Hello all,
I could talk about price or something, but I'm not in the mood for that today. Instead, I'd like to share with you all how I use the stop and reverse points (SAR) to identify trends and give me an edge in trading.
Of course, we have all heard the phrase, "the trend is your friend." Well, it's true. Of course, trends break and at some point following them can lose you money, but in terms of the big picture, following trends is pretty wise: you will be right more than you are wrong if you manage your downside appropriately.
There are a few metrics to identify a trend objectively, and one of them is the SAR indicator I am using. If you had solely been trading off of this indicator, you would be doing well for yourself. Of course, this doesn't always happen in every market this well and it's not perfect like anything else, but it is a very good trend indicator.
When the dots are above the price, that means you are in a downtrend and of course, if the dots are below the price, then you are in an uptrend. This is extremely useful and tells you the following: if you are betting against the overall direction of the SAR, you are probably wrong.
The SAR is therefore a great tool to be using to see if you have a correct outlook in terms of the big picture.
In terms of what it says in this chart, it is saying bitcoin is bearish... well no shit, but look at when it first started saying it was bearish: price was much higher. If you subscribed to the narrative that bitcoin was forming a smooth bottom and was about to moon, this would have been a great head's up. This is a big reason I was able to see this large crash coming and avoid accumulating bitcoin spot at $6,000. Of course, I looked at other factors, SAR just is one of them.
As you can see, I was leaning bearish and I saved my ass a ton of money as a result because the price then plummeted 50%. Risk management is a thing, but if you are like me and are looking to accumulate bitcoin at certain levels, then maybe 6k would have been one of them. As a result, you would have been dead wrong.
I am not a genie, I do not make money by being able to see the future, I am successful by doing the following well:
1. Not lose money (you can't bet the house on a trade)
2. Get into trades that give you a good probability of winning
SAR is a tool to help you do the second.
Hope this helps,
-YoungShkreli
I could talk about price or something, but I'm not in the mood for that today. Instead, I'd like to share with you all how I use the stop and reverse points (SAR) to identify trends and give me an edge in trading.
Of course, we have all heard the phrase, "the trend is your friend." Well, it's true. Of course, trends break and at some point following them can lose you money, but in terms of the big picture, following trends is pretty wise: you will be right more than you are wrong if you manage your downside appropriately.
There are a few metrics to identify a trend objectively, and one of them is the SAR indicator I am using. If you had solely been trading off of this indicator, you would be doing well for yourself. Of course, this doesn't always happen in every market this well and it's not perfect like anything else, but it is a very good trend indicator.
When the dots are above the price, that means you are in a downtrend and of course, if the dots are below the price, then you are in an uptrend. This is extremely useful and tells you the following: if you are betting against the overall direction of the SAR, you are probably wrong.
The SAR is therefore a great tool to be using to see if you have a correct outlook in terms of the big picture.
In terms of what it says in this chart, it is saying bitcoin is bearish... well no shit, but look at when it first started saying it was bearish: price was much higher. If you subscribed to the narrative that bitcoin was forming a smooth bottom and was about to moon, this would have been a great head's up. This is a big reason I was able to see this large crash coming and avoid accumulating bitcoin spot at $6,000. Of course, I looked at other factors, SAR just is one of them.
As you can see, I was leaning bearish and I saved my ass a ton of money as a result because the price then plummeted 50%. Risk management is a thing, but if you are like me and are looking to accumulate bitcoin at certain levels, then maybe 6k would have been one of them. As a result, you would have been dead wrong.
I am not a genie, I do not make money by being able to see the future, I am successful by doing the following well:
1. Not lose money (you can't bet the house on a trade)
2. Get into trades that give you a good probability of winning
SAR is a tool to help you do the second.
Hope this helps,
-YoungShkreli
Comment:
SAR can also be used to have low risk buys/sells, but that's a topic for another time :)