Yesterday, we discussed the need for BTC to make a strong move above $6600 and that's exactly what has happened. Since the slight trend change a few days ago, BTC had yet to put in a big accumulation bar (green in color), but now it has. Since the move above $6600, BTC has consolidated nicely on lower volume and continues to develop a constructive trend.
Going Forward
The question now is where to place the initial stop. The pink dotted line is designed to be the initial stop and is what I generally use to calculate my position size. The initial stop value is near $6548 and lets me allocate my max capital percentage per trade of 15%. Since BTC has pulled back, the main trend line (grey line) is resting near $6380. By changing my stop to $6380 and risking 1% of my capital, I'm still able to allocate 15% of my capital towards this trade. As a side note, you can set your max capital value to whatever you prefer. From my personal perspective I prefer to do no more than 15% towards any one trade regardless of my risk percentage per trade.
Why use the main trend line as your initial stop?
The simple reason is it allows me to still allocate my max percentage of capital by using the main trend line (gray line) and it also allows more room for BTC to work with a lower probability of being shaken out of the trade compared to using the pink dotted line value of $6548.
For now the trend remains intact until BTC closes below the $6380 area.
Best of Luck
Going Forward
The question now is where to place the initial stop. The pink dotted line is designed to be the initial stop and is what I generally use to calculate my position size. The initial stop value is near $6548 and lets me allocate my max capital percentage per trade of 15%. Since BTC has pulled back, the main trend line (grey line) is resting near $6380. By changing my stop to $6380 and risking 1% of my capital, I'm still able to allocate 15% of my capital towards this trade. As a side note, you can set your max capital value to whatever you prefer. From my personal perspective I prefer to do no more than 15% towards any one trade regardless of my risk percentage per trade.
Why use the main trend line as your initial stop?
The simple reason is it allows me to still allocate my max percentage of capital by using the main trend line (gray line) and it also allows more room for BTC to work with a lower probability of being shaken out of the trade compared to using the pink dotted line value of $6548.
For now the trend remains intact until BTC closes below the $6380 area.
Best of Luck
