So You Want to Catch A Falling Knife Episode3 Revenge of the BTC
Hello Fellow BTC Bulls.
Here we go again, we are waiting for a long entry in Bitcoin while is slides down to oblivion.
This is not for the feint of heart, as you can recall we tried this at 9500 and was stopped out with a small profit.
We then tried again at 7337 and was again stopped out by a small profit.
We have not lost any fingers but needless to say, catching knives is extremely dangerous.
We need to pay close attention, and we have to be quick!
I have marked down the buy points - these are approximates.
As we get closer to these areas, we will look into the smaller time frames for more accuracy.
Let's watch the BTC story unfold, and hopefully it gives us more hints as to when to enter.
There are 2 scenarios I'm looking at, both areas are marked on the idea.
1. The Double Bottom
2. The Panic Selling Buy
I'm looking for Panic selling. such as consecutive -10% days like today. I want to see blood on the streets and everyone is running around like the sky is falling. This is a good indictor that the bottom is just around the corner.
However, we can never be too sure. This is why we stay vigilant to protect our capital.
Here we go again, we are waiting for a long entry in Bitcoin while is slides down to oblivion.
This is not for the feint of heart, as you can recall we tried this at 9500 and was stopped out with a small profit.
We then tried again at 7337 and was again stopped out by a small profit.
We have not lost any fingers but needless to say, catching knives is extremely dangerous.
We need to pay close attention, and we have to be quick!
I have marked down the buy points - these are approximates.
As we get closer to these areas, we will look into the smaller time frames for more accuracy.
Let's watch the BTC story unfold, and hopefully it gives us more hints as to when to enter.
There are 2 scenarios I'm looking at, both areas are marked on the idea.
1. The Double Bottom
2. The Panic Selling Buy
I'm looking for Panic selling. such as consecutive -10% days like today. I want to see blood on the streets and everyone is running around like the sky is falling. This is a good indictor that the bottom is just around the corner.
However, we can never be too sure. This is why we stay vigilant to protect our capital.
Comment:
The formula for expectancy didn't come out right probably because of the double brackets. here it is again...
given that:
E = Expectancy (expected gains from a series of trades)
P = Probability of Trade Working
(1-P) = Probability of Trade NOT Working
E = (Reward x P) - ((1-P) x Risk) - Transaction Cost
or in simpler terms
Expected Profit Over Time = (Reward x Chance of Winning) - (Risk x Chance of Losing) - Transaction Cost
Where reward is from your entry point to your target price. Risk is from your entry point to your stop loss.
given that:
E = Expectancy (expected gains from a series of trades)
P = Probability of Trade Working
(1-P) = Probability of Trade NOT Working
E = (Reward x P) - ((1-P) x Risk) - Transaction Cost
or in simpler terms
Expected Profit Over Time = (Reward x Chance of Winning) - (Risk x Chance of Losing) - Transaction Cost
Where reward is from your entry point to your target price. Risk is from your entry point to your stop loss.
Comment:
FYI guys I'm going camping for 2 days. I will not be able to update (I don't think there is cell signal in the camp site).
I don't think we will be bottoming out anytime soon. This move down is so powerful, a consolidation should happen soon before another fall. I will update my idea once I'm back.
I don't think we will be bottoming out anytime soon. This move down is so powerful, a consolidation should happen soon before another fall. I will update my idea once I'm back.
Comment:
There's the start of your consolidation.
I have to admit this pullback is stronger than I expected.
Everyone is so bearish with bitcoin... I won't be surprised if the turn is just around the corner.
Anyways this is another piece of the puzzle.
I have to admit this pullback is stronger than I expected.
Everyone is so bearish with bitcoin... I won't be surprised if the turn is just around the corner.
Anyways this is another piece of the puzzle.
Comment:
These are the current scenarios I'm looking at...
Comment:
This is the first setup I'm seeing.
I'm going to put half the position in IF this structure forms.
To be honest I would like it to dip a bit lower than the previous bottom because these types of double bottoms tend to be more successful.
I'm going to put half the position in IF this structure forms.
To be honest I would like it to dip a bit lower than the previous bottom because these types of double bottoms tend to be more successful.
Comment:
a better picture, the zoom on the last one is too far
Comment:
The price tested the bottom of the wedge that is shown above.
At this point I now have a game plan.
1. Wait for a move up to test the upper wedge and a breakdown back to the bottom and Buy half the position.
(I will not put my stop at 4K for this first buy INITIALLY, this is going to move up fast depending on the price action)
2. If the wedge breaks down, it shows real panic, then I will buy the second half around the areas shown below.
At this point I now have a game plan.
1. Wait for a move up to test the upper wedge and a breakdown back to the bottom and Buy half the position.
(I will not put my stop at 4K for this first buy INITIALLY, this is going to move up fast depending on the price action)
2. If the wedge breaks down, it shows real panic, then I will buy the second half around the areas shown below.
Comment:
I'm looking for this right now. Lets see what BTC does.
Comment:
cleaner picture of the above...
Comment:
so far so good..
Comment:
It looks like the structure is going to form. I will update with a new idea as we get closer to the buy point
I am not saying I know where the Bottom is... NOBODY does.
This is why the idea shows different target points. If the double bottom does not work, the second area will be where I will try next.
Trading, or TA for that matter, is not about getting it 100% right. Fundamentally, TA is based on probabilities, so naturally you will be wrong at times, you will be right at times.
The MOST IMPORTANT THING about trading or TA is that your Expectancy is greater than 0.
What do I mean by this?
given that:
E = Expectancy (expected gains from a series of trades)
P = Probability of Trade Working
(1-P) = Probability of Trade NOT Working
E = (Reward x P) -
If E = 0, you will neither lose or gain money over many trades
If E > 0 , you will gain money over many trades
if E < 0, you will lose money over many trades
If you understand this fundamental you will realize that even if you are 90% correct in your trades, if your Reward/Risk is less than 0.1 (10 to 1 ratio), you will LOSE money over time.
Conversely
If you are correct in your trades only 1 out of 4 times (25%), you will MAKE money over time if your Reward/Risk is greater than 3 to 1.
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The Falling Knife series is a series of trades with high Reward/Risk ratio with low probability. But what makes these trades special, is that you can limit Risks and even make profits by placing stop losses at key areas.
This is why I say that these trades are not for the feint of heart, and not for the undisciplined traders that can't move or follow their stop losses.
I truly hope you guys take the time to understand this concept as it is essential to trading.
A quote from George Soros one of the greatest traders of all time:
“It’s not whether you’re right or wrong, but how much money you make when you’re right and how much you lose when you’re wrong.”
Trade with care.