Before buying any cryptocurrency the next thing you'll need to know is how to manage your risk and protect
your profit.
Here's some golden rules for risk management first always place a stop loss aka sell order at a price
which is five to 10 percent below the nearest support level.
In other words you'll immediately sell your coin to cut loss when its value goes down below the support
level.
So why do we need to do that.
Now let's consider this example.
Assume that you buy Bitcoin now at nine thousand one hundred twenty five dollars per coin.
What should we do as a professional trader.
First of all you'll need to analyze this chart and find out support and resistance levels.
As you can see on the chart we have a support level here which helped push the price back up and the
resistance level here which stopped the price going up many times in the past.
After finding support and resistance levels what you can do next is to place a sell order at a price
which is 5 percent below the support level.
The support prices around sixty five hundred dollars.
So to find a stop loss price you simply need to take 6500 and multiply it by 95 percent or Point 9 5
and we'll get a stop loss price of six thousand one hundred and seventy five dollars.
So why should we place a sell order below the nearest support level.
Most people tell you to stop loss but never teach you how and where to stop loss.
This is a very powerful trading skill that I want to teach you in this course.
As we've learned support is an area where traders found it attractive to buy previously and if it was
attractive wants to buy in this area it may well be again.
So as a professional trader we know that other traders will likely place a lot of buy orders at the
support level which can once again push the price back up.
For example after we bought this coin at nine thousand one hundred and twenty five dollars its value
keeps going down like this.
So what should we do now.
This is what you should have in mind as a professional trader.
If this support fails to push the price back up I'll consider selling my coin immediately to cut loss
before the price drops further.
So if the price drops to six thousand one hundred and seventy five dollars and also my coin immediately
to protect my money and if the support succeeds in pushing the price back up.
Well my money is still safe.
So I have nothing to worry about and I'll keep holding my investment bottom line when trading.
Make sure you always have an exit strategy in mind.
OK.
The next thing a bird in the hand is worth two in the bush which means you'll need to take the profit
immediately.
You need to stop thinking that the price will keep going up because you don't know what will happen
next.
The crypto currency market is very volatile.
Your Goines value may fluctuate 10 percent to over 100 percent a day.
So there are chances that your good profit will turn into a loss tomorrow.
A good trade will become a bad trade tomorrow.
So you'd better sell your coin and take the profit before everything gets worse.
So how do we know when to sell our coin.
There are two price points that you'll need to take into account first is 3 percent below the nearest
resistance level.
And second is 10 percent above that resistance level.
Now let's talk about the first exit point you may consider selling your coin when the price is 3 percent
below the nearest resistance level for example as you can see on the chart we have a resistance level
at around eleven thousand five hundred dollars.
So to determine your exit price just take eleven thousand five hundred and multiply by 97 percent or
Point 9 7.
You'll have an exit price of eleven thousand one hundred and fifty five dollars.
So when the price goes up to eleven thousand one hundred and fifty five dollars our sell order will
be triggered and we'll make a profit this exit strategy is more passive and preferrable.
As you just need to play some mortars and you can make money even while you sleep.
You don't need to get too involved in the market.
And on top of that you can avoid being affected by your emotions.
In case you don't want to sell your coin yet you may keep holding it a bit further but you'll need to
watch the chart closely before deciding your exit point when the price is at least 10 percent above
the resistance.
There are chances that the old resistance will become the new support.
This is very common in technical analysis.
Sellers are now thinking that the price is going to go higher and there's no reason to sell their investments
too early.
At the same time buyers also see this as an opportunity to get in the market since the price has already
broken upwards through the old resistance.
This will eventually lead to more buy orders than sell orders.
Sellers will also increase their asking price to take advantage of this scarcity and increased demand
which will finally push the price up when the price goes up.
You simply make more profits in this case.
You'll need to find the next resistance level to set your new exit point.
And in case the price fails to break through the resistance level and goes down you'd better sell your
coin right away before everything gets worse.
In the next module I'll teach you some powerful technical indicators that I always use to determine
if a coin's value will go up or down in the near future.
The next section is very technical.
So make sure you understand everything so far before moving on.