Perfect lesson in how sentiment can change on a dime! Just when we thought we could break out the champagne and party hats celebrating ATH's in our alt coin portfolio, we had to put down the beer and scramble to take off profits and cut losses to avoid a "Potential" meltdown of our alt portfolio. This is sound money management and this is one Rule I never break as much as I want to HOPE the market bounces, more often than not it continues lower.
So what do I do when the market reverses like this?
1) Start trimming off positions in good alt coins that are at ATHs to rebalance the portfolio. (This is minimal of my core 8 holdings) 2) As we have seen this market rotation before, I went to a mix of long BTC and long USD. 3) A few trades I had on alt coins (some that were up 20-100%+) I closed out period! I gave back 20%+ of the profits on several but I'm still up and I can always reenter if the market changes. 4) Look to re-buy coins when they are way oversold. So a reverse trade so to speak going short my trading portfolio by going long BTC with the profits. The BTC/XXX trade.
Bottom line I went into defensive mode. I would rather buy back trades 10% higher than take a 40-50% loss and YES we have seen that before. This is a risk reward in the reverse. I'm risking 10% to avoid a 40%+ loss which is 4:1. It may not be this time, but eventually "a failure to take a small loss will lead to the mother of all losses".
Now does this mean you run out and sell your coins? This is a decision you MUST make for yourself. Many times if I miss the initial selloff (as many that have followed a while remember happening several times at night) so I will look at a retracement level and use that as my stop out, or we often get a bull trap (B wave) which will allow me to cut loose there, or the market simply reverses. I've missed the initial sell signal many times and panicked, sold way low only to see it reverse in a B leg and not pullback to my sell point. But this is something you have to throw up on the charts and look for yourself.
Here is where having tooo many trades is an issue. It was like someone let 14 horses out of the barn and your trying to coral them up and every time you get one in the other is further away . I guess Paul Tudor Jones's statement "Big Positions cause Big Problems" could be modified to "Many Positions can cause Many Problems". I am human and made this mistake here. Every time I went to sell the red bar was longer! Lesson learned!
Either way, BTC has show itself to be a flight to safety during alt market pullbacks, so I am long BTC' and the USD' here with the targets for BTC' shown on the board. This also allows me to quickly transfer and buy oversold coins, some I missed on the previous breakout but remained patient.
Your never out of the market as a trader/investor, your always long something whether it be alts, BTC', Euros or Dollars.
I love when I see triangles and H&S patterns out of context. This was one of those times. The prevailing trend trumps everything, but interesting enough I found two inverted heads and shoulder patterns on the 4 hour chart and the RSI indicator. Understand the difference in seeing a pattern on a chart, and a pattern that is created by prevailing trends. How many Short BTC' and long XXX' charts were out there? "Here's your sign!"
Bottom line timing tops, bottoms, or where a correction will end is only done by liars! Strict Money Management is done by good traders!
I am watching BTC' closely as there is always the possibility of going lower. We are not out of the woods yet. In my opinion we need to break the $16,200 level to confirm liftoff!
評論
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Wave count for those that are interested. Wave counts are subjective.
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This is a zoom in of my cheat sheet. Looking for a consolidation and then a critical level of a resistance.
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This is the one day so you can get a better idea of where I obtained those levels and why.
I guess it depends on whether you are a trader or investor for the long term. Or if you believe their is a monetary shift happening. If you buy and hold, you can save yourself a lot of drama when the market changes direction and simply dollar cost average a better position. And you can take some gains along the way and rebalance your portfolio. BTC is going to go down some more. Then it will go up probably to around 25K before another pull back. The altcoins will take a hit then, Right now, the way oversold alts are poised to go up big (not many left as lots of alts got bought up after BTC wen up on its last run). I say hold your investment portfolio for the long term, then keep a portion for trading and more aggressive profit taking. I think you got into BTC too soon, if you have pulled out of your alts. Right now, many of the alts that were bought up after BTC went up, are also going to pull back as BTC pulls back. I'm guessing people are going long fiat for a little bit. But I suspect that altcoin retracement will not be as big. I believe there is a monetary shift happening and I don't care to hold a lot of fiat. Yes their will be massive swings and volatility in this market.... but I am in it for the long-term.... and while the gains for USD have been phenomenal - I don't necessarily measure it all in USD gains. I look at it in terms of BTC.... and eventually when BCH begins to be a base trading pair, I'll use that. Long-term gains will be measured in crypto and cease to have reference back to fiat as meaningful. This is not a pure investment - so one needs to view the situation more flexibly. If you think you are just investing, then you will measure everything against a dying dollar system and when the crypto market goes down, you will rush back into an even worse monetary system for safety. Your choice. Choose wisely. Happy trading!
@coltonrobtoy, for the daily I use 14 as that is 2 weeks, I adjust it for a 24 hour chart so it varies on the smaller time frames.
WhiskeyDeltaBravo
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@coltonrobtoy,I do. I prefer a stochastic RSI or a stohastic though.
goldbug1
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@WhiskeyDeltaBravo, I agree which is why we have the 70/30 portfolio. 70% long term holds that you ride out the storms (do NOT sell on pullbacks) and 30% for trading. I closed alt coins I was trading (30%0 I did not sell my core holdings. I never do that. Market timers are only winners if they are liars! Few outperform buy and hold strategies and this is a hybrid of that strategy. I do the same in the stock market!
bullcavern
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BTC is trading in this pitchfork and following ichimoku time theory to the T. I think we can see over 30000 around the end of february if things start to really move.
diego-d
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Hey mate do you have any new analysis planned for BCH?
@goldbug1, yeah want to see what you have to say. It's been declining slowly , not sure why when all other ALTS are going up.
webbie
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For those who've been trading for a few months, trendline drawing is an art, and takes years of consistent practice and analysis to get it right. Yes, there are automated trendline programs out there, but IMO, it's still more qualitative than quantitative. Today's trendline breakout was EXACTLY what one wants to see in this situation. Quick price-action coupled with surging volume. Now, it's all about follow through. Can price re-test and take the 50% retracement, or will it roll back over and re-test support levels? Either way, have a plan.