Course 8

Leverage is not necessary – Long term vision

What you will learn:

  • You make as much or more without leverage

  • You need to be patient

The reason why a lot of us are losing money when we start trading is because we want to use leverage, because we think about how much we can make. It gives us a boost and we take a massive amount of risks. We don’t know anything about position sizing or trading systems.

Basically we expect to turn $1,000 into $10,000 in a few trades. Then what? We do this every week, and we turn $10,000 into $10 million?

Why do we all think about this at first? I am not sure. What I know though, is that this is not the right way. All the money you make is equal to all the money someone else loses. This is a zero sum game.

If everyone was making 10 million out of $1,000, then there would be something wrong.

What happened to me is that I kept trying to make money by trying many many things, each day, day in and day out. I was so focused on making a system that brings big money fast.

Over time, I lost a little here, and then a little there, just by trying these different strategies. At the end of month 1, I was at minus 5%. Month 2, I was at minus 4%, and etcetera. One day I open a no leverage trade, just randomly, and I forgot about it. I will always remember, it was on XRP. A month later, I go check it, that thing was up 50%! And with absolutely no leverage!

This day I realized something: why in the world do I need leverage for?

Honestly, think about it, just enter each trade with all your position at a point of obvious strong support and get out each time your up about 1-2%. If you do this with a USDT pair, with an exchange that has enough trading pairs of course, so that you have 1 opportunity per day, now you are making 1-2% a day you are golden. 1% a day turn $1,000 into $1,347 in a month. 2% a day turns $1,000 into $1,811 in a month. Do this 2% for 6 months and now your $1,000 is worth $35,320. Yes this is possible.

So, why shoot for 10+% a day gains, and risk to lose it all, when you have an option to get small gains each day consistently? Some guys do the 10+% a day, but these are the super talented guys, they do this for a few days a month or something. I don't know about you, but personally I am not talented.

Leverage is absolutely not necessary to make it. My number 1 algo does not use leverage. I probably could, but I don’t need it. I don’t want to leverage and compound these fees/slippage, like we talked about in the other tutorials.

You need to have a realistic long term plan, and invest your time into learning and understanding how things work. You need to be patient. Learn how to fish instead of trying to just get the fish.

If your strategy has a 100% or more per month return, it means your $1,000 will become $2M+ in 12 months. Are you really you really one of the 1-2% of traders that can actually pull this off?

Conclusion:

Leverage is not necessary to make it big. There is enough volatility to make it on spot.

Have a long term vision, don’t try to make it big right away, eat the elephant one bite at a time.