BTC - Can You Fold a Winning Hand? Managing Risk

Bitcoin has been consolidating over the past week and is setting up for a break higher, but do not fall for the Fake Gurus pushing this hype. This is an area to take a little profit from lower levels, not to add more risk.

From a swing trade perspective the 16,400 is an initial target level, but risk is measured off the low end of the range, a more aggressive setup would be from mid-range around 15k. So with a trigger at 15,800 your risk is 800 points for an aggressive setup. The Fake-Out level has been slightly adjusted up to 16,400, so this would be an initial target.

Are you risking 800 pts to make 600 in an area where a fake-out is relatively high? Not me personally, this is a daytrading time frame or one for noobs.

If we do find buyers above 16,400 the next level of importance is 18,300, so this would be a reasonable target level, but probabilities favor a pullback prior to getting there so if you are a more conservative trader, probably best to wait.

Even so taking T1 @ 16,400 and T2 @ 18,300 is about a 1550 pt profit. Still under 2.0 R:R on a trade that is only about a 33% probability of success. Take this trade over and over probabilities will eventually catch up and your trading account will see decay.

For a trade like this to work, need better than 3:1 which would imply a T3 of 22k. Probably unlikely to get there in a single trade and there is more likely going to be trade setups along the way with a better R:R or one that makes more sense.

So in short we have decided to pass on this trade setup, as we told our members. Missing a trade is not the same as taking a loss. Taking a loss forcing a trade is a bad habit to get into. So though we remain long in the longer term, we are looking for better setups, less risk, more reward, higher probability outcomes, and because of that we have to step aside and be patient.

Money is not made by trading every setup, money is not made by trading on emotions or following the herd, money is made, over time, by those that have the patience to wait for higher probability setups.

A break of 16k is going to get a lot of attention, going to be a headline across CNBC, but this is simply the distribution phase, where they hype it up enough to sell part of their inventory to the emotional herd.

In closing, you can play every hand in poker to the river and you will never fold a losing hand, but is that the goal of playing poker? To win every hand you can? Or is the goal to make money? If your goal is to make money you MUST get used to throwing away winning hands when the Reward, Risk and Probabilities are not in your favor!

Clean Up - I guess it was pretty much a straight line to 16k ;)


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