losing trades are opened from the market. So, it’s obvious that the quality of entry at the entry of limit orders is much better.
And it’s not surprising. Guided by the main postulate of profitable trading “Buy cheap and sell expensive”, when entering with limit orders, you get an advantage at the entrance.
Why does this happen?
On average for a year about 80% of the time the market is in this or another range. This means that a buy order placed below the market will in most cases give you a good deal.
A sell order placed above the market in any other market also gives a lot of chances for a good deal, but on the crypto this is not always appropriate, as the short on the crypto is much more dangerous than the long.
Do you know how I started trading on Forex? I entered the terminal, took a pair of Euro USD and GBR USD, opened Buy Limit at the bottom, and Sell Limit at the top on the lower timeframe, in 60–70% of cases within 2–3 days closed both in the plus. In other cases, when the unidirectional movement started, I improvised — when averaging, when turning over, the success was variable, but such a simple and primitive system, which didn’t imply any market analysis at all, was in principle profitable for 3–4 months. That’s when I got interested in trading. Therefore, the topic seemed to be simpler and safer than all that I had been doing before.
With the advent of theoretical knowledge, which I actively absorbed where I could, and practical experience, which I gained with my money, I made many changes in the system, but the logic remained the same — a good entrance is half of success, and a good entrance must be caught.
There were still seven years left before Bitcoin came along…
The main difference in the crypto is that shorts and long are not equal in risk. Short can be successful only in the short term and under strictly defined circumstances, long without a shoulder, if it is Bitcoin or Ether, will bring profit always, it’s only a matter of waiting time.
But then why enter the market at all?
Isn’t the obvious solution — not to enter the market and make the number of losing trades even less? Unfortunately, it’s not that simple. The market requires flexibility, and bringing it under some strict rules is either loss or lost profit. There are situations when entrance from the market is necessary.
For example, in cases:
1.Strong movement, and limit orders are not placed.
2.The unpredictable situation in the market demanding the fast decision (only to be able to distinguish it from FOMO or FUD which not in the market, and in a head of the trader).
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