What To Consider Before Trading DEX Token For Profit

I've seen most crypto enthusiasts engaged in trading DEX tokens, with which they always ended up in loss or insignificant profit.

Hence, this has sprung the need for me to educate you on this!

If you're kind of a Dex token trader that doesn't have a predefined exit before entering a trade, you will continuously give all your profits to the market, not because you're not an experienced trader but because you didn't factor the gas fees.

Let me make my facts known by using a low entry fund as an example, just to make it more understandable.

You have a capital of $10 and you intend to buy a particular token on a particular swap protocol (DEX), you are then charged a slippage fee of $0.60 - $1 (depending on the connection of the blockchain network at that time). You might say that the fee is small but, do you realize that if the token moves up by 10%, you won't have a single profit but rather be in loss.

Now, get your calculator, and let's analyze from the example given.

Your capital is $10 while the fee to execute the trade is $1 (vary), the value of the token left in your possession is now $9 => $10 capital - $1 fee.

Now here is the gist, when you see a long candle on your chart or you get a notification that the token you bought just moved up by 10%. Congrats, but when you enter your wallet to see that you haven't made any profit, meanwhile, that's the exit point for some of the big investors. But you, you will still be waiting there Lambo Rambo😏.

Your possession is $9 only, which means you made 10% of $9 that's equal to $0.9, you have only $9.9 now, which is not even up to your capital. If the token still goes up by 20% which is equal to a profit of $0.8, you can see that it's not enticing enough.

Furthermore, assuming you then decide to sell at that price, you will still be charged up to a $1 fee, which means you end up with $9.8. NO Profit but LOSS.

Is a 20% increase not supposed to make you smile at your portfolio? But the reverse is the case here.

That's one of the risks that undercapitalized traders get involved in.

The major points are:

🛑 Don't trade DEX token with low fund at the aim of making quickie profit based on its fundamental factors.

🚥 If you must trade the token with a huge fund (maybe you have the sentiment that the token will go up), do not be greedy; define your exit point even before entering the trade.

If your target is 20%, sell when it reaches and move on, do not care if it still keeps going up.

#TradeWithCaution