Trading & The Skill Of Capital Deployment

9 Feb 2024

Sentiment Is Hotting Up
As you can imagine, with Bitcoin being above $45K, and altcoins like Solana making headlines, the masses are once again beginning to wake up. This is just the first phase, and we are likely to see a significantly stronger inflow post-halving. However, new participants are entering the market. The majority of these individuals have never traded in any financial market, and are now entering the most volatile, and perhaps even, the most dangerous market.
These “market participants” will begin trading without first dedicating time to research and learning the basics, regarding financial markets and technical analysis. One of the most important skills to learn is capital deployment. Not only does effective capital deployment act as a form of risk management, but it is simultaneously able to revive trades that have experienced an unexpected turn in the wrong direction.
This practice does of course take time to develop and requires a significant amount of discipline and self-control. It’s tempting to throw the kitchen sink at an investment or trading opportunity you think is about to explode, or perform well over the coming months. However, this is where effective capital deployment can make all the difference. The market has a way of defying your outlook, regardless of whether it is bullish or bearish.
The Foundation
The typical scenario of stop-loss hunting and liquidity grabs tends to send the market temporarily in the opposite direction of its intended path. Once again, in such a scenario, strict capital deployment practices can realign your entry with the short-term moves of the market. Most investors choose to enter a position guns blazing, as opposed to structured deployments that are decided by the market.
To structure a plan of action, one first needs to understand basic principles, such as support and resistance, as well as common formations found in technical analysis. The more knowledgeable and experienced a trader becomes, the more complicated their strategies become. Numerous relativity ratios begin to play into the picture and can enhance any trading strategy. The only problem with this approach is time.
Yes, it takes time, as well as numerous failed attempts to develop such a skill, and this is where the majority of new investors are not willing to compromise. They want to get going and begin “making bank”. The majority of course will simply dive in. However, consistently being able to extract value from the market is the only way to approach trading, or investing, for that matter.
Many will of course think it’s unnecessary. However, the market has a way of “coming for” your isolated wins. You need to have consistent and consecutive wins if you are to truly make headway. When it comes to trading with leverage, my strategy revolves around the principle of capital deployment. When I hear of traders getting liquidated, I know for a fact that they know very little, if not nothing, regarding effective capital deployment strategies.

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Final Thoughts
Learning the art of effective capital deployment is key to ensuring you remain consistently profitable. This is not only applicable to Crypto, but any financial market, for that matter. It’s important to study the principles, fundamentals, and dynamics that undergird your market of choice. This is especially true if you are planning to enter the world of leverage trading. At the end of the day, paying your dues is the only path to travel. See you next time. All the best!

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First of all, I am not a financial advisor. All information provided on this website is strictly my own opinion and not financial advice. I do make use of affiliate links. Purchasing or interacting with any third-party company could result in me receiving a commission. In some instances, utilizing an affiliate link can also result in a bonus or discount.
This article was first published on Sapphire Crypto.

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