Are You Ready?
Authored by: @hetty-rowan
Are You Ready?
Transition time?
We are currently in a transition from the downtrend that was underway to a new uptrend. When I look at the many charts that I see here and there on Twitter, I can conclude that we cannot be entirely sure of a lasting uptrend for now, but that we have reached the bottom of this pullback . Bitcoin has gone from red to green, and is currently up about 2.4% since the last 24 hours. The next resistance would be USD 51K… and to break that resistance, more volume would be needed. That's kind of what I can currently understand from the charts that I see dominating Twitter's trendline. Many altcoins are now also going from red to green again and if I just look at my own portfolio, it looks a lot friendlier today than yesterday.
No I didn't like this dip
Still, I have to say that I didn't worry about this dip at all. And that was surprising. Of course, I didn't like it. No I'm not that far yet. And why not? For the simple reason that I had nothing to buy in this dip yet! That was my biggest problem this dip. Not that I saw my portfolio go back out. No, that's only a matter of time, to get back up with full force after the dip. But the fact that I had nothing to buy… Yes, that was just a thing. And that thing made me think.
Time to think
Because how is it possible that if you have been working with crypto for about 3 years now, that you are not well-prepared for such a dip? Haven't I learned enough yet? Am I just too absorbed in the current bull market, have I just not paid attention? Did I let my emotions play a role? Have I been overcome by FOMO? Many questions… and especially in these red days, and because I could not buy anything… I had time to think. I was not going to participate in a panic sell. Fortunately, I left those days behind, but what was the problem, so I had not waited to buy crypto until there would be a dip. After all, you just know for sure that if Bitcoin has made such a huge advance ... that a pullback is guaranteed to follow.
I fell on my face
And yes… then I have to admit that I have indeed suffered from FOMO, but not only from FOMO, but also from GREED. I got carried away in the current bull market, and just didn't consider a pullback anymore. The euphoria of the moment has overtaken my sanity… and my emotions have taken over. I wanted to make more and faster profits. Logical that I fell on my face, right?
Wait until the markets turn green
It is sometimes said, “God immediately punishes”. So that's what happened. And the only thing to do was wait patiently until the markets turned green again and until my portfolio started to get a green color again. Not fun, but maybe necessary. Because it made me think, and it showed me that I wasn't that smart.
Yes I may have learned a bit to read the charts, it could be that I was taking some profits by now, but because I went ALL IN, I had nothing left at the time of the Bitcoin flash crash. And because of that, the big profits that I wanted so badly, too badly, to make… this pullback have passed my nose. I was IMPATIENT to make profit. , Ironically, it is now my impatience that has kept me from making the bigger profits I wanted so badly
PATIENCE is everything
A trader I follow on Twitter regularly calls out. How important PATIENCE is when trading. His words are "Let the market come to you". And I previously thought I understood what he meant. But now I suddenly understand him much better. Because, if you are indeed patient… and you follow what is happening with Bitcoin. Then you can really better estimate what might happen on the basis of that. Nobody can give a 100% guarantee. But if I had paid more attention, this flash crash wouldn't have surprised me as much as it did now. The volumes of Bitcoin were declining for some time, the lows were getting lower and highs were also printed lower. That, combined with the decreasing volume, should have been enough to set off my alarm bells, and at least not get into a new trade. Because I could have known that the moment Bitcoin gets a pullback, almost all altcoins will also have a pullback. Buying at such a moment is not smart to say the least.
Lesson learned
I do say afterwards, it has been a wise lesson. That won't happen to me next time. No I have not lost large amounts because I don't do leverage or margin trading. So it all came down to for me, at simply waiting for the market to go green again. And the change from red to green now seems to be happening. But it is just a shame that I made this mistake to not watch Bitcoin close enough, because it was precisely in this 'sale' that I could have made a lot more profits!
So a tip if you are going to trade.
NEVER BET EVERYTHING.
Spread your Risk
Suppose you have t a budget of $ 200 you want to trade with, don't use $ 200 in a trade. Yes I know, it is tempting because your winnings are getting bigger by $ 200. But if things go the other way because of a flash crash like now, you can't do anything anymore. You don't want to sell at a loss. At least not me… If I had used $ 100 by way, and kept $ 100 in reserve, I could have bought in on the low and my total would have gone up much faster than now. DCA… Risk Management, I don't care what you want to call it. But it is something you have to think about for a while. In my opinion, it is important to keep looking at Bitcoin. As long as there is enough volume there, you don't run that much risk ... but still. That same trader told it more than once. No matter what crypto you buy, no matter what crypto you own, YOU ARE ALWAYS WATCHING BITCOIN.
There will be more chances
In my opinion, it is therefore better to make sure that you always keep something on hand to be able to respond to a 'sell-out' like this. Certainly because we will receive these kinds of corrections more often on our way to the absolute top.
Need to learn from mistakes
Now I am really not an experienced trader, as you all know by now, but I thought this was worth telling. And yes, I will be baffled more often, so it is a good thing that I am not 'playing' with a portfolio of several hundred thousand euros. But I still need to learn from my own mistakes, and I thought this was a lesson to share.
What were the moments for you where you thought… Oops, I should have done that differently?
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One thing I actually do is try to take little gains. Wanting to gain it all makes people lose everything potentially. I won't lie FOMO is something rampant when it comes to a bull market as this, but we always have to learn to take little gains and not allow greed let one loose it all. The dip has really hooked us back to reality.
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Taking little gains is not a bad habit at all. I was talking with @thisismylife on discord. We were talking about the 3% rule. If you do 120 trades with 500 dollar, with each 3% profit, and you take the 3% profit with you in the next trade ... after 120 trades you have 17K usd.
Now that's possible if you ask me, because 3% is not that much when you look at crypto. Many coins are rising with more than 3% in 24 hours.
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I'm defo going to try this, but probably in a few days. Will start documenting it as well so that I can share it in a few posts. Very curious to see how that will unfold. I will have to dig a little deeper to make sure I understand the theory well and don't make mistakes with the stop-loss orders.
Today I bought in RUNE and initially wanted to start the 3% theory with this one, but decided that that's not really working out if you are planning on having them long term :P so my bag for the theory should be a completely new one and not buying those coins probably..
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You're actually very right about this. The truth is that, it depends on what actually works for us and this is why we must prioritize taking little gains even if we don't need the money in the short run. It'll definitely be useful to us in the long run.
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That's why I feel it is so important to have at least a basic understanding from the trading charts and being able to see the patterns, know how to interpret the volume and all things that have to do with trading. Even if you don't use it because you're a strong holdler, it can be definitely of use later.
Do prove me wrong but I'm not really buying the whole chart reading/technical analysis stuff. Didn't work for traditional stock trading and I don't see why it would work differently in crypto. The price can go up or down at any moment, coin toss, fitty-fitty. Of course it is influenced by news, tweets from you know who and various other factors but the chart itself? Don't think so..
Although I do use DCA myself investing lump sum the moment you get it has been shown to return better results in most cases (again, for traditional finance). So I guess what I'm trying to say is: you got in, you hodled, you're good :-)
Trading does work but its more of a self-fulfilling prophecy because its based on where people are likely to buy and sell. It can be a coin toss, but if you are risking $1 to win $3 when you are right, then you can make money. So its more about risk/reward for actual trading with TA stuff.
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Sure but the thing is, research has shown that to pick the right stocks, getting the timing right (twice for real day trading) and most important do that consistently is not an easy task. There's a big confirmation bias and many bad performing funds etc. quietly shoved aside.
Of course some have been successful, but finding the people who can or finding the stocks that will perform well beforehand is real hard. Now crypto is young and I'm not very experienced in it compared to many others. But at this moment I've seen little convincing me it would be any different..
I do however believe in investing in it for the long term as long as you believe it is the future, at that point it matters only little when exactly you buy. Just sooner rather than later and of course if there's a dip that's a great opportunity too. But I'm not waiting on it and miss out on the gains :-)
It is possible and if you take only the best optimal setups, then you are fine. You just have to know when to cut your loss and look for a better place to re-enter. The entire premise of momentum trading as most day traders or swing traders do is based on good setups. Some people prefer breakouts and others prefer backtest. Either way, you just need to know when to get out. The main idea they run by is to make the most of your money.
As for long term holds, then yes you don't need to look at it much. But there are ways to improve your positions. For example, you might take a slight loss by cutting off half of your position when it loses its uptrend and buy it back afterwards when it starts uptrending again. Either way there are pros/cons. I am not saying trading is for everyone and it is tough because you will probably spend a lot of time waiting. Anyone whos doing like 20-50 trades in a day is obviously not choosing the most optimal setups for risk/reward.
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I understand you need to know when to get out and make the most of your money, that part is quite logical. But the only time when I know for certain when the right moment was is looking at the chart after the fact. In reality it's really hard to time and say this is the moment as it's still in the green and looking like a bull run. Vice versa it's hard to buy in when everyone is panicking and jumping ship during the bear. All the resistance and trends talk sounds like financial astrology to me. Not trying to bash anyone here or say it can't be done but I've never seen any convincing evidence where it worked better than average consistently over a longer period, do let me know if you have!
Anyway even if it could give better return in some cases, I don't think I'd prefer the time and effort it takes to learn and implement it. The passive approach is much less stressful and you can use your time for other things increasing your position :-)
It definitely is less stressful. You can make a consistent return over time if you set up a good trading plan and follow your rules. Being rewarded for not following your rules is just luck and gambling. So I think it depends on what you want to do. Right now we are in a bull market so people haven't really seen much differences but during the bear market and do nothing markets, it can really benefit you.
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Lol ... I understand completely what you're saying. And yeah ... in the end, I will be good. I HODL'ed strong and wait patiently for the moment that I'm in profit again.
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Nice one @hetty-rowan. Risk management is very important, especially in crypto where there is so much at stake. Markets are highly volatile so it's better to diversify and invest what you can afford to lose. :D
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I never invest more than I can afford to lose because the only money I'm playing with are the earnings I made in crypto ... not fiat money. And in this case, because I don't do leverage or margin-trading ... I didn't lose a single penny in the way I look at it. I only have to wait until the crypto is back up ... I didn't panic sell, just HODL and wait patiently. But thanks for your advice.
The only thing is .. diversify when you only talk about 200 dollars is not the most wise thing to do, right?
I'm glad to see you're back with a more casual and entertaining Sunday read :) I hope you will have more profitable experiences in the future btw, and in any case it's enjoyable to learn from your mistakes :P
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Yea the market humbles everyone. So long as you learn from your mistakes, you will be more unlikely to make the same mistake again.
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Very true!
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Well those casual and entertaining writes on a Sunday ... I'm glad you enjoyed this one. I can do that more often. Lol!
Oh so you think it's fun to learn from my mistakes? Hmmm, that makes me think ... but do you have any interesting mistakes to tell us?
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hmmmmm selling a bitcoin at $18.000 in December last year is a good example of a mistake, that one looks really dumb looking back. My reasoning was that the world economy was hurting from the pandemic and I was scared bitcoin could crash back down soon and wanted to take some profits after waiting for 3 years
The take away message is wait for the bull market to start properly and not jump the gun
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Well trading is tough. All you can do is set up a plan and trade that. So long as you win more than you lose, your doing quite well. I generally don't do any great trading-wise on crypto since I don't like the heavy swings. But yea there are always going to be more opportunities in the market. Sometimes I make a plan and it doesn't work out
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Trading isn't easy, no one ever said it was. And yet, in the end it's still not hard. The only thing you really need is patience ... and a strong mind to not panic sell. And of course, you need the market to move in the way you want it to go. But since we're not in the bear market yet, I didn't worry too much.
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Yea its a waiting game. If it doesn't come to you, don't take the trade. Sometimes you just sit and wait for an entire week since it doesn't go your way.
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I am in similar situation, I never expected to see BTC below 50k again, and on the way to BTC's dip I bought in at 59k while asleep, makes me wonder if those sell or buy orders while am asleep is reasonable.
No it's the waiting game.
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You'll get there where it was before ... just like I do. You didn't panic-sell either ... so in the end it will all be good. But we lost out of buying the dip unfortunately.
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This is completely normal buddy, trading is very psychological. This BTC correction was coming since the last two daily candlestick peaks. As you said yourself each spike was lower and each dip was shorter, as well as the loss of volume, but also add to that a visible bearish divergence on daily candles on the RSI indicator.
All this together confirms to us this correction that is happening in the btc, and indeed mate, I don't think it's over. I think it may continue to $45K or $42K. These are the strongest points and where I think many buyers are waiting. I also have patterns on the chart that confirm this possibility, I will show you.
As you must have seen in the chart above, BTC was in a bullish channel that broke it last April 18 and fell to $55K, but in that fall a bearish pennant pattern was formed with target between $47K, as you can see in the chart below, the target is obtained by measuring the mast of the pennant and cloning it to the breakout zone.
The target was met, breaking through the $50K support, but apparently it's not all over here. I am observing that another bearish pennant is forming, a little smaller and with a target at $42K.
And it is curious that precisely the target is that price, since there is a quite strong support there. First because at that price there was a strong bullish rejection on January 8, as you can see in the following chart I indicate it with a red arrow.
And second, in this zone is also the .50 Fibonacci of the entire entire upside. This makes this zone incredibly strong and a very important spot for buyers.
For these reasons I think BTC will continue to $42K and that will be the best correction point. I think that's where the bulls can turn the market around and continue the BTC bull rally. Cheers buddy 👋.
Esto es completamente normal colega, el trading es muy psicológico. Esta corrección del BTC se veía venir desde los últimos dos picos en velas diarias. Como tu mismo lo has dicho cada pico era mas bajo y cada bajón era mas corto, así como también la perdida del volumen, pero también hay que agregarle una divergencia bajista visible en velas diarias en el indicador RSI.
Todo esto junto nos confirma esta corrección que está ocurriendo en el btc, y de hecho colega, no creo que haya terminado. Creo que puede que siga hasta los 45K$ o 42K$. Estos son los puntos mas fuertes y donde creo que muchos compradores están esperando. Además tengo patrones en el grafico que me confirman esta posibilidad, te mostraré.
Como debes haber visto en el grafico anterior, el BTC se encontraba en un canal alcista que lo rompió el pasado 18 de abril y cayó hasta los 55K$, pero en esa caída se formo un patrón de banderín bajista con objetivo entre 47K$, como puedes observar en el siguiente grafico, el objetivo se obtiene midiendo el mástil del banderín y clonándolo a la zona de ruptura.
El objetivo se cumplió, atravesando el soporte de 50K$, pero al parecer acá no ha terminado todo. Estoy observando que se está formando otro banderín bajista un poco mas pequeño y con objetivo en 42K$.
Y es curioso que precisamente el objetivo sea ese precio, ya que allí se encuentra un soporte bastante fuerte. Primero porque en ese precio hubo un fuerte rechazo alcista el 8 de enero, como puedes observar en el siguiente grafico lo indico con una flecha roja.
Y segundo, en esta zona también se encuentra el .50 Fibonacci de toda el alza entera. Esto hace que esta zona sea increíblemente fuerte y un punto muy importante para los compradores.
Por estas razones creo que el BTC continuara hasta los 42K$ y ese será el mejor punto de corrección. Creo que allí es donde los toros pueden darle la vuelta al mercado y continuar el rally alcista del BTC. Un saludo colega! 👋
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WOW ...
Just WOW, thank you for this very extended and clear reply! I will read this comment over and over again to get it in my mind because this can be of a great help for the future.
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No problem my friend, analyzing is my passion. A pleasure to provide information of this kind to all colleagues in the community.
No hay problema mi amigo, analizar es mi pasión. Un gusto brindarles informacion de este tipo a todos los colegas de la comunidad.
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That's good to know!
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I ended up with some more Hive, so although I am thinking Bitcoin, my strategy is becoming more and more vested in Hive. I am very much looking forward to our HF25 to see what kinds of advantages and disadvantages appear, so that we can adjust our strategies. I have only been curating properly for maybe a year. It definitely made a difference however, just as understanding the money flows into crypto will help you decide your timing for market entries and exits. There is a wave, and you are part of it. That is why it can be so exhilarating, so euphoric; and so utterly devastating when 'reality' hits and you watch everything turn red. Welcome to BTC.
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You have exactly described the feeling along the way ... exhilarating, euphoric and then reality. The shit hits the fan and there we go, all the way down. First there is disbelieving. No this is not going to happen! Then there is panic, holy .... this is happening. What should I do! Then there is a lot of time researching, hmmm it seems we're not done yet. And then there is relaxation again. Ok, watch it closely how it unfolds and do NOTHING. Just WAIT for this to recover and get your eyes off of the PC. Welcome back in real life.
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It's easy to be smart with $200.
Try with $100K of real earned money and you'll see the difference.
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Maybe the 200 is just as valuable to me as 100k is to someone else.
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It's not about how valuable it is.
The difference is the sensation when you press the send, sell, or swap button. It's scary, trust me. Very scary.
I believe you, without a doubt!
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the last dip caught a lot of people off guard. Risk management is everything in this space, spreading/diversifying one risk as you said is one great to avoid total loss in the case of another surprise plunge
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That's a sure thing. I will take this into account for the future
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So true about not betting everything. One needs to stay alive in order to take advantage of opportunities that come our way. Those trading on 100x+ leverage were living on the edge.
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Trading on leverage is the most risky thing you can do. Sure it can bring you the biggest profits ... but the risks are too high for me. So I will never play the crypto markets with that.
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Thank you for this very extended and clear reply! I will read this comment over and over again to get it in my mind because this can be of a great help for the future.
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I am ready... just always buy a few hundred of BTC, ETH and BNB on every dip and you will be a Billionaire
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The hit lesson there is that we spread our risk. ALl the assets won't all dip at the same rate and time. However, dips are a beautiful time for another buy-in.
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