The crypto markets never close. You can trade them at any minute of any day of the year. But does that mean you should?
The answer is absolutely not. Do not confuse an open market with an opportunity to make money. Lately, the crypto markets have been quite slow, giving us few opportunities with a solid risk vs reward ratio, or high probability setups. As result, I have not made any trades on any cryptos in the past few weeks.
I am writing this article to emphasize the importance of not trading when there is no opportunity in the markets, and also talk about what you can do to improve your trading while the market is slow.
No Range or Trend
Bitcoin has been stuck in the low 6000’s range for almost a month now and has just been bouncing back and forth between the upper and lower part of the range. There is not much edge during range-bound trading. Range-bound trading is the easiest way to get chopped up. Even if you are taking small losses, you end up racking a ton of costs through trading commissions.
When there is range-bound trading, there is no obvious trend. This means the best position to be in is cash. There is no money to be made in any market that has no trend. When there is no trend in the market, you do not know where the market will likely head in the near future. When you trade in markets with no trend, you are just gambling. It is your duty as a trader to stay on the sidelines until there is a trend to capitalize on.
Making Nothing Is Better Than Losing
Unlike most professions, crypto trading is a profession where you are not paid a set wage, and you can actually lose money by trading at the wrong times. This means that you have to be able to sit on your hands so that you don’t waste your physical and mental capital when there is nothing to trade. So many traders give back their gains from when the market is hot during slow periods like we are in now.
They end up digging themselves in a bigger hole and take a string of unnecessary losses from boredom and forced trades. When the market gets hot again, they are just trading to get back to breakeven to make up for all of those boredom trades. Always remember that being flat on the day is always better than being red because you forced trades because you wanted to make money. Patience to wait for the best setups is an essential characteristic of a successful crypto trader (one of the five traits of successful crypto traders we talked about in our last article).
Use This Time To Study
Slow markets are the best time to study and review your old trades and refine your trading strategy. Analyzing your trading data is most important part of improving yourself as a trader outside of actively trading. Figure out what setups consistently make you money, and what setups don’t work for you. The best crypto traders just have a few different setups that they can rely on with certainty to generate them income every month.
Trade Other Markets
A big reason why I like to trade stocks as well is that I have something else to trade when the market gets slow. This way I can still generate trading income for myself and eliminate the temptation to trade the cyrpto markets when they get slow. Vice-versa when the stock market is slow, I will focus my attention on the crypto market if there is opportunity. The great thing about stocks is the maturity of the market. There are different markets within the whole market which usually always gives us opportunities to make winning trades.
Kunal Desai is an American day trader (stocks and cryptos) and founder of Bulls on Wall Street and Bulls on Crypto Street, two online trading academies and informational publications. He has been featured in many high profile publications like Inc, Forbes, Buzzfeed, and Fortune. He has spoke at trading and business events all across the World.