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  • Rick Rahim trades everything from stocks to crypto, and one of his top picks is litecoin.
  • His goal is to make 1% to 2% a day and then compound the gains.
  • He says it’s a low-risk strategy if you know how to execute each trade and don’t panic sell.

Rick Rahim is an active day trader of stocks, crypto, and derivatives including options.

He’s also a self-described serial entrepreneur who mainly sells products on Amazon. But he realized that profitable trading is much more rewarding than running a business.

While he was figuring out his strategy, he founded an automated trading software company called ProChartSignals. The paid software’s algorithm combines various indicators such as momentum, overbought and oversold signals, buy and sell pressure, moving averages, and trading volume to help traders determine the optimal entry and exit points for stocks and crypto.

“There’s no overhead except you need the money to trade, but you can trade in your underwear from anywhere in the world,” Rahim said of day trading. “You can be on vacation with your wife and have your laptop. Heck, nowadays you can do it from your phone.”

While he can trade almost anything, one of his go-tos is litecoin. Created in 2011, it was one of the earliest altcoins, designed for cheap and fast peer-to-peer payments.

"The main reason I trade litecoin is because I'm not mentally committed to buy and hold it the way I am with bitcoin and ethereum," Rahim said. "I absolutely believe bitcoin will go to $100,000, if not way through it, very shortly, and ethereum up to $5,000 and $10,000. So I don't want to be out and miss the big runs."

He views litecoin as a temporary utility used for the faster transfer of digital assets — unlike bitcoin, which he sees as a long-term store of value, and ethereum, which has strong technological use cases.

Once the emotional attachment is removed from the asset, entering and exiting positions becomes easier, Rahim said.

His trading strategy 

Rahim said that by using the power of compounding in a proactive way, he'd been able to increase his litecoin position many times over.

At a minimum, he strives to buy low and sell high, a process that's profitable for every asset. It works especially well for litecoin because of its steady price fluctuations, Rahim said, adding that on good days you can make 2% to 10%. Once you see the gains, get out, lock up your profits, and repeat.

Though gains aren't guaranteed, Rahim suggested two simple rules-based tools to improve the odds.

The first is stop-loss orders, which can be set up through a brokerage account to cut losses. A trader sets the price at which they would want their crypto sold in the event the price begins to drop. The set price needs to be lower than the market price at the time of the order.

For example, if a trader is not willing to ride out a sell-off and wait until it recovers, a stop-loss can limit losses and take profits by executing a sale if the crypto's price drops below a certain point, Rahim explained.

But keep in mind there's no guarantee of execution at the given price, particularly when the market is diving. In such a scenario, the sale might trigger at a price lower than what a trader had punched in. And even a stop-limit order, with which a trader can specify the lowest possible sale price they want, may not find a buyer if prices are falling extremely quickly.

His second simple tool for risk management is limit orders. For a buy order, a trader can preset the maximum price they're willing to pay. If the price of a crypto drops to a favorable rate, the brokerage will automatically purchase the crypto. Here again, the order may not get filled in a fast-moving market.

Crypto traders are no strangers to sharp volatility, and they got another taste of it earlier this month. As of Friday, bitcoin's price was down by about 42% from its November 10 peak. Litecoin was down 61% from its May peak; that slide featured a 36% single-day drop on May 19.

While altcoins are high-risk investments, Rahim believes litecoin is less risky than some of its peers because it has been widely accepted. It's the 18th largest by market cap and its users have kept it around for 10 years even though more than 2,300 tokens have failed, according to Coinopsy.

But before throwing money at a trade, Rahim recommends studying litecoin's chart over a span of days and hours. Another option is to take advantage of paper trading before trying the real thing. The goal is to take note of the support and resistance lines, because those will inform your entry and exit points.

"Your risk is that it'll drop drastically," Rahim said. "And if you're using money you can't afford to invest, if something in life happens where you have to pull your money out at a loss, then you absolutely lose. Now, to me, I only invest what I'm willing to not need long term."

That said, Rahim isn't exactly trading with spare change. In one instance in November, he moved as many as 120 litecoins ($19,725) in a trade, according to a copy of his brokerage account statement that Insider viewed. That means his daily upside is also substantially high. His account showed that in one day he purchased about 118 litecoins at about $199.10. On the same day he sold about 354 litecoins when the coin was trading between $199.90 and $206.

But even if you start smaller, with $100, $1,000, or even $10,000, and you earn 1% to 2% a day, you can become "obscenely wealthy," Rahim said. However, you'd need to reinvest all your gains to capture the upside over time and create a snowball effect.

"It's obscene how quickly you can make money. And we all know what they say: The rich keep getting richer," Rahim said. "So I'm trying to teach people how to do that, even with small amounts. And that's what rich people do."

Rahim survived the 2017 crypto crash by panic selling in time to still see a bit of profit. But he said that if he had held out, his position today would have been millions of dollars higher.

In the meantime, weaving in and out of trades in smaller cryptos like litecoin is his way of turning quick profits rather than needing to wait a few months or even years to see returns.

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