I mentioned in the last article the smaller the time frame the more chaotic the fluctuations. This is why I believe Richard Dennis said "you are either very long term or very short term". It took years for me to understand this statement, but what I believe Richard Dennis meant was you are either long as long as the long term trend is in tact, or you are short term and trading short term trends.
I could not understand years ago why my returns under-performed the market. It was simple, I was investing for the long term but trying to guess the short and mid term price fluctuations. So I would see a price rise and sell out only to see it go higher, or I would see it dip, sell out only to see it recover and jump back on board. I was mixing long term investments with short term trend trading! Once I stopped that and switched to always long and add on the dips sell extensions (and only side trades), my returns went way up! This evolved into my 70/30 portfolio+- strategy.
Many are focusing way to hard on the short and medium term price action. If you open up the trading platform, your impulses take over and you feel like either your missing out, or your going to lose $. This is the reason we have mentioned over and over and over STOP TRYING TO TRADE CORRECTIONS and TIME THE MARKET! If you are not a disciplined trader, and can not read charts then you should be sitting back adding to your position, taking notes and making paper trades. Let me put it simply. If something goes wrong with your car and you want to fix it but have to call your brother in law every 30 minutes to see if you did something right, you probably should not be fixing your car!
We have a simple system that works. Why mess with it! 70% of your portfolio is LONG as long as the long trend is in tact! During bull runs we are fully vested, during corrections we tighten up to core and cash for deals. It does not get any simpler than that.
So last Thursday we noticed a top "may" be forming and so we went into correction mode, closing out trades, taking our profits off the table, getting to our cash position, and getting rid of losers. Why? Because losers are the first to go in corrections! So our portfolio is tightened up with winners and we have cash on deck, and in corrections CASH IS KING!
Bottom line successful investing and trading requires discipline. Looking at the longer term trend we clearly have not broken the trend line. The longer term RSI is still above 40. I personally have added a little as I mentioned. I have an order in at $14300 but it didn't get filled. One other note is the similarities between the November correction and the current correction pattern. There is no reason to fear and be in and out of the market during a correction. Corrections happen and are a buying opportunity for smart investors. Where do you buy? Well that is your decision but I never buy in all in moves. I come in in blocks. Add $2000 here, pulls back I'll add another $2000 etc. But I personally am long term with a $23,000 target. Do your homework after all its your money!
Disclosure for those following: I closed out ZEC and added the proceeds to DASH XMR DCR and XRP.
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The move this morning made it clear we are following the 533 correction pattern. (WXY on the chart) But clearly both longer term trends are still in tact. Can we pullback to the trend line? Absolutely. Can we pullback to $6000 sure. But before we answer all those questions, lets see if 14k holds first.
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Keep in mind 14k is a level of support, so when we say we want to hold "14k" it does not mean it can not fluctuate above or below by 2-3% especially in thin markets and these are the thinnest. Also keep in mind different exchanges vary in prices. Coinbase is at 14k+ right now. So in my opinion 14k has not yet broken down even though we got as low as 13,810. Patience and let the market find its direction. Do not try and guess where it might go. This would be like a stock buying a stock at $14.50 and your exit is $14.00 you see it dip to $13.80 momentarily and your throwing in the towel! fluctuating around a level is not the same as the level giving way to support.
Now we are at 14,088. This is why trying to guess just does not work.
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So how quick did some of you go from Bearish to Bullish and many will go right back to bearish on a dip. Investors almost always sell out at the WRONG time!
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For the most part 14k held. though we did have a quick dip to 13,500 it was quickly bought up. This is not out of the ordinary for an equity that can fluctuate 10-20% a day. Looking at the two corrections they are similar in nature. I would like to see a retest of the trend line to have more confidence the correction is over as this would complete a 533 correction pattern. But since we have formed a double bottom around $13455 we could be finished. The next range is 15k which is the 0.5 retracement from the a wave correction. A break of $15338 (an not just puncturing it) would convince me the bull has returned. But corrections are nearly impossible to predict so we can not count out retesting the 11k area again. The sweet spot in my opinion is the 12750-13500 range closer to the lower trend line. Anyways keep calm and let the market do its thing. It is easier to trade a bull market by simply going long when its obvious then trying to trade a correction where you do not know if wave 3 has started or we are still in a WXY correction! But 0.5 appears to be the magic number!
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Looks like we appear to be settling down and consolidating. I had a sell order at $15330 which did not fill and two buy orders at $13500 and lower which did not fill last night either. But consolidation is good and it appears we are starting to settle down after the chaos of traders trying to time markets. I love consolidation boxes, its my favorite trade period. Low risk high reward. This is why we need to be patient and not over react during corrections. Wait to the market settles down and then make a rational trade decision.
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Well that got ugly fast. One thing I do thank God for was the cluster with the exchanges! Took a small loss. I was trying to get out, but the exchange locked up, and when it finally came back online it was close to $13250. I done cut there even though it went up to $13500+ I do not trade on hope! Keep in mind these were two trades and as much as I preach do not trade corrections, I did, I got caught and had my ASSets handed to me. But I did NOT think twice about taking a loss! The Failure to take small losses will eventually lead to the mother of All losses!
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For the record, that was failure of 14k to hold! ;)
I'm sorry everyone, but unfortunately the price of btc won't go higher anymore. I bought @ average of $16000, and I'm not selling this time. I believe I have some super powers: I buy, the price goes down. I sell, the price goes up. This time I've decided to hold it for minimum of 30% profit.
Fiyi77
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Please never stop writing this kinds of enlightening mini articles. I think so many of us are beginners and need someone with knowledge tell us 'how it is' sometimes. I have read books that try to explain in 100 pages what you have clearly stated in 4 paragraphs. Thanks
bobby_soltani
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Hello , first of all Thank you for Chart and all the comments actually takes 2h to read all of them ,I looked some of them twice and at the end I find out I'm kind of stupid cause I can't understand what price is a good signal to buy BTC ,I'm going to hold it till it should be enough to be a millionaire ;) but I prefer to buy it when its really at the bottom cause I'm living in planet Iran and we must pay 2000 $ more for BTC ! of course because of the sanctions
I really appreciate your help , once again my budget is for 3BTC but I'm going to buy 1 first and use the second one for other cryptocurrency like Ripple and i don't know the others maybe BTCH to use it as a short time and as you said reserving the last one for the time that BTC start to rise as a boot , Wow sorry it supposed to be one Q , i really need your guidance . Sorry if my english is not good
Haceru
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Regardless of the trends, prices, etc. ... I think you have great narrative skills. Maybe you should consider writing some blog / book on the subject of crypto-trading? I am sure it will help a lot of newbies and pros alike.
Brilliant text, spot on.
I have 2 strategies, 1 is hodl and the other is day trading where I look for 2-3% gains.
The day trading enabled me to start with 0.25 btc and convert it into 1 btc in 5 weeks.