Picking up new skills in the bear: Leverage Trading

Chat / Discussion
1

I want to use this bearmarket to learn some new skills and prepare for the time after crypto winter.
So I thought it would be really good and interesting to learn a bit about leverage trading.
My goal would be to acquire this skill to a level where I can use leverage trading for assets which already have momentum up or down. I am aware that it is obviously not that easy but when I saw luna going down I realized it is possible a good skill to learn how to short so you can short falling knives.

My plan would be to first learn by paper trading so that I start to understand the mechanisms and interface.
Does anyone know about a good platform to do so?
And if anyone has experience with it here I would be very happy to hear about your common or first mistakes

Or if you have any article, video or other resource which helped you please share if you want

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A good platform for leverage trading imo is pancakeswap: user-friendly, decentralized and fast. You can find all the explanations on how to use it, the site and theories here with these articles.

At the beginning, I started reading articles and watching video just for fun, and a good way to learn is by following the articles on Binance Academy. It starts from the beginning and the explanations are all clear.

My recommendations: 1. donā€™t ever over-invest. 2. you will not become a leverage trader just by simply studying the articles I linked you. Study, read more, then try by yourself and be cautious. But Iā€™m pretty sure this is something you already know.

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Thx for these resources will check them out!

Doesnā€™t pancakeswap has quite some high fees?

Also do you have some sort of rule system in place to create yourself a framework to guide your actions!

Knew them but never wrong to hear them again and take them serious

Very true just by reading you wonā€™t have the skin in the game and no exposure to the mental games it will play with you yet still before using reall money I want to collect experience with a paper trading account

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A bit high. PancakeSwap runs on the BNB smartchain, but it is not one of the ā€œno feeā€ exchanges. It charges around 0.20% per transaction, regardless of whether you are a maker or a taker. A bit high, you can say, but imo the platform is good and secure, and this is whatā€™s more important.

Try to give a look at this.

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This is a tutorial for margin trading right? Or for a paper trading account?

Alright thats not the best but potentially acceptable I will look into it

Are you actively margin trading or how are you operating?

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Maybe Iā€™ve personally also only been trading for a few years by risking the ups and downs of prices, but Iā€™m sure this is something difficult because of a sharp knife on a thin thread. when our calculations are wrong we can lose quite easily, different when it comes to a point where we wonā€™t lose any part, just lose value based on price and it can still be done by time.

Maybe this is a few articles enough

I hope itā€™s a fun start if you learn a little more before starting.

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Thx a lot for sharing
What where common mistakes you made when you started and what would you have loved to know from the beginning on?

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Mate I would really avoid leverage trading , because exchanges can see all the positions and can crash the price whenever everyone is highly leveraged and take all your money, dont get wrecked. @pancaked swap is built with atom sdk has low low fees

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Definitely gonna be careful!
Learning now about it made me realize how crazy dangerous it is.

If I would do it it would be only small sized positions with a lower leverage and not aiming to make some crazy gains just some profits
This obviously is already way to easy sad than done

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Mate just remember it cuts both ways, if you 5x leverage it goes up 5 times faster, but if price drops by say 5 percent price goes down 5 percent x 5 , then you get liquidated - btw going leverage in a bear market is the worst time, because price keeps dumping.

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I am definitely aware of the two sides of the blade!

I am also not planning to use any leverage now during the coming bearmarket rather I see it as the time to learn about it so I can use that tool with minimal exposure with the new bearmarket

I also think one of the hardest things is when you have losses to than cut the lossesā€¦thats really not easy for me but with leverage trading a necessity

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maybe this is my basic mistake,

  1. Expectations were too high, when I saw an opportunity and I continued to chase it because of fomo.
  2. Lack of knowledge, about the basis of risk. or platform-specific models and settings and policies sometimes differ
  3. Trading without a clear plan such as when should I take an entry or exit position
  4. Do not use Stop Loss, and let the loss think it might turn around.
  5. Tempted to High Leverage

Maybe this is what I thought, when I do I think I need high concentration and focus.

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These are definitely mistakes I also can see unfold for me.

This one is especially a tricky one for since it is very hard for me to cut losses but this is an essential thing to do in leverage trading

With becoming more experienced did you somehow managed to create a framework which leads your decisions when to exits or enter something?

I would imagine when performing a trade you before entering already determine your goal and create a stop-limit order for this area
As well as an stop-loss to minimize your losses and donā€™t get liquidated

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14

Trading is hard. And just when you think you got it right you fall even harder.

Never ever assume you understand what price is doing. No good trader will ever guarantee something cause thatā€™s nonsense.

Trading is statistics. You have to stop seeing price as dynamic. Create a bet like a coin flip: only 2 conditions can be the result. Either price goes to a point x oder to y. Make a plan before entering. Define both conditions and do not change them (95%, there might be exceptions)!

A bet is like a clear thing here: ā€˜I bet 10 bucks the price goes 1% up before it goes down 1%ā€™ by that you define both exits beforehand without any room for emotional error.
When to make those bets depends on your style of trading but I make sure you are always keeping in mind you basically only making a coin flip bet and nothing else.
2 conditions, 2 exits.

Trading is risk management. Nothing more than that. Mastering the theory behind it is only a statistical thing to learn and can be done by a lot of people. But I recall a line going like 'if trading would be about intelligence there were so so many more."

Never give into your emotions. Never think you know whatā€™s gonna happen. I cannot stress that enough. Taking losses is part of trading. By default you lose 50% of your bets. Donā€™t take it personal and donā€™t get carried away.

Cheers

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15

Thanks for these advices!
Really enjoyed reading that, well writtenā€¦chapeau!

Could you explain risk management a bit further and how you personally manage your risk in trading