EDIT: This article was written before the collapse of the FTX platform:
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Crypto trading relies on strong discipline and strategies that work. The tools help traders organize themselves and thus optimize their trading. This is the case with sub-accounts. Although very simple, it is very useful.
Secure your primary crypto trading account
When starting trading, usually at fire one or more accounts. This is due to the fact that we are naive, maybe sometimes too sure of ourselves and that we are not yet aware of the traps that the market can create for us.
We’ve all been through this phase where, all the fire, all the flame, the important thing is placing orders and selling. Many beginners focus on chart analysis or money management but forget the essentials: organize.
Especially in crypto trading, sub-accounts are a real tool formanage your account in crypto trading.
By analogy, not having a sub-account for your crypto trading amounts to opening an existing account that can accommodate the current management, the Livret A, the PEL, the Life Insurance, the investments, and etc… Obviously this configuration is not easy to manage.
More than an organizational problem, it is also a lack of securing capital .
To use the analogy of a bank account, if all operations and changes in value due to various investments affect the entire capital, the owner of the account in question is not guaranteed to end the month in one positive note.
This is why our bank accounts divided. On the one hand, the risk-free current account, then the savings account and finally the riskier investments. In this way, part of the capital is secured even if it has no return or very little.
Sub-accounts for crypto trading work in the same way. They tend to get a share of the capital to avoid any disappointment.
Crypto trading: test your strategies risk-free
Marketing is also a matter of strategy. In fact, claiming to have tamed the market and generated profits without an established strategy is pure utopia.
The second utopia is the belief that one strategy is enough to get through all market cycles. It is unpredictable and sometimes misleading. Relying on just one crypto trading strategy is like wearing only short-sleeved shirts all year round, not thinking that winter can be deadly.
Obviously, we don’t trade the same way during an explosive bull run as we do during a relatively flat period. Therefore, the majority of traders use many different strategies according to market movements, volatility or even the phase of the cycle in which they find themselves.
They also do not hesitate to create new strategies using different indicators, identifying specific patterns, etc. create a new strategy and apply it to real life requires a test phase. The latter tends to validate or not the reliability of the method used.
For this, two options are available to traders:
- They can use a demo account ;
- Or opt for a under Account.
The first option seems safe and secure to keep the entire capital. However, the demo account is what its name suggests a fictitious account. So capital is not real. Although the strategy test can be implemented, the fact remains that thepsychological aspect get lost in the process. But we know, themental influence represents a significant bias in the activity of the entrepreneur.
This is why the second option is the best way to test new strategies in your crypto trading. This is to create a sub-account and deposit a small amountbig enough to count but small enough to not put the total capital at risk.
Thanks to these sub-accounts, it is possible to test new strategies on actual conditions and thus whether or not the method is valid considering all the variables.
Dedicate a sub-account to a specific strategy
Many new entrepreneurs will be tempted mixed strategies in the same account. They set themselves up with a short-term strategy of M15 for example, then in the following trade start a long-term investment in a daily or monthly time unit.
In fact, it is very practical to center its commands and thus make a point in a simple view. However, it also shows a lack of organization important. This is a source of error which is sometimes very expensive, especially if the positions represent large amounts.
User-defined alerts occur chaotically and it is necessary to verify what these alerts correspond to.
In this situation, using a sub-account offers several advantages.
On the one hand, it provides a saving time. Each sub-account has its own policy and its own alerts. So it’s easy to organize and react quickly when a buy or sell signal appears.
On the other hand, it allows segmentation of asset classes where it is interesting to place oneself.
In FTX for example, it is possible to create as many sub-accounts as you like. One of them can be attributed to the major crypto-currencies (BTC and ETH) where a long-term DCA strategy is preferred. The second account will focus on DeFi-specific cryptocurrencies, etc.
With one click, it is possible to switch from one sub-account to another and execute trades according to the defined strategies. Sometimes even smart 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. So this means establishing a money management strategy including, in particular, therisk aversion maximum that can be tolerated so as not to quickly dissolve its capital.
However, depending on the assets and crypto trading strategies used, this risk can change. With only one main account, it is difficult to master this basic aspect for optimized trading. Disorganization jeopardizes the smooth running of your money management strategies. Here again, mistakes can happen and capital is expensive.
A sub-account allows you to easily organize your crypto trading. on personalization of each sub-accounttraders can only place on cash management conditions.
A sub-account can thus play it safe with 1% risk taking and others are more aggressive in using higher leverage but little capital. In this case, the sub-account where risk aversion is greater will not compromise all capital.
For example, the FTX platform provides the possibility of configuration different maximum leverage for each sub-account and thus adjust the maximum level of margin allowed for each.
The sub-account: good for using the crypto trading algorithm
the trading algorithms has been rising for a long time. These are powerful computer programs that have the ability to scan the entire market to find the best opportunities for their users.
It offers many advantages, including saving time enough. In fact, they are permanently connected to the markets of search signal respect the strategy(s) of their users.
Although many scams are riding the wave of trading robots, some of them are very effective. They allow traders generate very interesting passive income.
However it is necessaryto be careful and on choosing the right algorithms in trading, those whose creator is recognized in the world of trading and whose integrity can be verified.
The best way to use a crypto trading algorithm is to connect it to a sub-account through an API system provided mostly by exchanges. This method provides 3 major advantages:
- The user can monitor the performance of the trading algorithm;
- It allows, similarly, to maintain its own trading activity independent of the algorithmic service;
- If there is a mistake in the selection of the trading robot, the sub-account limits the losses. They do not affect the principal capital.
The trading algorithm developed by the Stradoji team allows and encourages the connection of sub-accounts to major exchanges. Start enjoying this service today and join us here: We optimize your crypto investments
Find us at CryptoRider training. Sylvain March develops strategies and tips for you to trade and invest in crypto-currencies