Have you ever found yourself facing the daunting task of making ends meet in the ever-changing and unpredictable world of financial markets? It’s no secret that earning money can be incredibly challenging, especially during ranging markets which are confronted even more with market uncertainties as compared to bear markets.

I recently undertook a challenge to turn $500 into $10000 in just one month. What were the results?

In this article, I will share tips, tricks, and mistakes to avoid that I learned through my transformative journey. 

Choosing the Right Exchange:

Before delving headfirst into the thrilling world of futures trading, it’s of utmost importance to find a service provider that you can trust and that aligns with your unique needs. When seeking out an exchange to begin your trading journey, I would recommend reputable platforms like Binance for centralized trading or DyDx for decentralized options. 

These exchanges provide user-friendly interfaces, a wide range of futures trading opportunities, and robust security measures to safeguard your assets. If your not sure if you should start with CExes or DEXes, you can check out this article here: https://chaindebrief.com/cex-vs-dex-crypto-trading/

Evaluating different platforms can be carefully assessed through factors such as fees, funding rates, and the overall reputation and reliability of the exchange. Choosing the right exchange is an essential step that can significantly impact your trading experience and, ultimately, your long-term profitability.

For example, I prefer a more UI/UX friendly experience and don’t mind paying more for funding rates. This is why I stick with Binance and DyDx, as liquidity is generally stable with good UI/UX, limiting the number of independent variables that could affect your trading decisions. 

It’s important to note that I do have some experience trading futures, and after some evaluation, I personally think Binance tops them all for this journey due to its UI/UX, which I believe is crucial when trading for the long-term

The Secret Sauce:

It is important to note that there is no get rich quick scheme, or any shortcut to success. You may chance upon a lucky or game changing trade, but ultimately you will lose to the market without proper discipline and execution. 

Everyone also has their own style of trading, mine for instance uses less technical analysis (TA), and more sentiment prediction. For example, this includes looking at things such as feed activity on Twitter, particular news that could affect token prices, and funding rates.

From what I have learned from the 30 days, let me share with you an easy 3-step mentality framework for you to get started. 

Step 1: Take Calculated Risks When Starting Out

It’s no brainer that you’ve heard of the saying, you need money to make money. That’s why it’s a lot easier to trade with a much larger sum of capital because of an exponential effect. This was something I experienced when starting out with $500. 

For example, if you put $100 into a 20x trade and make a 300% ROI, you would only make $300. Conversely, if you put $500 into a 20x trade and make a 100% ROI, you would already make $500. My point, take calculated risks when necessary, when starting out, because it is nearly impossible to grow that capital without taking some degree of higher risk. 

While this may prove to be disastrous if you predict the market’s movement wrongly, you can mitigate the percentile of losses with a Stop Loss. This is something I strongly advise all traders to do. 

Taking calculated risks can come in a variety of forms. For example, a 100x long may actually be safer than a 10x long. For instance, take a 100x long on ETH with $50 capital, as compared to a 10x long with $500 capital. 

While a 10x long may be good especially in the current ranging market, you may miss out on the opportunity to trade if you have to hold your position underwater. As compared to a 100x long, these positions are extremely risky, so exchanges usually set a tighter liquidation threshold.  

For example,if you enter a long at $1750, your liquidation price is $1740, even if it means you only lose 50% of your capital. Therefore, if you set a SL at $1741 and it hits, you only lose $25 which is 50% of your capital, instead of losing 100% of your capital if you hit your liquidation price. You risk little capital for exponential upside, while in the previous scenario, you risk a majority of your capital for little upside. 

For instance, let’s break down the rationale I used for my first trade. We started off the day looking for shorts in the market, and at that time, the entire market seemed to be fueled by the $ARB airdrop (sentiment). Naturally, we look to short any airdrop coin especially in a bear market. 

Timing is key.

Before I short this coin, it’s important to note that there isn’t really much historical data, so TA doesn’t really help in the calculation of risk. 

Instead, we look at price action. After noticing a correction towards ~1.2, we can notice that the funding rate was skewed positively. +0.07. It would be foolish to short at this given the lack of understanding of price action.  

We can also notice that there was huge resistance at $1.5, which is a strong indication that the market would look to try and “break” that point of resistance. This is when we observe the trade, and sure enough it tried to break this PoC. Again we look at the funding rate, which is extremely positive for a second time 0.047%. This indicates late shorts coming into the equation, which is a good time to short. 

This is because the market will often try to find liquidity, and in this case it’s at the bottom of the range. 

By setting adequate and reasonable TP’s with this micro-analysis, we made about a 160% ROI in a few hours. 

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There are many strategies that many people utilize and this is just one of the methodologies I follow, but it’s all about taking that calculated risk to grow capital. 

Here, I risked about $180 (from Stop Loss) to earn $733, a reasonable trade to grow your capital initially.

Step 2: Follow Liquidity in Any Trade  

What exactly do I mean by this? From what I’ve learned, ranging markets mean no one wins, unless you are doing grid trading. For example, I’ve held a position on $SUI a while back, but it was inconsistent and not performing well. Within the days of holding to trade, I was at net delta neutral, simply because the market was not moving. 

Furthermore, there was extremely low liquidity, so a single whale entering $SUI can just send a market order, significantly expediting the price and hitting my SL. 

These low liquidity coins may have strong fundamentals, good traction, and a good development team, but I can tell you to scrap that because a good product doesn’t mean anything in crypto. 

Follow liquidity instead. 

Instead, look for high-liquidity coins, aka the top 24hr gainers to make your trades. Not only are these a lot more volatile, but it is also easier for you to make a successful trade. When following liquidity in this market, I suggest not utilizing TA because the coin is unpredictable but instead use sentiment as a more accurate gauge. 

The goal is to not be the last one out. I usually use the funding rate as a good indication for myself when predicting sentiment. A general rule of thumb is to think opposite of what the market thinks, but there are many exceptions to this as well. 

For example, ID was a coin that was pumped simply because of an exchange listing, and the general sentiment is that it will definitely go down.

Source: https://fxssi.com/how-to-trade-liquidity-voids

Therefore, liquidity is at the bottom of the range from a basic understanding, and this can be validated with a liquidity void analysis (more advanced concept) indicating that it is a good time to short. Learning how to grab liquidity is essential, coupled with an understanding of when to think against the market and when to think with it. 

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Step 3: Don’t Avoid the Noise, Sift Through It

Almost every crypto trader has two mentalities. One, the moonboys, who think everything will go up and two, the group that always says to avoid the “noise”. 

In 30 days, I’ve realised that you shouldn’t avoid the noise, but instead you should sift through it to see what is real, what is not, and what you can take advantage of. 

For example, I frequently like to join speculative groups to validate my decision. There was as group I joined that frequently shilled low-cap coins that made absolutely no sense. 

However, this wasn’t all just noise. Some coins ride the trend of meme coins, e.g. $PEPE (which I regret not buying), while others just slow rug. 

The key is to remember that if there is enough demand, any exchange will list a token because it is popular and consumers want to make money. The goal of exchanges is not to make you money, but to ensure that you stay on their platform. 

A thesis I like to stick to is that “normies” will often outperform your rational portfolio by entering at the right time. By this I mean, investing in things like DOGE, SHIBA, and PEPE. If everyone is in disbelief of $PEPE going up, and wants to short it, then perhaps it’s time for you to enter a long. Sift through the noise to make a decision, not avoid it and be uninformed. 

Similarly, when opening positions, utilize this noise for your trade thesis. This is something I did for my winning $ARB trade. A lot of people were calling a FDV similar to MATIC due to its strong ecosystem (which I agree on for the long term), but I disagreed because there simply wasn’t enough liquidity in the market. While everyone was entering a long, I decided to enter a short instead. 

Closing Thoughts

Trading is an intensely personal journey, and each individual develops their unique style and approach over time. While sentiment trading and price action analysis have been instrumental in my personal trading success, it’s important to acknowledge that finding your own style is a process of exploration and adaptation. With the right method, you can achieve results like this:  

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Embrace the opportunity to experiment, learn from both successes and failures, and continually adapt your approach to align with evolving market conditions. It’s crucial to get burned to achieve results when trading.

Also remember that what works for someone else may not necessarily work for you. It’s crucial to remain open-minded and willing to discover your own edge and trading strategy that resonates with your strengths and preferences. If you’re interested in delving deeper into sentiment trading or seeking additional insights, I encourage you to explore reputable resources available to enhance your understanding but avoid paid resources as these are often scams or loophole references. 

Also Read: Power Perpetuals: A Better Way To “HODL”?

[Editor’s Note: This article does not represent financial advice. Please do your research before investing.]

Featured Image Credit: Chain Debrief