Bitcoin - Fake Analysts and Bad Habits
Funny how many so called "analysts" were calling for 1500-2000 just a couple weeks ago, have dumped their bear buddies and are now calling for 5k and higher. They simply feed into the frenzy with wave counts, diverging MACD's, and a bunch of crap that creates fear and FOMO. Great job guys, only a couple weeks ago they had you selling the bottom, now they are jumping on the FOMO train with their buy calls. In the immortal words of Lee Corso "Not So Fast My Friends".
THE BULL LEG:
The current move, though very positive for bulls, is simply one leg. There is no structure and there is no framework for being aggressive here. Though I have been and remain "Long in the Long term (3-5 years)" trading here is aggressive and risky and should be handled as such. Reduced trade size, reduced risk when in a trade, fading the rally and taking money off the table when you can. This means adhering to your strategy for a swing trade.
Until we see some structure form over the next few weeks, this is still a risky market here. Recoveries normally do not happen in a few day, they happen over a few weeks or months. The possibility for a pullback to retest the low or even lower is still there and at least 50%. On any pullback towards 3k the TA's (Troll Analysts) will be out in force calling for 2500 again. Quite simply we do not know if this is the initial leg of a recovery or not, there simply is no structure and looking at the MACD or MA's or the data that happened 20 days ago is not going to provide any insight.
With that said it is a great start! But not so fast! Until Bitcoin' breaks 4500 the risk of a retest of the low is very much there. To ignore this and focus on a flying triangle, or wave count that mean nothing, is a setup for failure in the long term. Why? Because it creates bad habits, and makes you an emotional trader!
Two things were created in the Bitcoin' bull market last year. A bunch of fake analysts and more that have bad habits.
BAD HABITS:
"Look a bullish flag, bearish pennant, ascending - descending and symmetrical triangles", patterns that form randomly on a 4 hour or shorter time frame charts. Trading these works in trending markets, and makes everyone a chart expert! 1-4 hour charts are for daytraders, not swing traders looking for 1200 pt moves. These patterns that form in smaller time frames are simply noise during inner-day trading. Sure it works from time to time, it works when it is inline with the trend, but understanding when to use these and the time frame to use takes experience. All this crap has created "Bad Habits".
I had someone email me recently, who was in some other trading group, "why are the flag patterns that worked last year not working now"? I answered with a question "what time frame". The response was "2 hour". I asked what kind of trades are these? Response "Swing trades". Well the answers were simple, wrong time frame for the type of trade, and patterns in smaller time frame are more random than in broader time frames. Simply these patterns should be taken with a grain of salt on shorter term time frames, unless you are scalp or day-trading, even then they are subject to random moves. Now this does not imply flags, wedges, and triangles do not mean something, they do, but they must be taken in context of the broader structure and trend and it takes experience to know when they are more relevant or just random.
Trading long here is still against the trend. This is risky and subject to being stopped out. These should be considered aggressive trades and trade size should be reduced accordingly. How many are trading with trading capital that has been hit 30-50-70% trading over the past 9 months? Your not a trader, you are a gambler. Hey the Truth Hurts and I could make cupcakes for you and tell you this is part of the game, but it is NOT! You have formed bad trading habits, with the most important being PATIENCE!
How do you know if you have Bad Habits?
1) You follow Mr. Obvious - your trade decisions are based on flip flopping analysts that have no plan or strategy for the long term. They just report the obvious. They are never wrong, because they never really post a trade, just IF THIS THAT, IF THAT THIS, and wow I nailed it hope you were in, or hope you got out before the pullback you have to adjust. HUH you said the target was 75.0 it went to 73 turned and stopped me out.
2) Your swing trades are based on shorter time frames. The 4 hour and less time frames are day-trading time frames, though the 4 hour can provide some entry for a swing trade, the trade is not based on it.
3) You jump into a trade, without assessing risk or position size, and have no consistency
4) You monitor a swing or position trade minute by minute, which implies you have no faith in your assessment of the trade. If someone posts a swing trade, and has 5 updates in the first 24 hours, here's your sign of no experience. This implies they are trying to validate their trade, and are not confident with it. This does not imply you do not adjust, but adjusting is based on rationale not emotions and 15 updates in 24 hours? Give me a break.
5) You jump into bull rallies too quickly - This is not the same as fading a market. Fading a market is a contrarian positioning strategy, jumping into a rally is an impulsive nature.
6) Since you have no goals, you flip from strategy to strategy looking for the holy grail. Strategies, like market recoveries, need to develop over time, not days, but weeks and months. You may have a run of losses, but you will likely have a run of wins. They key in making money is risk management not being right or wrong. Amateurs focus on right or wrong, professionals focus on risk management.
7) Your trading account is down 30% or more this year in cryptos. Hey we all take losses, but if you are down 30% or more in a year, you likely have no trading plan, no trading strategy, just putting your money down on 7 and hoping you hit your number. (Trading account is different than a long term investor who just buys and holds for the long term. I need to clarify this for the trolls).
Bottom line you have no patience or concept of risk management.
I loved the comments when I posted the article "Brag About Your Losses". Hey four losses in a row most would not brag about, but since April of this year, our posted trades and trading capital is still up 10%. Take out the one home run and we are still slightly up for the year. I see many trading blogs where guys are down 30-50-70%. Taking 3-5-10-15 trades a week. This is NOT trading this is gambling. The success of a strategy should be looked at over a descent time period not a couple weeks.
Recoveries take time to form, and though the initial leg is positive, it is far from a smoking gun the market has turned. We need more evidence, and this is going to take some time. We are looking for a structure that provides further evidence the market is reversing, not just a flying bat, pennant of flags that form randomly in markets. Long term I am still bullish, but in the short term we need more evidence. Until then all trades should be considered aggressive and risk needs to be adjusted in the form of position size, and sticking to stop levels!
Troll Disclaimer and Clarifications:
IF you are a long term investor..... Fading the market is a strategy if you believe we move higher towards the previous ATH' in the next 3-5 years. If that is not your long term outlook than why are you investing in Bitcoin. Cost averaging is a great strategy during bear markets, and it is assumed your portfolio will take some pain in the interim term. This article was about swing trading not long term investing.
THE BULL LEG:
The current move, though very positive for bulls, is simply one leg. There is no structure and there is no framework for being aggressive here. Though I have been and remain "Long in the Long term (3-5 years)" trading here is aggressive and risky and should be handled as such. Reduced trade size, reduced risk when in a trade, fading the rally and taking money off the table when you can. This means adhering to your strategy for a swing trade.
Until we see some structure form over the next few weeks, this is still a risky market here. Recoveries normally do not happen in a few day, they happen over a few weeks or months. The possibility for a pullback to retest the low or even lower is still there and at least 50%. On any pullback towards 3k the TA's (Troll Analysts) will be out in force calling for 2500 again. Quite simply we do not know if this is the initial leg of a recovery or not, there simply is no structure and looking at the MACD or MA's or the data that happened 20 days ago is not going to provide any insight.
With that said it is a great start! But not so fast! Until Bitcoin' breaks 4500 the risk of a retest of the low is very much there. To ignore this and focus on a flying triangle, or wave count that mean nothing, is a setup for failure in the long term. Why? Because it creates bad habits, and makes you an emotional trader!
Two things were created in the Bitcoin' bull market last year. A bunch of fake analysts and more that have bad habits.
BAD HABITS:
"Look a bullish flag, bearish pennant, ascending - descending and symmetrical triangles", patterns that form randomly on a 4 hour or shorter time frame charts. Trading these works in trending markets, and makes everyone a chart expert! 1-4 hour charts are for daytraders, not swing traders looking for 1200 pt moves. These patterns that form in smaller time frames are simply noise during inner-day trading. Sure it works from time to time, it works when it is inline with the trend, but understanding when to use these and the time frame to use takes experience. All this crap has created "Bad Habits".
I had someone email me recently, who was in some other trading group, "why are the flag patterns that worked last year not working now"? I answered with a question "what time frame". The response was "2 hour". I asked what kind of trades are these? Response "Swing trades". Well the answers were simple, wrong time frame for the type of trade, and patterns in smaller time frame are more random than in broader time frames. Simply these patterns should be taken with a grain of salt on shorter term time frames, unless you are scalp or day-trading, even then they are subject to random moves. Now this does not imply flags, wedges, and triangles do not mean something, they do, but they must be taken in context of the broader structure and trend and it takes experience to know when they are more relevant or just random.
Trading long here is still against the trend. This is risky and subject to being stopped out. These should be considered aggressive trades and trade size should be reduced accordingly. How many are trading with trading capital that has been hit 30-50-70% trading over the past 9 months? Your not a trader, you are a gambler. Hey the Truth Hurts and I could make cupcakes for you and tell you this is part of the game, but it is NOT! You have formed bad trading habits, with the most important being PATIENCE!
How do you know if you have Bad Habits?
1) You follow Mr. Obvious - your trade decisions are based on flip flopping analysts that have no plan or strategy for the long term. They just report the obvious. They are never wrong, because they never really post a trade, just IF THIS THAT, IF THAT THIS, and wow I nailed it hope you were in, or hope you got out before the pullback you have to adjust. HUH you said the target was 75.0 it went to 73 turned and stopped me out.
2) Your swing trades are based on shorter time frames. The 4 hour and less time frames are day-trading time frames, though the 4 hour can provide some entry for a swing trade, the trade is not based on it.
3) You jump into a trade, without assessing risk or position size, and have no consistency
4) You monitor a swing or position trade minute by minute, which implies you have no faith in your assessment of the trade. If someone posts a swing trade, and has 5 updates in the first 24 hours, here's your sign of no experience. This implies they are trying to validate their trade, and are not confident with it. This does not imply you do not adjust, but adjusting is based on rationale not emotions and 15 updates in 24 hours? Give me a break.
5) You jump into bull rallies too quickly - This is not the same as fading a market. Fading a market is a contrarian positioning strategy, jumping into a rally is an impulsive nature.
6) Since you have no goals, you flip from strategy to strategy looking for the holy grail. Strategies, like market recoveries, need to develop over time, not days, but weeks and months. You may have a run of losses, but you will likely have a run of wins. They key in making money is risk management not being right or wrong. Amateurs focus on right or wrong, professionals focus on risk management.
7) Your trading account is down 30% or more this year in cryptos. Hey we all take losses, but if you are down 30% or more in a year, you likely have no trading plan, no trading strategy, just putting your money down on 7 and hoping you hit your number. (Trading account is different than a long term investor who just buys and holds for the long term. I need to clarify this for the trolls).
Bottom line you have no patience or concept of risk management.
I loved the comments when I posted the article "Brag About Your Losses". Hey four losses in a row most would not brag about, but since April of this year, our posted trades and trading capital is still up 10%. Take out the one home run and we are still slightly up for the year. I see many trading blogs where guys are down 30-50-70%. Taking 3-5-10-15 trades a week. This is NOT trading this is gambling. The success of a strategy should be looked at over a descent time period not a couple weeks.
Recoveries take time to form, and though the initial leg is positive, it is far from a smoking gun the market has turned. We need more evidence, and this is going to take some time. We are looking for a structure that provides further evidence the market is reversing, not just a flying bat, pennant of flags that form randomly in markets. Long term I am still bullish, but in the short term we need more evidence. Until then all trades should be considered aggressive and risk needs to be adjusted in the form of position size, and sticking to stop levels!
Troll Disclaimer and Clarifications:
IF you are a long term investor..... Fading the market is a strategy if you believe we move higher towards the previous ATH' in the next 3-5 years. If that is not your long term outlook than why are you investing in Bitcoin. Cost averaging is a great strategy during bear markets, and it is assumed your portfolio will take some pain in the interim term. This article was about swing trading not long term investing.
Related publications
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.