Bitcoin: Long But Only 12K Target Area?

Bitcoin has recently generated a new swing trade long signal which we are managing at the moment. This idea is the result of WAITING for particular criteria to line up which took almost 10 DAYS. I cannot describe all the details of what we look for to enter a trade, but I can share two key variables that carry a great deal of weight in our decision making. Again, the goal of this article is to provide a sense of perspective and shed light on the mindset that has helped us produce a REALISTIC and CONSISTENT track record.

In our recent podcast, we addressed one of the biggest reasons why the majority of short term traders and investors will NOT win in this game: looking to numerous and free outside sources for information that can provide an advantage. Beside the fact that most of the free internet sources are nothing but marketing lures, without your OWN organized thought process and clear objectives, even quality signals will hardly provide any sustainable performance.

From the population of followers that we interact with, we see the same patterns over and over. New traders come into this with one objective: I want to make money. That's great, but not even close to enough in order to achieve any kind of success. Organization is the first and foremost component, and this comes in many forms. Most beginners will often hear about having a "trading plan" which is vague, but it is a step in the right direction in terms of developing a process to carry out effective timing decisions. This is ESPECIALLY important for shorter time horizon strategies such as swing trades.

Which brings me to the elements that shape our context and perspective in order to buy Bitcoin. What is our objective? To generate a greater return relative to the respective risk. This statement alone helps to shape our predetermined risk parameters AND targets. When a buy signal appears, we do NOT go all in and then starting consuming all the articles and analysis that hype about Bitcoin going to 20K next week. We don't operate on hope. Instead we set realistic targets based on the current price structure.

This means IF Bitcoin tests 12K, we will be taken out of the market for a profit relative to the risk we had to take. If Bitcoin runs further, we are unaffected, and simply WAIT for the next setup. This mindset and best practice has allowed us to exit near the highs of recent movements MULTIPLE TIMES, while everyone else gets faked out by hope and ignorance. Bitcoin has NOT proven it is in a broader trend yet, so why would you impose trending expectations on it?

What elements help us enter into the trade in the first place? LOCATION and CONFIRMATION. 9750 is a major support that has proven itself since June. It also happens to be the .382 retrace of the entire bullish move since the 3150 low. Any time price revisits the entire REGION, which means from 10K to 9400, that is a HIGH probability reversal zone. Why anyone would go short in such an area, especially on a swing trade time frame has absolutely no point of reference when it comes to risk and probabilities.

Confirmation comes in the form of price action, or in our case, candlestick analysis. The sharp reversal candle off of 9400 met our criteria. From there we were able to predetermine our risk. And once the trade triggers, it is up to the market to do the rest. We simply monitor and adjust if any price action comes along that negates our premise. This is how you operate in an objective, process oriented way or with some form of "trading plan".

In summary, I am not able to share specific trade details, but my point is to shed light on the process. There is NO one size fits all way to do this, but you must have an organized way to interpret and act on market information, otherwise you are more likely to REACT. And the shorter the time frames you want to participate in, the more objective and technical your process should be.

Reacting is the "gut feel", intuitive or "easy money" way to operate in the market, not much different than participating in a casino game. Your performance will be random, and eventually lead to an empty account. The first step to getting away from the herd mentality is to STOP consuming and reacting to the same information everyone else is. The ability to WAIT carries more value than whatever information you consume from a source outside yourself. If you think this is a game of anything other than psychology, then your learning curve has yet to begin.