Today, I am going to do an analysis of one of my losing trade. Although winning feels rewarding, if you want to improve, there is no better school than reviewing a setup that failed - understanding where it went bad and what would have been the best solution, was there any mistake? This is a personal introspection of how i felt during the trade, why i entered the position, what would have been the best solution and why I believe this was a bad idea to enter this trade. Please feel free to leave a comment.
The idea was simple, an upward channel started early April (the 2nd) which is one of the easiest set up to be trading. Enter the trade on the lower band and exit the trade when price bounce on the upper band with a nasty 4.6 W/L ratio. I have marked few part of the chart and will explain those points in details.
N.B.:I will study the chart and not talk about the bitcoin crash which was I guess due to the huge btc movement (8.2K BTC) which may have caused the FUD - point 4.
1) I can see the price bouncing on the channel and I "FEEL" confident that the price is going upward in the near future and that was my first mistake! Never trade with your guts, trading is not about winning a single trade with incredible result (200% pump), that's called gambling and you'd better go to the Casino! I strongly believe that trading is a long term game where you manage to win over a long period. Losing happens, the question is "can you win over the long term?". This was a bad timing because the price was still under all 3 EMAs (especially the 55 which is one of my trigger), the cross over of the macd was not sharp and you can see it fluctuating between 0 for 12 hours.
2) that's where i should understand that the market might be going against me, the price is bouncing on the 55 ema and the next candle is red. the price is not going upward anymore and this is a correction/ retracement.
3) The price is breaking sharply under the lower band, my stop loss is triggered. but I know some people are not putting any stop loss (although this is the most important thing!!!) and thus will continue this trade as if i was still holding it.
4) A well known case of "Support becomes Resistance", the price is bouncing on the lower band of the channel, it will most likely decrease sharply again after that movement. if I haven't closed my position, the point (5) is where i should close it.
6) Let's talk about the RSI going down, 6 happens at the same time as 3. this is again a strong signal that the price has not finished it's correction,
Finally, I missed the powerful Elliott waves!! Although moving in a channel, you can argue there are 5 waves and the retracement could go up to 100% at that point. at the present time, it went to the 78,6% level and held that level.
What if I was working and could not monitor the chart, even worse, I didn't put any stop loss... The price went below 0.0011500 ! which means that at some point the trade was a 15% loss! What should I do??
Do you believe the price is going up or down and why?
At the present time, i don't think it is going further down, first because of the MACD divergence, there are lower lows which means that the downward movement pace is slowing down. In addition,I can see that the stoch RSI is increasing sharply (you can compare it to the previous ones). it looks like we have hit the bottom. Because of this, I believe that the correction of the elliott pattern is now finished, and price will now reach the 1st fibonacci extension : 0.0016800.
How I would play it and please bear in mind I am not a financial advisor! Again writing it down will allow me to come back on that thought and analyse my strategy! "I will get better!"
- Waiting for the confirmation candle crossing sharply the 55 EMA, checking the the next low of the RSI is actually above the latest low (Divergence), a sharp cross-over of the MACD- then ladder my buys to lower the overall cost of it.
The idea was simple, an upward channel started early April (the 2nd) which is one of the easiest set up to be trading. Enter the trade on the lower band and exit the trade when price bounce on the upper band with a nasty 4.6 W/L ratio. I have marked few part of the chart and will explain those points in details.
N.B.:I will study the chart and not talk about the bitcoin crash which was I guess due to the huge btc movement (8.2K BTC) which may have caused the FUD - point 4.
1) I can see the price bouncing on the channel and I "FEEL" confident that the price is going upward in the near future and that was my first mistake! Never trade with your guts, trading is not about winning a single trade with incredible result (200% pump), that's called gambling and you'd better go to the Casino! I strongly believe that trading is a long term game where you manage to win over a long period. Losing happens, the question is "can you win over the long term?". This was a bad timing because the price was still under all 3 EMAs (especially the 55 which is one of my trigger), the cross over of the macd was not sharp and you can see it fluctuating between 0 for 12 hours.
2) that's where i should understand that the market might be going against me, the price is bouncing on the 55 ema and the next candle is red. the price is not going upward anymore and this is a correction/ retracement.
3) The price is breaking sharply under the lower band, my stop loss is triggered. but I know some people are not putting any stop loss (although this is the most important thing!!!) and thus will continue this trade as if i was still holding it.
4) A well known case of "Support becomes Resistance", the price is bouncing on the lower band of the channel, it will most likely decrease sharply again after that movement. if I haven't closed my position, the point (5) is where i should close it.
6) Let's talk about the RSI going down, 6 happens at the same time as 3. this is again a strong signal that the price has not finished it's correction,
Finally, I missed the powerful Elliott waves!! Although moving in a channel, you can argue there are 5 waves and the retracement could go up to 100% at that point. at the present time, it went to the 78,6% level and held that level.
What if I was working and could not monitor the chart, even worse, I didn't put any stop loss... The price went below 0.0011500 ! which means that at some point the trade was a 15% loss! What should I do??
Do you believe the price is going up or down and why?
At the present time, i don't think it is going further down, first because of the MACD divergence, there are lower lows which means that the downward movement pace is slowing down. In addition,I can see that the stoch RSI is increasing sharply (you can compare it to the previous ones). it looks like we have hit the bottom. Because of this, I believe that the correction of the elliott pattern is now finished, and price will now reach the 1st fibonacci extension : 0.0016800.
How I would play it and please bear in mind I am not a financial advisor! Again writing it down will allow me to come back on that thought and analyse my strategy! "I will get better!"
- Waiting for the confirmation candle crossing sharply the 55 EMA, checking the the next low of the RSI is actually above the latest low (Divergence), a sharp cross-over of the MACD- then ladder my buys to lower the overall cost of it.
