TraderWagon — Explaining Market Trends & Risk Management!
TraderWagon is a platform that allows you to copy trades made by lead traders worldwide. However, copying a lead trader blindly without understanding the market trend can be risky.
Suppose as per your Technical Analysis, the price will increase but your lead trader opens a short position so instead of losing money in this trade you can close your short position.
Let’s see how to understand market trends to continue earning a consistent profit. If you don’t have a TraderWagon account, you can create one using my referral link.
The crypto market has been in an uptrend since the start of the new year 2023 and during the uptrend, Bitcoin price pumped from 15K to 25K within two months.
You may already know that Bitcoin decides the next move of altcoins in the crypto market. And If you will look at the Weekly chart of Bitcoin, it looks like so much fuel is still left.
Currently, Bitcoin weekly is just sitting below the 25k mid-range. If Bitcoin manages to claim and hold above the 25K mid-range, it can easily pump to the 32.5K range high.
I feel like we will easily see 32.5K in the coming months, which will also be beneficial for the altcoins.
However, the reality is completely different from the expectations. We can expect the price to increase depending on our Technical Analysis but we cannot be 100% sure about our price prediction.
This is the place where Risk Management comes in. If you will follow proper risk management, you will easily earn a profit on correct prediction and at the same time, your losses will be small on the wrong prediction.
Usually, you need a high win rate to be a profitable trader but Trader with a proper risk management can be profitable even with an average win rate.
For example, Investor I is risking 60% of the total capital in every trade for 120% profit while Investor II is risking only 5% of the total capital in every trade for 10% profit.
As you can see in the below screenshot, the profit of Investor II is 2.5K after 10 traders while Investor I is in a loss.
The reason behind the loss of Investor I is s/he isn’t following proper risk management. Investor I is clearly earning more profit because of 60% risk per trade but in the long term Investor II will always be profitable because of only 5% risk per trade.
You can also see the below screenshot of a lead trader from TraderWagon. The win rate of this lead trader is only 27% but sill his 30D ROI is 443%. I think he might be also following proper risk management.
Stop Loss→
Stop Loss is one of the most important aspects of Risk Management. No matter how profitable and experienced trader you are, it just takes one bad trade to lose everything.
Even if you are 99% sure about your price prediction, you should still set a stop-loss because you never know what’s going to happen in the market.
Stop Loss helps you to close a losing trade with a minor loss instead of liquidating your account. This is the reason, TraderWagon gives you the option to set Stop-Loss and Take-Profit targets.
TraderWagon uses portfolio margin balance to calculate the TP & SL Price.
For example, If you will start copying with 100 USDT and 5% Stop-Loss, the system will close the positions, when the portfolio margin balance reaches 95 USDT.
Note: If you will add more margin balance to your portfolio, TraderWagon will use the new total margin balance to calculate TP & SL. Also, Setting TP & SL is optional but I would recommend you to use SL at least.
