Bitcoin has NOT been naturally going down. It is being pushed down via whales placing spoofy sell orders on exchanges to make noobs and risk managers sell to "buy back lower". They are stealing your bags and will make you buy back at a higher price
19. REFINE YOUR DAILY ROUTINE
If your mind is scattered, your portfolio will likely be scattered too.
Be purposeful about how you conduct your research each day.
4. PAY EXTRA ATTENTION TO TOKENOMICS
There are some amazing projects out there, but due to poorly designed tokenomics/vesting schedules, they fail to perform in terms of price.
@thedefiedge's tokenomics checklist below is a good starting point.
I will give you a tip this has made me incredible amounts of money over the last 6 years of trading crypto.
Now that funding rates are getting a little crazy on some alts, here is your strategy.
On top trending/strength alts, set bids 20-30% lower with limit orders.
There are like fishing hooks you set out to catch some wicks during liquidation events.
I did this on FTX regularly and it works out very well.
When funding is .3-.4%, a flush is inevitable.
It can even dump 30-40% sometimes in a single candle before recovering 70-80% of the wick.
If you aren’t a good trader, I’ll give you a little tip that should help.
Most new traders usually have bad instincts.
They buy on impulsive green candles and panic sell on red candles.
Before you go to enter, look at your setup and say, “where would I set my stop loss if I entered this trade.”
Usually, it’s below the wick or the former low.
Now that you are armed with this information, set your entry in that zone and make your new stop loss below that.
Very simple, yet effective way to turn your beginners instincts into as asset instead of a liability.
Only advice I can give you if you are actively trading and not holding is to buy dips, not rips.
Step 1: Find top trending movers.
Step 2: Look for oversold moves on 5 min / 15 min and keep buying them and selling the pumps to compound a small account quickly.
4/5 times this will work and the 5th time it should hit your stop loss.
Rinse repeat on the next mover.
Hedging is one of the best ways to protect yourself against downside moves and to prevent selling before 1 year for capital gains.
Bookmark this thread so you have it in the future if you need it.
This is a thread of why and how to hedge using derivatives and leverage:
- Hedge to reduce taxable events
- Hedge to lock in notional profit
- Hedge to protect from downside
- Hedge to take advantage of high funding rates against longs and for additional yield
- Hedge into mania/euphoria
What is hedging?
It is using a secondary market to take a position that is equal and opposite of your original position to reduce risk.
Side Note: The real reason to use leverage is to reduce counter party risk, not to be a degenerate gambler.
Here is a real world example of hedging and the reasoning behind it.
Example:
I buy $50k of Solana at $10.
Solana goes to $200 and it’s now worth $1,000,000 but the market is euphoric but I won’t want to sell because it’s been less than a year and I’ll get hit with 37% cap gains.
If I want to lock in the value because I’m afraid the markets are overheated and a correction is due, I can then use the derivatives or futures market to short the same asset.
I can instead short $1,000,000 with 10x leverage ($100,000 position size) on the SOLUSDT.P contract on Bybit or Binance so I am 1:1 hedged and if price goes up, I don’t lose any money and if price goes down I don’t lose money.
If funding rates are overly positive because we are in a euphoric environment and the ratio of longs:shorts is high, then you can also make a decent amount of money by holding the short position.
This is called a funding rate arbitrage trade strategy and works well for many assets.
You can hold the short open for as long as you want and if price ends up crashing you can close the short whenever and you still have $1,000,000 because the gains in the short offset the losses of your spot position.
The key to hedging is to be comfortable with price moving against you and losing out on the spot gains because you are locking in the value and expect the euphoria to eventually come back down to earth.
You can also hedge with options, dated futures contracts, etc.
The strategy I provided is the simplest you can do for a beginner.
Like and repost if you enjoyed the thread and follow for more 🙏