“No one makes money from trading Bitcoin”
In recent days, that statement has been repeated. The only thing is, in 2018, people still debate about this argument. But for now, all agree that: No trader can make money from the Crypto market, especially Bitcoin.
So why? It’s simply because of: Fast, strong, and unusual price movements of Bitcoin (BTC). The price decreased by 13% and then rebounded within 1 hour. It blew away all the money of the traders who were trading in this market, regardless of whatever trading strategy they were pursuing.
The question now is: Whose pocket will the money flow in? Or rather, who is behind all this? Surely, this guy has a lot of money and power to be able to control both the price of Bitcoin and the crypto market. I will call them: Creators – An existing and dominant organization or group in the market.
Not just Bitcoin, any market has a Creator. Often, the creators don’t need to create too much volatility. They only need a few hours to “shake” the market and steal all the achievements of the traders.
How to not lose money? The answer is capital management. The market is a battlefield. There, you have to fight with all kinds of genres to make money. If you consider the trading strategy as a spear, then capital management is your shield and armor that helps you survive.
So: You need a capital management strategy to ensure that your trading account is always safe. At the same time, it realizes the profit goals that you pursue. And today, we will talk about: Capital management – the key to making money in Olymp Trade trading
Methods of capital management in Olymp Trade trading
I will cover 3 capital management methods that you can often read on websites or be taught in trading. At the same time, I will point out the disadvantages of these capital management methods.
Classic capital management – trade evenly with a certain amount
Here’s what you are taught: Deposit your Olymp Trade account with $1,000, then trade with an equal amount of $50 per order. Using a strategy with a 70% probability of winning (7 wins – 3 losses out of 10 orders), you are definitely profitable.
10 orders? You need to open up to 10 orders, don’t you? When you trade a lot, your emotions will suffer. It is easy to get caught up in fast trading orders. And in the end, you don’t have a single penny left in your account.
Martingale capital management – absolute winning in Olymp Trade trading?
Martingale – this is a sure way to make money in both Fixed Time and Forex trading, provided: You have a lot of money. Martingale’s principles are: If you lose, double the bet on the next trade. With just one win, you will get back both capital and profit.
Here’s what you are taught: The market always gives you a 50% chance of winning (either bullish or bearish). As long as you apply a few more indicators, your probability of winning will increase. So you just need to trade using the Martingale method and you will always win.
You understand the picture above, don’t you? The Martingale plan would be: You deposit $1,093 into your account for 7 consecutive orders. You will start with the $1 order, and so on. If you lose, you continue to triple the investment for the next trade. Just one winning order, you will recover all the capital of the previous losing trades. And then you start over with $1. You only lose all your capital when you lose 7 consecutive orders.
Martingale capital management is a psychological game where fears will slowly eat up your mind. Trade for $1, no problem. A $3 trade is not a problem either. But the more you trade and increase the investment, the more likely you will start to fear. Every losing trade makes your inner fear grow. A brain overwhelmed by fear has no room for wise decisions. The result is always: You will lose, definitely lose. And for Martingale, losing is painful. Losing is losing it all and losing means not being able to stand up.
Capital management with compound interest
You can understand it simply as follows: You start trading with a small amount of capital. If you win, use profit plus capital to trade the next orders. In trading, it is called all-in. And this is the fastest way for you to make money. But if you lose, you only lose a small amount of your initial capital.
For example, you start at $60. If you win 3 orders in a row, you will get $360. If you lose, you only lose $60. So you are allowed to be wrong 3 times. And with only 1 win, you will get back all your capital.
The French have a very good saying. With the word “If” they can put the whole of Paris in a bottle. Therefore, if you use the word “If” in Trading, you will not have a single penny left in your pocket. Win 3 times in a row? It sounds easy but it is not always possible. And if you continually lose small amounts, your capital will run out.
At the same time, compound interest is a very strong blow to greed. Assuming you are lucky enough to win 3 orders, the question now is: Can you stop? Or would you continue to trade with the thought: If you lose, it only takes $60, but if you win, you will make a lot of money? Greed is a very difficult thing to control. It only stops when you lose all your money.
Why do I say: Capital management is the key? The reason is: Capital management is money management and money management is emotional management. Your emotion is like a bomb. It will destroy everything when it explodes. But if you keep the detonator safe, nothing will happen.
And before I go on to share my own capital management in Olymp Trade, I will give you some good practices that you should avoid.
Capital management always goes with trading strategies
You have your own strategy. And you know for sure the probability of winning when trading in Olymp Trade using that strategy. At this point, you need a suitable capital management method. So, create your own one.
Don’t read or copy anyone. That’s just a theory and it’s not right for you. Most of the online articles on how to manage capital in trading do not help you at all. It even leads you into the spiral of trading. It makes you trade more and more.
The number to stop
The market is a harsh battlefield. If you want to be a predator, you need to survive. You can achieve all profit goals only if: you have money left. Therefore, managing capital means keeping money. Have you got a plan to keep your money yet? If you trade Forex in Olymp Trade, what is your stop-loss? If you trade Fixed Time, how much money will be for you to stop if losing? Let’s specify it by a number. And when you reach that number, you definitely have to stop.
Clear profit targets
You want to make money in Olymp Trade, don’t you? How much? Exactly how much do you want to make? Of course, it must be reasonable compared to your financial capability.
For example, You cannot deposit $1,000 and expect a profit of one million USD. Conversely, you can not deposit one million USD just to expect a profit of $50. Everything should be reasonable and within your reach.
Do not over-deposit into your account
Here’s an experience I want to share. If you want to make $50 a day in Olymp Trade, you just need to deposit $300 or less.
Imagine, if you have $1,000 in your wallet, then you will not regret spending $10. But if there is only $50 in your wallet, you will definitely be hesitant. The same applies to your trading balance. If you deposit a large amount, even if you make a profit, you will find it too small compared to your total account. Conversely, if you only deposit a small amount of capital into your Olymp Trade account, with just 1 or 2 winning trades, you will see a relatively large profit.
My capital management method during trading in Olymp Trade
Profit target: $1,000 for the first month. That means you only need to make $50 per day.
Acceptable risk level: $30 per day. You can understand it simply as follows: The maximum amount that can be lost in a day is $30.
Trading strategies in Olymp Trade: Trend + Signal. With this strategy, I only open from 3 to 5 orders per day. So, to reach my target of $50 per day, I will invest $20 per order.
Forex test order
The best part of Forex is stop-loss. You only lose a small amount when you are wrong. So, for trading strategies in Olymp Trade, you must use Forex test orders. “Never test the depth of a river with both feet.” So, before you start looking for opportunities to make money in the market, you need to do some tests. It is to make sure your predictions about the trend are correct.
In Forex, I will set a stop-loss of 30%, which equates to $6 per trade. If my prediction is wrong, I will lose $6. On a bad day, being wrong 5 times in a row can completely happen. And if I lose all $30, I will stop.
But when you catch the right trend of the market, never take profits. Let that trend increase your profits. The job now is: Focusing on finding the next entry points on either Forex or Fixed Time Trade.
Limit Fixed Time transactions as much as possible
Making money fast is a trap of Olymp Trade. It’s like they give you a noose and wait for you to put your neck in. Just a little impulsiveness, a little of wrong psychology, the string will slowly tighten. And the result is: You die.
I don’t mean you can’t make any money in Fixed Time Trade. But it is only suitable for those with good nerves, patience, and discipline. Usually, I will open 2 Forex orders based on the main market trend. And since both of these orders are profitable, then I place a Fixed Time Trade order. This is the best way to keep your account safe. Please remember: Survival is the first rule, making money is just in second place.
For me, when both Forex orders are profitable, I will open 1 Fixed Time order for $20. If it wins, the target profit for the day will be reached. I will stop and withdraw the money. If I lose, I can preserve my capital and finish here. It looks like I can’t make any money today.
Let me reiterate: Capital management is risk management. And the top priority is to protect your account. Depending on the method, strategy, and goals of each individual, we will have an appropriate capital management method. Don’t follow anyone else stereotype.
Let’s review my series of 14 other articles about Olymp Trade:
- How to make $1,000 in Olymp Trade: Safe, stable, and easy to carry out.
- 5 Basic Principles When Trading In Olymp Trade (Part 1/20).
- 4 Things To Prepare Before Starting Trading In Olymp Trade (Part 2/20).
- The Easiest Way To Make Money In Olymp Trade: Determine The Trend (Part 3/20).
- Unbeatable trading strategy in Fixed Time Trade: Trend + Signal? (Part 4/20).
- Practice trading in Olymp Trade easily and safely: Uptrend + Retest (Part 5/20).
- 3 Forex trading skills in a downtrend in Olymp Trade (Part 6/20).
- Make money in Olymp Trade: Be patient or die (Part 7/20).
- 3 ways to never lose money in Olymp Trade (Part 8/20).
- Habits Of Reviewing Trading Logs In Olymp Trade (Part 9/20).
- Why Shouldn’t We Trade In Olymp Trade When The Market Goes Sideways? (Part 10/20).
- Do not lose money in Olymp Trade (Part 11/20).
- Emotions during trading in Olymp Trade: Throw it in the trash (Part 12/20).
- 7 illusions that kill traders in Olymp Trade (Part 13/20).
- To make money in Olymp Trade: Think like a predator (Part 14/20).