5 good reasons to use a sub-account

Updated 16 Sep 2022 at 13:13.

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 with sub-accounts. Although they are very simple, they are nevertheless incredibly useful.

5 tips for better cryptocurrency trading

Securing your primary crypto trading account

When starting out in trading, it is common to burn one or more accounts. This is because we are still naive, perhaps sometimes too sure of ourselves, and that we do not yet know very well what traps the market can set for us.

We have all gone through this phase 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: be organized.

Especially in crypto trading, sub-accounts are a real tool forManage your account of crypto trading.

Analogously, having a sub-account for your crypto trading is not equivalent to opening a single current account, which would accommodate the current management, Livret A, PEL, Life Insurance, the investments, etc… It is obvious that this configuration would not be easy to manage.

In addition to an organizational problem, it is also a lack of securing of capital .

To use the analogy of a bank account, if all operations and value changes due to the various investments affected the entire capital, the holder of that account will not be guaranteed to end the month positively.

That’s why our bank accounts are divided. 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 gives no return or very little.

Crypto trading sub-accounts work the same way. They tend to secure a portion of the capital to avoid any disappointment.

Crypto trading: test your strategies without risk

Trading is also a matter of strategy. In fact, it is pure utopia to claim to tame the market and create gains without a previously established strategy.

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 only one crypto trading strategy is like wearing only short-sleeved shirts all year round, not taking into account that winter can be fatal.

Of course, we do not act in the same way during an explosive bull run as during a fairly flat period. Thus, the majority of merchants use several different strategies depending on market movements, volatility or even the stage of the cycle they are in.

They also do not hesitate to develop new strategies by using different indicators, identifying specific patterns, etc. develop a new strategy and applying it in real life requires one test phase. The latter will tend to validate or not the reliability of the method used.

For this, two options are available to traders:

  • They can use one demo account ;
  • Or choose one under Account.

The first option seems safe and secure to keep the entire capital. However demo account is as the name suggests a fictitious account. Capital is therefore also fictitious. Although the test of the strategy can be done, it is a fact thatpsychological aspect disappears from the process. But we know thatmental 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 smaller amountlarge enough to count, but relatively small so as not to endanger the total capital.

Thanks to these sub-accounts it is possible to test new strategies in actual conditions and thus validate or not the method taking into account all the variables.

Dedicate a sub-account to a specific strategy

Many beginners are tempted to mix strategies on the same account. They position themselves both on a short-term strategy in e.g. M15, so on the following trade, a long-term investment begins on a daily or monthly time unit.

It is certainly very practical to centralize your orders and thus make a single glance. However, this again reflects a lack of organization important. It is a error source which can sometimes be very expensive, especially if the positions represent large sums of money.

Custom warnings appear chaotically and it is necessary to verify what these warnings correspond to.

In this situation, using a sub-account offers significant advantages.

On the one hand, it gives a time saving. Each sub-account has its own policy and its own warnings. It is therefore easy to organize and react quickly as soon as a buy or sell signal appears.

On the other hand, it allows divide asset classes on which it is interesting to position oneself.

On FTX, for example, it is possible to create as many sub-accounts as you wish. One of them can be dedicated to the major cryptocurrencies (BTC and ETH), where a long-term DCA strategy will be preferred. Another account will focus on DeFi specific cryptocurrencies etc.

FTX sub account creation - crypto trading
Example of sub-accounts on FTX

With a single click it is possible to switch from one sub-account to another and to execute 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

In addition to the simple graphic strategy, it is a matter of securing portfolio management. This therefore entails the establishment of a money management strategy, including in particularaversion to risk maximum tolerable so as not to quickly melt his capital.

However, depending on the assets and crypto trading strategies used, this risk can be adjusted. With only one main account, it is difficult to master this basic aspect too optimized trading. Disorganization jeopardizes the smooth execution 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 personalization of each sub-accounttraders can simply set money management conditions.

Thus, one sub-account can play it safe with a risk-taking of 1% and the others be more aggressive by using higher leverage but a smaller capital. In this case, the sub-account where the risk aversion is greater does not compromise the entire capital.

The FTX platform, for example, allows for configuration a different maximum leverage for each sub-account and thus adjust the maximum margin level allowed for each.

Sub-account leverage - Crypto trading
Example of the FTX platform, which allows determining a maximum leverage effect specific to each sub-account
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The sub-account: ideal for using a crypto trading algorithm

That trading algorithms has been increasing for some time. They are powerful computer programs with the ability to scan the entire market to find the best options for their users.

These offer many advantages, including time saving significant. In fact, they are permanently connected to the markets on search for signals respect their users’ strategy(s).

Although many scams ride the wave of trading robots, some of them prove to be very effective. They allow merchants to generate very interesting passive income.

However, it is necessaryto be on guard and off choose the right algorithms of trade, those whose creator is recognized in the commercial world 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, which is mainly provided by exchanges. This approach offers 3 major advantages:

  • The user can monitor the performance of the trading algorithm;
  • This provides the opportunity to simultaneously continue its own trading activity independently of the algorithmic service;
  • In the event of an error in the selection of the trading robot, the sub-account limits the losses. They do not affect the main 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: Optimizing Your Crypto Investments

Find us in the CryptoRider training. Sylvain March develops strategies and tips for you to trade and invest in cryptocurrencies

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