BINANCE COIN! A defined Setup with Huge Risk:Reward!

BNBBTC

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Some of you liked the way I explained my procedure for enteering a trade and calculating position size in my EOS/USD swing trade, so today I'll try to replicate it with this new BNB/BTC setup that I found.
** This analysis is ment for educational purposes, not financial advice. Trade at your own risk **

🟠 ¿WHY AM I ENTERING THIS BNB/BTC TRADE?

The first thing to consider is that there is clear evidence that the 2019 highest weekly close is acting as support after breakout. The previous two candles have long wicks down that immediately show rejection and return above 0.00456. Context is also important and should be considered, especially since cryptocurrencies show the highest correlation of any market. In the lower right graph we see Bitcoin in the daily time frame, which is currently breaking out from it's all time high of $57,500. As explained with red lines, a continuation after a daily close happens above is pretty likely. Keep in mind that the only reason you want to buy an Altocin instead on Bitcoin in this case, is if you expect it to go higher percentage wise. Assuming that BTC continues to rise after this breakout, altcoins will rise in a similar way, unless they have a particular setup as is this case.

In the upper right graph we see Binance Coin against the US dollar, which is currently in an area with a confluence of two types of support:
1. Horizontal Support at $255 derived from the highest daily close of the first of March.
2. Trendline support from extending the broken triangle formation.

With this in mind and considering the three relevant graphs, I believe that Binance Coin will rise against Bitcoin in a way similar to the last Leg Up of more than 200%. Not only that, but I also believe that Bitcoin wil rise as well, compounding the efect of your gains against the US Dollar. I believe that it will also happen in a more predictable way, allowing traders to use much larger positions without risking a larger amount by having a stop so defined and so close to the entry.


🟠 ENTRY (0.00457)
For this swing trade it does not matter much if we place the entry right in the highest weekly close of 2019. Price is currently just where we want it to be, so in my case I will enter with a market order at the current 0.00457 price.

🟠 STOP LOSS ( 0.003975)
As explained on my previous idea, the distance between your entry and your stop loss is what should define your position size, not random numbers or a percentage of your account balance. However, you shouldnt try to place your stop randomly close to your entry either, but at a place where you feel like the price reaching it invalidates the whole setup. In this case I will use 0.003975 as a stop loss, because I think it is far enough apart to withstand a flash crash if it happens, but not so far that it affects my position size too much. Aditionally, any weekly close below the level of support, would also be an early sign for exiting the trade, even if the stop loss hasnt been reached.

🟠 TAKE PROFIT
Defining take profits in an all time high is one of the most challenging things in formulating this type of setup, mainly because there are no areas of horizontal resistance that you can plot forward. That is why in my opinion, as long as you know that your probable take profit is at a reasonable distance that meets your R:R tolerance, you can eventually decide based on analyzing market conditions as a whole.
Knowing your take profit isnt necessary to calculate position size, which is also why I think it is less important than the price of entry or your stop loss definition.

🟠POSITION SIZE
Looking back to that EOS / USD trade, you can see that Position Size is calculated by dividing the risk ammount (What you are willing to loose if this doesn't work) by the distance in percentage from the entry to stop loss.

In this case I buy at 0.00457 and my stop loss is 0.003975, which is -13.3% below. Let's do an example with $100 risk ammount.
POSITION SIZE = (RISK AMMOUNT) / (DISTANCE TO STOP LOSS)
POSITION SIZE = ($100) / (0.133) = $751

This means that with a -13.3% distance to stop loss and a risk ammount of $100, my position size will end up being $751.00. If the ammount you get is bigger than the value of your portafolio, use leverage. :)

Thank you very much for your time and for sharing. I'll continue to update this idea as it develops, so feel free to follow me to get notifications on any news.

Feel free to post your comments or questions in the comment section. All positive feedback is well recieved.