The strong bullish candlestick that has just been completed at the 60min Bitcoin chart favors long positions for sure. Should we trade this breakout, the rules of the previous breakout trading apply here as well. Read my short post about the breakout when Bitcoin penetrated $400 resistance level here:
In brief, and due to the ascending triangle drawn at the chart, my stop loss would be set right below the trendline. A more conservative strategy would be to exit if Bitcoin drops below $415, which was the low of the (almost) doji candlestick printed on November 14.
Finally, if you opt to day trade Bitcoin and use the breakout candlestick for setting your stop loss, I would trade out 33% or 50% of my position if Bitcoin hits $470 and another 33% at $500 (round number and pullback's range - from $450 to 400).
Here's how you should calculate your risk/reward ratio, based on a trading you could have made during the recent Bitcoin breakout:
Thanks for the chart Jim - seems like you were right on that. I've just been using Bitstamp and not sure what trading platform to trust for BTC. Can you recommend one?
JimMakos
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In all honesty, I haven't traded Bitcoin yet as I myself haven't found a reliable trading firm. Having been used to stock brokers, I find it hard to trust these Bitcoin exchanges. I keep reading that withdrawals take more than a month at least and commission are pretty high compared to stock or forex trading. I'll keep you posted as I learn more about Bitcoin platforms and exchanges.
JimMakos
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I just found an informative resource, presenting the top 4 Bitcoin exchanges based on cumulative Bitcoin trading volume. Perhaps it'll come in handy,
Hey Guys!!
I'm really interested in getting started on the technical side of trading.
Could anyone recommend a good place to start learning about charting/indicators etc...?? (books, sites, videos anything)
Have only just found tradingview.com today and it's excellent to have all your explanations and forecasts right there on the chart.
Any help is appreciated,
Happy Trading
JimMakos
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A simple Google search about "candlestick patterns" or "technical analysis" will bring up a lot of good resources to begin your studying. Be prepared, there are a lot to learn. You don't become a trader in one day.
The information may seem a bit overwhelming in the beginning, so try focusing on basic stuff, like trendlines or support and resistance. Avoid indicators when you start and study more about money management.
Also, be sure to join popular trading forums, like EliteTrader, Traders Laboratory, Big Mike's trading forum and Trade2Win boards.
Happy studying!
vanucci
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Thanks, I'll get started
MRS_Watanabe
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ok got it, money management rather than something you have spotted in the charts thanks
JimMakos
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Yes, exactly. Thanks for commenting!
MRS_Watanabe
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why close some at $470? where do you get that fig from. I agree with big round number resist. 500 but why 470?
JimMakos
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Breakout's candlestick range is about $20 - from 430 to 450. So, if we used that candlestick to set a tight stop loss (430), by closing out a part of the position at 470 the trade has a 1-1 risk/reward ratio, at least for that part. Taking quick profits (and moving the stop loss to breakeven point) if trading short-term usually takes the psychological pressure away. On the contrary, if I set the stop loss further down, I would advise against trading out so soon, since it would hurt my trade's profitability in the long run. I simply picked that number due to the breakout's candlestick range and having short-term trading in mind. I like keeping an eye on the probable risk/reward ratio, as that will also define the variance of my capital.