Hello friends,
Someone said that they felt that bitcoin wasn't in an uptrend. I said that clearly it is in an uptrend as an uptrend is measurable (kind of the main point) and the measurements are bullish. I'd like to take a second to talk about why objectively (by common metrics) bitcoin is OBJECTIVELY in an uptrend.
For starters, Bitcoin is up over 200% this year and has had a max drawdown of something like 30% in all that time. It has been more probable for bitcoin to consolidate and then explode up than to drop after parabolic moves (!). This alone is a pretty good piece of evidence that we are in an uptrend, but it's not an exact measurement.
Let me share with you a pretty well documented technical sign that you are in a bull trend: if a moving average is faster than another one that implies the faster ma is above the ma. As you can see, in the chart, the 50 is higher than the 100 which is higher than the 200. This is bullish technical posture and is a pretty simple measurement of trend.
Now, I am on the daily chart and generally don't care about any timeframe lower (am starting too in developing quantitative infrastructure but that's not how I cut my teeth) than it. The weekly and monthly are vital as well for determining trend and they will agree with what I am saying is true for the daily price data as well. That is also a good indication you are in a strong trend: the lower timeframes align. If the timeframes align, the trend is wherever the price is generally moving. It's that simple.
The sar is also a good measurement of trend, but it changes often even in uptrends so you don't want to define a trend based on it. That said it can be pretty useful in measuring how serious moves against the trend are.
My point in making this post is that as a technical trader, there are really two main options for your trading strategy (you could do orderbook analysis, stat arb and others but that's besides the point) they are: 1) trend following 2) mean reversion. I use elements of both in different situations, but by and large, I follow trends. If you look at my early work, which made a lot of money for me and was very high alpha (see for yourself) I was betting on the bear trend every time and called many of the bear market local tops. I did this by a mix of mean reversion and trend following, but the confidence was far more in the trend than the mean reversion.
How are you going to trade? How are you going to measure a trend? Only by systematically approaching trading will you have a chance to make money. And for what it's worth, bitcoin is a very nascent inefficient market. What does that mean? It means your competition is much less than that of other major markets. This is an advantage. There are disadvantages to this as well, but by and large you are competing with other traders and less competition is good for your pnl. In smaller markets, you have a better chance of being a big fish (a whale if you like).
The question is: how are you going eat the other fish?
YoungShkreli
Someone said that they felt that bitcoin wasn't in an uptrend. I said that clearly it is in an uptrend as an uptrend is measurable (kind of the main point) and the measurements are bullish. I'd like to take a second to talk about why objectively (by common metrics) bitcoin is OBJECTIVELY in an uptrend.
For starters, Bitcoin is up over 200% this year and has had a max drawdown of something like 30% in all that time. It has been more probable for bitcoin to consolidate and then explode up than to drop after parabolic moves (!). This alone is a pretty good piece of evidence that we are in an uptrend, but it's not an exact measurement.
Let me share with you a pretty well documented technical sign that you are in a bull trend: if a moving average is faster than another one that implies the faster ma is above the ma. As you can see, in the chart, the 50 is higher than the 100 which is higher than the 200. This is bullish technical posture and is a pretty simple measurement of trend.
Now, I am on the daily chart and generally don't care about any timeframe lower (am starting too in developing quantitative infrastructure but that's not how I cut my teeth) than it. The weekly and monthly are vital as well for determining trend and they will agree with what I am saying is true for the daily price data as well. That is also a good indication you are in a strong trend: the lower timeframes align. If the timeframes align, the trend is wherever the price is generally moving. It's that simple.
The sar is also a good measurement of trend, but it changes often even in uptrends so you don't want to define a trend based on it. That said it can be pretty useful in measuring how serious moves against the trend are.
My point in making this post is that as a technical trader, there are really two main options for your trading strategy (you could do orderbook analysis, stat arb and others but that's besides the point) they are: 1) trend following 2) mean reversion. I use elements of both in different situations, but by and large, I follow trends. If you look at my early work, which made a lot of money for me and was very high alpha (see for yourself) I was betting on the bear trend every time and called many of the bear market local tops. I did this by a mix of mean reversion and trend following, but the confidence was far more in the trend than the mean reversion.
How are you going to trade? How are you going to measure a trend? Only by systematically approaching trading will you have a chance to make money. And for what it's worth, bitcoin is a very nascent inefficient market. What does that mean? It means your competition is much less than that of other major markets. This is an advantage. There are disadvantages to this as well, but by and large you are competing with other traders and less competition is good for your pnl. In smaller markets, you have a better chance of being a big fish (a whale if you like).
The question is: how are you going eat the other fish?
YoungShkreli