Crypto Academy / Season 3 / Week 8- Homework Post for Professor @yohan20n

We have some trading concepts that we need to be fully aware of when it comes to trading. I am going to tell you in detail about these concepts.

• Buy stop
• Sell stop
• Buy limit
• Sell limit
• Trailing stop loss
• Margin call

Buy stop

Stop order is a method we can use during trading we can use it to purchase an asset, To use this approach, it is necessary to increase the value of assets. If we talk about using it You can buy any asset at a price higher than the current market price through a buy stop .This is a very useful process for trading.This is beneficial because the asset has already broken its established resistance, which is likely to increase the value of the asset.

(tradingview BNB/USDT 4H chart)

The asset position must be strong to place a stop order,As you can see in the screenshot, the rising price of the BNB has also broken its resistance line.And this gives us a clear indication that the value of the BNB will increase. and then i set Buy stop at $ 369 above the current market price of BNB . And also you can see on the screenshot after a while the price of BNB was increased 18% .

Sell stop

Sel stops are also an order that traders use to avoid any major losses in the future.Traders, judging by market conditions, assume that the value of existing assets will rise slightly and then fall.That is why the traders think that I am in a special position right now which will end soon.That's why traders use cel stop as a precaution.And traders make these decisions wisely and with market conditions in mind.And this process is very beneficial for traders

(tradingview ADA/USDT 4H chart)

As you can see in the screenshot above,The price of ADA has been rising steadily for the past few days but its price will start declining from last night.I placed a sale order at $2.06 below the current price is $ 2.20 with the help of a sale stop. After placing the cell order as you can see on chart price was drop almost 13%

Similarly, if we look at the RSI indicator. Even there, we can see that the bitcoin price is breaking the resistance line and coming down.

Buy limit

The process of buying an asset at a price lower than the current price is called a Buy limit,Merchants used this order well Traders can purchase any asset through a limit order without having to wait to purchase an asset at a price lower than the current value of the asset.
Now let me explain to you on the buy limit chart

(tradingview ADA/USDT 30m chart)

As you can see in the screenshot,The current value of the asset is $ 1.97. And I placed the first purchase order at 1.94 and also placed the second purchase order at $ 1.90 with the help of the buy limit.And when the asset price goes down, the order will be completed with the help of automatic Buy limit.

Sell limit

This is an ordering feature that helps traders maximize profits and minimize losses.If the market is in an bulish trend, we can make a profit by placing a sale order at our specific location with the help of this order feature.If the market is in a bearish trend, we can minimize our losses with the help of stop loss and sell limit.This is a very useful process that traders use a lot during trading,Now I will try to explain to you the function of this feature with the help of chart

(tradingview BNB/USDT 4H chart)

As you can see in the screenshot, the current price of the bomb is $ 399 and its resistance price is $ 424 but I ordered at $ 420 with the help of the sales limit. My order will be completed automatically when the price reaches $ 420.if the bearsh trend start i will set the sell order at $ $ 380 because i dont want to loss my all money

Trailing stop loss

Trailing stop loss is a feature that gives traders a lot of profit and greatly reduces the loss rate. If we talk about trailing stop loss, it is a strong combination of risk management and trade management.

For example, a BNB coin costs $ 300 today, tommorw the price of BNB will increse $330 , you have to set stoploss at $320,let suppose if BNB price will decrese then your BNB will sell automaticlly at $320 then you have $10 profit , Beacuse you has already set stoploss at $320 .

So on the price of BNB will increse and reached at $370 you have to lock you profet at $350 with the help of stop loss , again lets supose if the price of BNB will decresed and you asset will automaticly sell at $350 and you had $20 profit. Thats called trailing stop loss.

Margin call

what a margin cell is whenever you trade some security or asset through a brokerage or in the case of crypto and exchange,The service provider may offer the user the possibility to trade with leverage basically trading with borrowed money.

Any assets or security purchased on leverage will typically be stored in the so-called margin account now every service
provider offering these kinds of accounts will have a minimum required amount of funds deposited by the trader in effect the service provider will require a trader to have a certain percentage of the borrowed amounts as collateral in exchange for being granted leverage on the tradethese levered positions make larger gains possible

If we talk about margin call, it would be very useful for traders, Suppose a trader is trading with all his money and is incurring a loss. The brokerage house calls the trader to avoid loss even if it is in the form of an email.

2 - Practically demonstrate your understanding of Risk management in Trading.

What is Risk Management?

If we talk about risk management, it literally means risk setting. Traders should now take precautionary measures to avoid incidents that may occur during trading.Every trader should make some rules to trade which can save him from huge losses during trading.If a trader does not follow the trade rules he has made, it means that he has not traded successfully.Similarly, every trader should trade at 15% of his saving ,If there is a loss during trading, the rest of the money will be saved.And similarly, don't trade on credit, which can be detrimental.

Risk management is generally divided into many categories. Portfolio Management ,Self-Control, Reward Ratio.

Portfolio Management:If I talk about portfolio, it is very important in cryptocurrency. Good traders never invest their money in any one asset.We should invest our money in different assets which will greatly reduce our loss rate.

For example, I invested $50 each coin of, Bitcoin, Vechin, Bnb, Steam, Polkadot, and Chainlink.Bitcoin and BNB prices started falling and that's why I started losing, but if I look at my portfolio, the other three assets were giving me huge profits which covered all my losses. Similarly, we want to invest in different assets at the same time.

Self-Control:Similarly, the types of risk management are self-control, in cryptocurrency trading, the person who controls his sentiment is the person who is successful.While trading we should make realistic decisions that are very useful to us.Traders should first perform a fundamental analysis of any asset and then a factual technical analysis which has a positive effect on trading.

Stop loss:There are several indicators in the market to avoid stop loss. By using them wisely, we can avoid losses and in the same way we can use our understanding to gauge market trends that can save us from losses. Are And we can avoid losses with the help of many such technical points.

Reward Ratio:These are the ratio of a rate of profit which we can keep in different ways and get different types of profit such as ratios of 1/2, 1/3, 1/4. We say that if we set the reward ratio to 1/2, then our assets are worth 20 20. Thus, if the market situation worsens, we will have a stop loss of $ 16 and a loss of $ 4. As we expected, our selling price will be $ 24, which will give us a profit of $ 4.

Trading Strategy based Risk Management using EMA

As can be clearly seen in the picture, the EMA 50 lines are crossing the EMA 200 line from bottom to top. This process is called the Golden Cross. The EMA 50 line will serve as a strong support. When the trend was changed bearish to bullish, that time I entered the market up to the golden cross that time asset market price was $347 and i set the stop loss below the current market price at $ 283 ,and my take profit price was $416 and let see my reward ratio with the calculation of method

Buy Price = $347
Stop Loss = $ 283
Take Profit = $ 416

Risk = Buy Price - Stop Loss = $ 347 - $ 283 = $ 64
Reward = Take Profit - Buy Price = $ 416 - $ 347 = $69

Rasio Risk: Reward = $64: $69= 1/2

That is the calculation Method you can simply calculate your reward ratio and risk ratio, because of that i already tell you I am just enter the market slightly above the golden coress because of that if market suddenly changed then i loss may all mone thats why i wait a while and check the market trend and then enter the market. if we can apply this strategy in our trade we can get good profit

Conclusion

Thank you very much teacher for making this very useful lecture for us. I hope you will learn a lot by reading it. I hope we will find such useful courses in the future and in today's class I learned about the points to be used during trading. And understand the risk reward