I have been writing about the clear reversal formations for weeks in the major coin markets. Of the three that I evaluate, this one had the clearest signal which I highlighted in an update to my previous LTC report. This was the in the 118 area and was followed by the anticipated higher low, and you can now see the result.
You want to be positioning yourself for these type of dramatic reactions, not jump in when it becomes obvious.This is why understanding your own risk tolerance is important, otherwise you will not have the confidence to enter when the most attractive reward/risk opportunities present themselves. The best time to buy is NOT obvious.
Now that this market has proven that momentum is in effect, my objective is to add to my position trade long on pull backs. The next pullback I am watching for is the 186 level which is now the .382 of the recent swing. This level also coincides with the newly established . IF price manages to offer this opportunity, I need to then see some variety of a reversal signal such as a or other type of pattern. Once in place, a swing trade and position trade opportunity will be presented.
Why is a swing and position trade opportunity available at the same time? It is all relative to location. A pull back to the also happens to be overlapping with the large magnitude of the 186 to 138 area (.618 of recent broader bull run). Trades off of this level offer attractive positioning for a broader move that can works its way back toward the highs over time. While at the same time, a swing trade can be taken that offers a shorter term opportunity with defined risk and a reasonable target range within the 231 to 265 area.
If I think it's going back to the highs over time, why get out earlier? It is all dependent on your outlook and the risk you are willing to take. Also not all levels offer these type of opportunities. As the market goes higher, I will want to buy less for position trading and more for swing trading which keeps my risk in line with my tolerance. Swing trading is a lower risk strategy because you are in the market less time and take profits sooner compared to a broad position trade.
In summary, if you find yourself feeling impulsive and anxious because you missed out on the earlier entries of this move, do not give in to the greed and fear of missing out, that is what the herd is for. Getting in the habit of looking ahead will separate you from the impulsive mindset and allow you to anticipate and position yourself to capitalize on the next reaction. In this case it is a simple pullback to the next support. At the same time, you must be mindful of risk because what if price falls through the support? IF that happens, the market would be telling us that it is range bound rather than which will require an adjustment to the short term outlook and expectations. Price may only present a shallow retrace, which requires a more adjustment. Having predetermined scenarios helps you prepare for and capitalize on market opportunities when they are not obvious, The herd cannot see beyond the scenario in front of them, while the experienced speculator is open to a multitude of possibilities and prepared for each one. Impulses steer you into the herd, the first step to avoiding that is becoming aware.
Questions and comments welcome.
"Swing trading is a lower risk strategy because you are in the market less time and take profits sooner compared to a broad position trade" - You say swing trading limits risk cause we exit the market earlier, thus locking in profits. What about locking in some 50% profits on a swing with the risk of missing out a huge 150% or more bull run like the one XRP had in Dec/2017?
Or maybe you keep in mind the 70/30 long holds x trades (swing included) so that you can profit from the huge bull runs.. Well, I've been following you for a while now that's why my guess.