Crypto trading relies on strong discipline and strategies that work. Tools can help traders organize themselves and thus optimize their trading. This is the case of sub-accounts. Although very simple, they are nevertheless incredibly useful.
Securing your main crypto trading account
When starting out in trading, it is common to burn one or more accounts. This is due to the fact that we are still naive, perhaps sometimes too sure of ourselves and that we do not yet know very well the traps that the market can set for us.
We have all gone through this stage where, all fire, all flame, the important thing was to place orders and trade. A large number of beginners focus on chart analysis or money management but forget the essentials: get organized.
Especially in crypto trading, sub-accounts are a real tool formanage your account of crypto trading.
By analogy, not having a sub-account for your crypto trading amounts to opening a single current account which would accommodate current management, the Livret A, the PEL, the Life Insurance, the investments, etc… It is obvious that this configuration would not be easy to manage.
Beyond an organizational problem, it is also a shortcoming in the securing capital .
To use the analogy of the bank account, if all the transactions and variations in value due to the various investments affected the entire capital, the holder of the account in question would not be guaranteed to end the month on a positive note.
This is why our bank accounts are compartmentalized. On the one hand, the risk-free current account, then the savings accounts and finally the riskier investments. In this way, part of the capital is secured even if it generates no or very little return.
Sub-accounts for crypto trading work the same way. They tend to secure part of the capital to avoid any disappointment.
Crypto trading: test your strategies without risk
Trading is also a matter of strategy. Indeed, claiming to tame the market and generate gains without a previously established strategy is pure utopia.
The second utopia is to believe that a single strategy is enough to get through all market cycles. These are unpredictable and sometimes even misleading. Relying on just one crypto trading strategy is like wearing only short-sleeved shirts all year round, not taking into account that winter can be fatal.
Obviously, we do not trade in the same way during an explosive bull run as in a rather flat period. Thus, the majority of traders use several different strategies according to market movements, volatility or even the stage of the cycle in which they find themselves.
They also do not hesitate to develop new strategies using various indicators, identifying specific patterns, etc. However, develop a new strategy and apply it in real life require a test phase. The latter will tend to validate or not the reliability of the method used.
For this, two choices are available to traders:
- They can use a demo account ;
- Or opt for a under Account.
The first option seems secure and safe to keep the entire capital. However, the demo account is as its name suggests a fictitious account. Capital is therefore also fictitious. Although the test of the strategy can be carried out, the fact remains that thepsychological aspect disappears from the process. But we know, themental influence represents a significant bias in the trader’s activity.
This is why the second option is actually the best way to test new strategies in your crypto trading. This is to create a sub-account and deposit a small amountlarge enough to count but relatively small so as not to endanger the overall capital.
Thanks to these sub-accounts, it is possible to test new strategies in the actual conditions and thus validate or not the method taking into account all the variables.
Dedicate a sub-account to a specific strategy
Many novice traders are tempted to mix strategies on the same account. They position themselves both on a short-term strategy in M15 for example, then on the following trade begin a long-term investment on a daily or monthly time unit.
Certainly, it is very practical to centralize its orders and thus make a point of a simple glance. However, this again reflects a lack of organization important. It’s a error source which can sometimes be very expensive, especially if the positions represent large sums.
User-defined alerts occur chaotically and it is necessary to verify what these alerts correspond to.
In this situation, using a sub-account offers considerable advantages.
On the one hand, it provides a time saving. Each sub-account has its own policy and its own alerts. It is therefore easy to organize and react quickly as soon as a buy or sell signal appears.
On the other hand, it allows compartmentalize asset classes on which it is interesting to position oneself.
On FTX for example, it is possible to create as many sub-accounts as desired. One of them can be dedicated to the major crypto-currencies (BTC and ETH) on which a long-term DCA strategy will be preferred. A second account will focus on DeFi-specific cryptocurrencies, etc.
In one click, it is possible to switch from one sub-account to another and to carry out trades according to the defined strategies. Sometimes it is even wise to competing strategies to determine their effectiveness.
Crypto trading: using more aggressive money management without risk
Beyond the simple graphic strategy, it is a question of ensuring the portfolio management. This therefore implies establishing a money management strategy including, in particular, theaversion to risk maximum bearable so as not to quickly melt its capital.
However, depending on the assets and the crypto trading strategies used, this risk can be adjusted. With only one main account, it is difficult to master this fundamental aspect for optimized trading. Disorganization jeopardizes the smooth running of your money management strategies. Here again, errors can occur and cost the capital dearly.
A sub-account allows you to simply organize your crypto trading. In personalizing each sub-accounttraders can simply set the money management conditions.
A sub-account can thus play it safe with a 1% risk-taking and the others be more aggressive in using higher leverage but a smaller capital. In this case, the sub-account where the risk aversion is greater does not compromise all the capital.
For example, the FTX platform gives the possibility to configure a different maximum leverage for each sub-account and thus adjust the maximum margin level allowed for each.
The sub-account: ideal for using a crypto trading algorithm
The trading algorithms have been on the rise for some time. These are powerful computer programs with the ability to scan the entire market in order to find the best opportunities for their users.
These offer many advantages, including time saving considerable. Indeed, they are permanently connected to the markets at the search for signals respecting the strategy(ies) of their users.
Although many scams are riding the wave of trading robots, some of them are proving very effective. They allow traders to generate very interesting passive income.
It is however necessary toto be vigilant and of choose the right algorithms of trading, those whose creator is recognized in the world of trading and whose integrity it is possible to verify.
The best way to use a crypto trading algorithm is to connect it to a sub-account via an API system provided mostly by exchanges. This approach provides 3 major advantages:
- The user can keep an eye on the performance of the trading algorithm;
- This allows, in parallel, to continue its own trading activity independently of the algorithmic service;
- In the event of an error in the choice of the trading robot, the sub-account limits the losses. They do not affect the principal capital.
The trading algorithm developed by the EnBourse team allows and encourages connection to the sub-account of the main exchanges. To learn more about this service, join us here: We optimize your crypto investments
Find us in the CryptoRider training. Sylvain March develops strategies and tips for you to trade and invest in crypto-currencies