Concept of GON...Overview
Concept of GON - Get Out Now!!!
Thanks to spending most of my time on the wrong side of the markets, the GON (Get Out Now!!!) found me.
GON aids in telling me when the markets are about to gain momentum and start to move strongly against a wrong position, the realisation check to save oneself...
Understanding the trading journey; SPOT trading turned into glorified DCA (dollar cost average) trading, resulting in greed wanting to make more and then fighting this cumbersome world of liquidations, sizing, leveraging continually beaten by the markets.
Clarity on Abbreviations (how would one word it)
F8 = Fibonacci tool in short, makes it easier to withstand typos.
print ('F'+len('ibonacci'))
Last leg - The last leg is calculated from the start/beginning of the trend till the last highest high (HH) or lowest low (LL) position - dependant on direction of the trend. This last stretch/movement whereby the F8 tool is pulled/drawn from the top and bottom, in this article be referred to as the last leg.
External leg - This is the bigger move before the last leg.
Golden Pocket - between 0.618 (or 61.8%) and 0.65 (or 65%) of the last leg
Inverse Pocket - taking the opposite position of the golden pocket, calculating 100 - 61.8 (38.2) and 100 - 65 (35)
Momentum - it would be the force used to keep the price moving in one direction with little or no retracements.
Retracement value - The % mapped to the K8 tool position, this position would be compared against either the last leg or external leg.
Mixing F8 and Momentum
The F8 is useful in many ways, for me it would be to identify points of interest (POI), also putting a name to the reaction %.
During the course of learning the markets, what made sense to me about this Great F8 tool and how I could make use of it.
When drawing it, there is a starting point/value of 0 and ending point/value of 1. Depending which direction, the 0 and 1 could be swapped around and in this chart the 1 position would be at bottom and 0 at top. Knowing the potential retracement % level would be useful to calculate DCA probabilities. This is by bringing factors such as the direction, size and likelihood into equation.
The last leg helps to paint the picture of what the market is doing now. The most recent market conditions formed by the latest active key players. By observing their game and looking at it from this perspective helped me to determine the trends.
By observing the retraced % value against the last leg, a few hypothesis could be made.
1. If the F8 reaction % value increases/decreases, the force behind price is strengthening and the chart gaining momentum in a given direction, (aka: lower highs | higher lows).
2. Strength of market, as price is held to the upper bracket forcing the price higher, would indicate strong buyers. If the price is held at the lower bracket forcing price lower.
3. The opportunity to DCA decreases and later in the chart nearly impossible - depending on account balance.
4. The retraced position forms the MSS (market structure shift), or BOS (break of structure). BOS confirms strength in the current trend, while MSS warns of a possible reversal and new trend forming.
More-on F8
Reaction %, vs normal Trend Statistic Analysis, vs key entries
0% = Double tops or bottoms. Meaning, price bounced at an exact location at 0%. For beginners the Key Entry to enter the trade.
30% < or < 70% < Premium/Discount zones, momentum starts to build confirming the movement and also safe to enter the markets with SL just below the 0%.
40%/60% = Golden Pocket depending on sell/buy, or how you draw'em. You comfortable with the risk, know that these give greater results.
50% = You now need to know what you are doing...
The nice thing about momentum would be that the more people notice the new trend forming, the more likely they would jump in trying to try and catch the current move of the market and this would ultimately push the price further in any given direction.
Now unto the chart.
So, to define the early beginnings of momentum, we start observing the change in trend. The trend always starts with the lowest low (LL), or HH (highest high) depending which side the new leg is forming (opposite of the external leg). From this point we observe the next price reaction during the retrace and bounce against the last leg. We expect an increased new value, thus comparing the F8 position of the lowest low (LL) and higher low (HL) for LONG/BUY, or HH (highest high) to LH (lower high) for SHORT/SELL. Whenever a higher low (HL) or lower high (LH) is formed, we draw a new leg but interestingly the retrace % value increases as the markets keep pushing higher with force and momentum is gained.
In this chart the F8 .1 is drawn at the bottom, and .0 is positioned at the location of the last leg up, highlighting the retrace % value during a retracement.
So you want to get the maximum profit from any given trade, but that would mean that your profit margin would continue to increase. Logically, who would take 10% if they could make initially 25%? There would be a buffer, like a trailing SL but calculated differently as price increases. If the markets do hold and continue, who would rejoin and re-entering the markets again pushing the price even further.
In the world of DCA, you should have high volatility, but with leverage and sizing it becomes tricky and you perhaps "have one shot" . The outcome of this COIN reached just over 70% before retracing, and when it did retrace returned to +-2% of the original position around 25 days.
This technique may be tedious to continually draw the K8 on the last leg, especially as new higher highs or lower lows are formed, whereby one need to look at the new retrace % value and calculate if it would exceed that of the previous retrace value. Think this is where MSS and BOS would help, as it would be the same position.
If you are following the trend, you have a position working for you, then following with a SL (stop-loss) at the last formed MSS or BOS would be safe for greater profits.
If the trend isn't your friend, notice the trends shifting with momentum and be GON!!!
This isn't f inancial or trading advice, rather an interesting phenomenal aspect which helped me understand the usefulness of the F8 tool during any trade. Also do not promote any DCA strategies.
Hope that you had fun reading this article.
Wasn't myself in this particular trade, just taking a previous lesson learned from this COIN and seeing the relevance all around in the markets.
Welcome for correction, proper acronyms/abbreviations and any comments.
