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In a previous idea I was asked if I could explain my procedure to enter a trade and that I will try to do here.
I had an earlier idea about this triangle formation that got deleted, but after months of waiting, I can begin to say that the breakout is here and it came just as planned.
We're looking for a daily close above trendline and then a following retest for confirmation of resistenace turned to support to enter. anything arround $3.35 would be perfect to me, but the upside is so masive that it doesn´t really matter much. Even when trading breakouts, a risk defined setup is very important, and therefore, I will use a stop loss in the invalidation zone (where the trade is no longer valid) and a series of take profits in trouble areas (mainly zones where a reversal might ocurr).
🟠 STOP LOSS
Conversly, the best place for SL is below the lowest swing arround $ 2.87 before breakout.
🟠 TAKE PROFIT
Take profits are split into three:
1. Surround the previous swing high (daily close). $ 8.47
2. Arround the BITFINEX:EOSUSD all time high highest daily close. $ 17.64
1. At the top of the channel of current daily bar. (Assuming cyclical repetition)
Position size depends a lot on the trader, but in my case I assign a risk percentage of my portfolio to every trade, meaning that if my portfolio is $100, and my risk tolerance is 5%, I will allocate $5 of risk to the trade. THIS IS NOT POSITION SIZE. Position Size is calculated by dividing the risk ammount ($ 5) by the distance in percentage to the stop loss from the entry.
Let's say I buy at $ 3.35 and my risk ammount is $ 5 and my stop loss is $ 2.87, that is, -14.4% below. BITFINEX:EOSUSD
POSITION SIZE = (RISK AMMOUNT) / (DISTANCE TO STOP LOSS)
POSITION SIZE = ($ 5) / (0.144) = $ 34.7
I´ll keep you updated on this trade.
** This is not financial advice, trade at your own risk **
My risk management will allow to increase my position only after there are several daily closes above this level, especially if there is a sign of rejection now from the upside.
Good luck to you all and trade well. :)
Thanks for all the engagement and diffussion this analysis has gotten!
Hopefully things continue to work in our favor.