Two fisherman were on a boat one a young fisherman Joe the other an older fisherman named Bob. The two set off on their boat for a day of fishing. Joe being young was anxious to just catch fish, so he baited his hook with a piece of shrimp threw it out there. Bob only wanted to catch BIG fish so he used a medium sized fish as bait and a big hook.
Bob threw his line out there sat back in his chair and drank a beer while he watched the younger guy pull up fish left and right. A few went in the cooler but most were not keepers so he just threw them back. Of course he bragged and bragged about all the fish he was catching and how good he was. Meanwhile the Bob sat back in his chair, popped another cold one or six, ate his sandwich and just patiently watched his line, enjoying the sunshine, water and fresh air. Meanwhile the younger fisherman was busy baiting and casting. A few hours went by and several six packs and suddenly Bob's rod started to scream! He quickly put down his beer grabbed his rod and after 45 minutes of an epic fight brought in a 30lb Mahi Mahi! Joe looked in awe as Bob quietly sat back down, put on some suntan lotion, sat back and pulled out another beer.
When they got back, Jim the dock-master asked, "how did you guys do out there?". Joe replied "I was catching them left and right all day long". So he opened his box and and showed Jim a few descent sized fish. Jim then turned to Bob and asked "How did you do Bob" to which he replied, "another beautiful day on the water, enjoyed the air, the sun, had a few beers and caught one fish". "Ohh yeah" said Frank". "I don't see it!". "That's because it didn't fit in the cooler" replied Bob.
We added bitcoin yesterday, if you follow on the other site, and we also added a position to OMG. I am not buying here for day trading I am buying for a positional longer term trade. I am not looking to make a few pips I'm looking to catch the broader move and I am willing to be patient. We move down, I am fine with that. I'm looking for a big fish! With all the recent short interest (at an all time high of bitfinex) bitcoin did not make a new low. This tells me that we likely MAY have found the bottom.
As Gillian pointed out on her trade, the pullback was a higher low, and it was at a critical level, where we normally look for reversals. I liked her trade setup and I added.
We mentioned 6427 was a critical level to hold and it did not even retest it. The upper 6615 support level held and we have since swung up from this level. I am looking to add other coins and will post elsewhere when I do. Actually there is one specific coin I am looking to pick up here and in quantity.
I am looking for broader market moves. I remember one trader posting at 6200 to go long target 7300 or thereabouts. He closed his position and everyone cheered, but then bitcoin continued up to 9500, then 14,500, then 19,000, and though he traded along the way, he did not outperform the broader market move.
In order to day trade effectively you MUST use margin. Using margin comes with risks and in this market I would NOT even think of it. Swing and positional trades with the longer term view in mind, should be the focus. Believe me I have seen it many times in my life, one bad trade wipes out 6 months or more of gains. I have seen two people go bankrupt trading on margin. Yes I too took a loss during those times, but I simply was able to ride them out and since I didn't sell I never really lost money. They never recovered. Now there is a time for margin but in risky volatile assets classes, your gambling period!
Many think that Tether is an issue for this market. I am more worried about these wild west exchanges and the margins they allow to be traded. A huge margin call and the clearing house may not be able to cover YOUR coins. You think you will get your coins before their buddies do? NOPE! This is the biggest risk to these markets not Tether.
People significantly overstate the amount of manipulation that occurs. Not all random price movement is manipulation. There is very little volume at present, a lot of traders who would generally make up the bulk of the volume are simply not trading BTC at the moment. On top of this there are no new buyers entering the market, and then there are the ones who sold out higher and are patiently waiting for a new entry point to present itself or very slowly accumulating. This lack of volume means that every time a very large short is closed (yes some people have a hell of a lot of BTC) price spikes. When a large long is closed price tanks. When these sudden price movements occur some people panic and either market buy or sell to try and catch the movement which in turn exacerbates the move. The professional operators do capitalise on this by buying some of the panic selling at the bottom or selling into the suckers market buying the top of the move. They aren't just moving price around for the hell of it in a stale market, there's no profit to be made doing that.
If you keep "BTCUSD SHORTS" and "BTCUSD LONGS" open in your watch list you can see the correlation between a sharp change in margin positions and price. Also follow @whalecalls on Twitter, he/she will keep you updated.
Another theory I have that I haven't looked into yet is that the number of people currently trading alts instead of the majors may also have an effect on price as when you sell your alt for BTC you're effectively market buying BTC. Not sure about that one yet though.
I'd love to hear back from anyone regarding any of the above. Thoughtful disagreement is always welcome, that's how we learn.
Maroochydore
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@Hulksbits, Well said. Though the Alt market does't nearly have enough volume to make any swing to the BTC price either way, does it?
Hulksbits
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@Maroochydore, I don't know mate. I don't know where the BTC comes from when you sell an alt for BTC or what effect it has on BTC markets but I assume it must have some. There is only so many available so a large sell off on a high volume alt, like Verge or Tron recently (I'm not suggesting they're a good trade or investment, just highly active) must have some impact as it takes some BTC out of circulation. Same as when there's a spate of buying. I've been meaning to look into it for some time but haven't got around to it yet.
So, I assume you are from Maroochydore?
Maroochydore
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@Hulksbits, Bugger, my cover has been blown! Near enough to there. i kind of see your point and I was seeing a lot of contrary price action between BTC and BCC on Bittrex. Also when ETH moves it seems to have contrary moves in BTC. But those two have much bigger volumes than most.
I will also agree that when BTC moves quickly it tends to affect the Alt market, but I see that as people selling out of Alts quickly to get back into BTC to sell to $. That in that way I see Alts plunging like the end of last year where BTC shot up (back to BTC to get your $), and when BTC is on a correction (sell your Alts to get back to BTC to get out in $). The time it seems best for Alts is when BTC is reasonably stable, that time is for when people want to increase their BTC holdings.
I've only been in this for a year but these are trends I have noticed, so it would be good to have some other traders conformation on this.
Hulksbits
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@Maroochydore, Nice spot Maroochydore! I work up there a bit. I'm a Goldie lad now living in Brisbane.
Agree with your observations on alts:BTC price action correlation.
Maroochydore
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@Hulksbits, Cheers, nice to get an agreement on the correlation so it's not just in my head, and hopefully not just 'local' comradery! Anyhow, I've been living in London for 20 years so I'm much less 'Coasty' than I used to be. :-)
scinar03
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@Hulksbits, Well, clearly that's one or a few players. Today, on Monday exactly at 9:00 a huge long got closed and price plunged on all exchanges. And now shorts are again at ATH. Manipulation or not it is clear that big players are able to shake the market with shorts because the volume is so low. And this will continue until people get tired to lose money and stop trading at all.
Hulksbits
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@scinar03, I 100% agree they can. Maybe I wasn't clear in the point I was making: Understanding the reasons for these reactions and the motivation of actual manipulation, as in, how they actually achieve their goal, is important as it will make you a better trader. But it's not just shorts, liquidated longs have the same effect. I short Bitcoin, it's no different to trading long and the easiest way to trade in a bear market. Shorting the market is not manipulation, it's trading. When volume is low any significant spike in volume will move price. We saw that recently when that massive long got liquidated (whale calls posted about it) and liquidations have the biggest effect as they instantly market buy/sell the entire position.
So when price moves suddenly, instead of going "shit! It's off! I gotta get on this!" I look for the reason why it moved and if there is any continuation of buying/selling. If there is continuation I'll look to buy/sell a pullback. But recently it's quite often been a reaction to large positions closing with little follow through. I think it's important for people to realise this so they don't get tired, lose money and stop trading.
It is a part of the game. We cannot change the game so we need to get better at playing it.
UnknownUnicorn995432
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@Hulksbits, follow the 'excluded' BTCUSD volume at Bitmex. CMC excludes it as there is 'no trading fee', but still lists it under the markets.
Hulksbits
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@doctorkesh, Thanks very much. I'm not 100% sure what that is yet but I'll definitely look into it soon!
If you keep "BTCUSD SHORTS" and "BTCUSD LONGS" open in your watch list you can see the correlation between a sharp change in margin positions and price. Also follow @whalecalls on Twitter, he/she will keep you updated.
Another theory I have that I haven't looked into yet is that the number of people currently trading alts instead of the majors may also have an effect on price as when you sell your alt for BTC you're effectively market buying BTC. Not sure about that one yet though.
I'd love to hear back from anyone regarding any of the above. Thoughtful disagreement is always welcome, that's how we learn.