Probably some of the hardest scenarios a trader faces is a trade going completely opposite of the direction they were expecting. Also struggling with the idea that they KNOW the general direction price is going, but the price keeps jumping up or down.
When trading, you have to be dynamic, especially trading bitcoin. The volatility is the reason we're here (because it's profitable), but it also makes for major heartburn trying to figure out what the next step is and positioning yourself for it.
Not even the best traders or charters out there can give you a definite answer of up or down, this way or that way. If there is someone that claims they can predict a certain price or a certain scenario, they're either going to be lucky, or lying. But with that said, how exactly do you trade then because it seems like its impossible to predict what position you should take?
My trading method is two fold. I have separate accounts for long term positions and short term (scalping - which I don't recommend unless you know exactly what you're doing). In one, I trade the obvious trend and not short term sentiment. And when we talk about long term trading, we're talking weeks and months, NOT days or hours. Those long term positions will end up usually being your highest probability and highest profitable trades. It takes time and patience.
With that said, how do we trade a pattern like this? We all know and suspect that the overall situation IS bearish. No matter how far the short term trends go up... This scenario takes planning. You have to try to chart all the possibilities so that you are ready for when an opportunity presents itself to ADD to your position.
Take for example the chart above. Yes, it's been changed over time. If your TA stays the same over time, you're not reacting to the market. You're not positioning your trades for probabilities and profitability.
The trick to long term trading is to NOT ever be in high leveraged positions. EVER... Start out with a small position first.
For example: if your long term trading account has 1 BTC. You see it's a bearish market. You chart the possibilities, and ADD to your short over time taking advantage of price fluctuations to the upside. You DONT go into a long term position with your entire portfolio. Say you start out your short position with 0.1 BTC on a 5x short. You chart the possibilities and add to your position another 0.1 BTC every time there is a higher high on higher timeframe chart (Nothing below 4hr timeframes).
Take for example our current situation. I have the possibility that we could see around the 8700 mark, but each one of those patterns does develop a long term bearish price point at the end. The higher and faster the rise, the better chance of a deeper dive down by the time the pattern fully concludes. In this scenario we are already in a short, but let's say price climbs much higher. We add more to our short at the expected range if we start heading towards it and keep breaking out and above trend lines... But you stay in your short position, therefore it averages out the loss and potential profit over time by adding to your short position at a higher price. If we're wrong, and we just stay going down, you're still making money. If price shoots up, you'll STILL make money. If we're completely off and a very different market emerges, you lose less money by spreading out your positions over time. Once again, patience is the key.
The most money I've lost was where I kept closing my positions over and over again, selling at a loss, only to see the price eventually come right back the other way. Don't keep chasing price, position yourself in the overall trend: "trend is your friend".
Whenever I post my ideas, it is ALWAYS with the long term possibilities in mind so that it does not catch anyone by surprise. If we DO go up from here, its actually a great opportunity to ADD to your short position.
Guidelines for long term positions: - Never EVER go into a long term trade with your full portfolio. - Never EVER utilize more than a 5x margin. - Never EVER lose more than you can afford. - Set a profit margin in mind, set a stop loss in mind. - Trade the long term trend, stop looking at small time frame charts. - The market is dynamic, never stop tweaking your charts. Don't be stuck in a static idea that doesn't change with how the market responds. - Chart all the possibilities no matter how bullish or bearish current price might seem so that you can profit from them and they don't catch you off guard. - Stop focusing on your PNL only. Focus on the long term picture. This is where charting out the possibilities saves you from reacting to price fluctuations and benefits your long term position.
Another great tool I use is called the Wookalich NVT. In short, it shows real transaction volume (people actually buying to invest and not buying a position).
-Whenever the gray line *closes* a candle below the orange line, it is a bearish sign. -Whenever the gray line *closes* a candle above the orange line, it is bullish.
I like to eye that indicator because whenever we have pumps up from here, everyone gets bullish because they see price rising. The last couple of pumps up, candle still closed BELOW the orange line, even if during the candle of the pump the gray line did go above the orange line for a period of time. Until that changes (especially on a larger timeframe), we will keep seeing prices going down.
Even though I am short, as I said earlier, a price surge up is more favorable for profiting in a short position. As crazy as it seems, I actually welcome it so I can build my short positions on top of it.
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I just happened to run across this article. It describes day trading almost perfectly. Definitely worth the read if you're consistently failing your trades.
DONT ABANDON YOUR SHORTS... I get it... We went up. We should obviously anticipate some buying at some point. Around 8200 is a good place to stack onto your short position.
I am still convinced in the big picture we are headed down, and even more convinced that we are headed further down than 7400... More likely in the 7k area for now. That changes if we do go up much higher.
Great TA and advice as always! I came across Wookalich NVT not long ago but didnt pay much attention to it and came back to a zero lag MACD because it "looked better", but now realized thanks to you that it could have taken me out of many bad trades and also ride the good ones longer without chickening out on fakeouts and small pumps. Thanks a lot!
I will be announcing pretty cool news to my followers here soon.
I am in the process of integrating my trading style into a scalping strategy and another one for a long term strategy into an INDICATOR! So it will simply tell you when to buy, when to sell.
In BETA testing, I am currently getting a NET profit ratio of over 500% with a max drawdown of around $800 in the previous 3 months of backtesting. These figures were calculated at $1000 positions at 5x leverage with apx 0.9% - 1% in exchange leverage fees!
.... Which is honestly better profit margin than my own eyes and TA could do!
As soon as I’m done with all the internal testing I’ll be releasing it to a select group of my followers for free, for further beta testing on a live crowd.
sfigus
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@zk8619, Wow! Sounds great, I'd love to try it! :)
Zulu_Kilo
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@sfigus, word to the wise... Go ahead and ADD to your short position here unless youve already done so.
sfigus
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@zk8619, I just did it but this time with 3x leverage so that liquidation price is far far away (above 12k, there's no change of hitting that anytime soon) , thanks again!