Beginners Bitcoin Trading – Did you catch the breakout of bitcoin prices early morning in the 13th of Feb? I caught the trade, but I was late – which was a mistake that could have been prevented. Then, I made a mistake that cost me the profits I had, forced me to give up my entry position and turned a profitable trade out of a perfect trading signal – into a loss.
Here is a case study of a day of trading bitcoins for beginners – a day with nice clear trading signals that should have turned out as a big profit day, but two mistakes caused this trade to fail.
Beginners Bitcoin Trading
First, there were blatant mistakes before the trade signal that resulted in at least half the profit potential removed from the trade. This sloppy entry reduced the profit potential, but the trade was profitable and, in hindsight, even this sloppy entry point would have been a good buy and hold level. However, an inadvertant mistake halfway along the trade ended up increasing risk beyond the size of this trading account, and the position had to be liquidated at a small loss.
As the day went along, fortunately, there was another opportunity to enter the trade and at the time of this writing, this second position is profitable and prices have moved above very important technical levels and there is confidence this position is a good one for a long term hold while we test to see if Bitcoin is now in an up trend.
The Need For Using Stop Losses
It is almost like teaching about the benefits of using a seat belt when driving – but sometimes it takes a close-call before you take notice and pay attention to safety. Better to let someone else’s experience teach you how to avoid this common mistake made by a lot of beginner bitcoin traders.
In this particular trade, bitcoin prices were a the edge of a very strong chart formation. I was short with a very small trade and prices were looking soft, so I went to bed. When I woke up, prices had broken higher out of the trade formation and my short position was at a loss. Not only was I holding a loss, but I had missed one of my most important trading signals and price had surged much higher.
I closed my short position instantly, and instead of just going long immediately, I then watched prices to see if another entry opportunity would show itself. I didn’t have to wait long and I bought in, and then I added to the position – leaving me with 0.1 btc long… about 40% of my available trading funds.
After the trade was in a profitable position, I started to consider Rule #2 – and look for when it would be good to add onto the position… and at the same time, calculate just how much I planned to add onto the trade…
However, I mistakenly sent in that order, and there I was, with too much exposure at the wrong time… prices faded back and ate all my profits, then they started to break below the bottom of a 1-2-3 top formation and I had to close the trade at a loss instead of risking a sharp price drop.
Prices faded a bit, then recovered and made some nice new formations that gave me another entry point. I went long, and then added to the position. A little later, prices broke higher past important levels and I added to the trade again. This time the trade positions were put on at the right times and immediately proved me right. Both Rule #1 and Rule #2 put into action and I have my full line on.
Now the trade is profitable and prices are creating a consolidation pattern at a range that gives my entry point some degree of comfort.
The plan now is to sit and do nothing – unless prices move back down and force me to close the position to avoid a loss. Now that prices have moved to higher technical support levels, I’ll take a greater risk with the profit capital and let the prices retrace without taking profits, and bet on a longer term trend that will turn this small trade into a very nice profit percentage.
Thanks for tuning in to this Beginners Bitcoin Trading Case Study – I hope it helps new bitcoin traders make more profits with trading!
To Your Success for Beginners Bitcoin Trading,