Another week and another stop out. That is 3 in a row for the record, and is reason enough to go back to the plan and assess the strategy. Trading is not about being right or wrong, it is about adapting to your environment. It is about looking at your losses and how you can improve your strategy as the market changes. Range bound markets are difficult to trade period. There is a lot of noise and often stop losses are hit right before the move happens.
This is why everyone trading long last year made money. No secret, bullish momentum, defined trend, anyone that bought a pullback two weeks later was able to take in profits. However the environment has changed. No longer does this strategy work, and as the market continues to be range bound we need to adjust our strategy moving forward. This is exactly what we did. Obviously not from a bull to a range bound, but the difference in how Bitcoin' is trading within the range.
One nice thing about position trades is they are not as affected by these markets as swing trades. This is the reason we have orders staggered lower into extreme lows. You have to be able to often take some pain, but buying into a low is a simple position strategy. Swing trading is different. There is a defined buy or sell, stop and target. Just yesterday our trade was knocked out again.
This is where position size matters and the reason we wrote a thorough article on why trade size matters and how to calculate it. It is one thing to take a loss, this is trading and part of the game, it is a complete other to be irresponsible with your trading capital. This is not only why businesses fail, Dr's go bankrupt, but why most traders never make money in the long term. Three losses at a maximum 2% of ones trading capital is 6% capital depreciation. This is not an insurmountable loss. However if you are one of those traders that is looking at their portfolio, and it is down 20-30-40% in the last two three months, than you are not focusing on your losses, your playing roulette.
The current chart is very simple. Trading any type of moving average, or other indicators and oscillators in a non-trending market is a recipe for disaster. Consolidating ranges require a different strategy and it is the reason you see a simple trend line, range and two simple levels. Like the instructions say on the box, screw driver and pliers, no other tools required.
We recently broke through the down trend, which is well defined, and have retested where resistance becomes support. We are at the lower end of the range, not exactly at the bottom, but below the midpoint for sure. We also have a minor uptrend formation which as long as it holds, in the short term we are likely to retest the upper range. How is that for being simple? No RSI's, MACD's, HMA's EMA's or flying Fibonacci Bats with inverted collars required. Just good ole fashion "identify the trend".
Now that does not preclude we can not see lower prices, WE CAN, but positioning closer to the lower end of the range, and using the trends as our guide we can increase the probability of success. This is what trading is all about, not magical unicorns, that poop golden trade signals. It is all about adapting to the current market conditions. This implies we are not counting on 6800 to be broken any times soon. That does not mean it can't, just we are not factoring it in at this time.
So as the market evolves we adapt to the environment. In lieu of bragging about our wins, we focus on our losses and look to see how we can adjust our strategy to increase our probability of success. Remember even though swing trading is a short term play, it is still a long term game. This is why capital preservation is critical. When the market returns to a defined trend how big of a hole will you be digging yourself out of. This is the reason we are selective and conservative in our trading, and not taking 5-10 trades simultaneously as I explained in the article.
To be successful you should be more focused on the losses than the wins. You should be more focused on capital preservation than making money. You should be focused on what is the proper trade size in this market environment. Sure everyone wants to make money, but it is minimizing losses that really what separates traders from gamblers.
How do you know if your a gambler or a trader? If your taking more than 1 or 2 trades in a range bound correlating market you are simply gambling. If you want to go long oil, do you pick 6 oil' trades, or look for the best oil' trade and position accordingly? If you are short the dollar, do you go long the Euro', GBP', and CHF'? Or do you pick the chart that is the best and position accordingly.
Traders pick the one they believe is best, gamblers see the wheel spinning and start throwing money down on 5,9,21,18,24,35, red & even and hope they the ball stops on 24 red. When it doesn't all their chips are called away. You will never be successful with this type of mentality which is the reason we emphasize position size, and not over trading.
So while many are bragging about their wins, I am bragging about my losses. Why? Because since September, using our position strategy, our swing trade capital is only down 4%. When a bull market returns, what will be in your wallet? Is all the fun you had trading worth it?
Again if you are going to post your 90% win ration, charts with 58 indicators and fill up my article with junk, please at least hit the thumbs up!! Have a little class!
This is why everyone trading long last year made money. No secret, bullish momentum, defined trend, anyone that bought a pullback two weeks later was able to take in profits. However the environment has changed. No longer does this strategy work, and as the market continues to be range bound we need to adjust our strategy moving forward. This is exactly what we did. Obviously not from a bull to a range bound, but the difference in how Bitcoin' is trading within the range.
One nice thing about position trades is they are not as affected by these markets as swing trades. This is the reason we have orders staggered lower into extreme lows. You have to be able to often take some pain, but buying into a low is a simple position strategy. Swing trading is different. There is a defined buy or sell, stop and target. Just yesterday our trade was knocked out again.
This is where position size matters and the reason we wrote a thorough article on why trade size matters and how to calculate it. It is one thing to take a loss, this is trading and part of the game, it is a complete other to be irresponsible with your trading capital. This is not only why businesses fail, Dr's go bankrupt, but why most traders never make money in the long term. Three losses at a maximum 2% of ones trading capital is 6% capital depreciation. This is not an insurmountable loss. However if you are one of those traders that is looking at their portfolio, and it is down 20-30-40% in the last two three months, than you are not focusing on your losses, your playing roulette.
The current chart is very simple. Trading any type of moving average, or other indicators and oscillators in a non-trending market is a recipe for disaster. Consolidating ranges require a different strategy and it is the reason you see a simple trend line, range and two simple levels. Like the instructions say on the box, screw driver and pliers, no other tools required.
We recently broke through the down trend, which is well defined, and have retested where resistance becomes support. We are at the lower end of the range, not exactly at the bottom, but below the midpoint for sure. We also have a minor uptrend formation which as long as it holds, in the short term we are likely to retest the upper range. How is that for being simple? No RSI's, MACD's, HMA's EMA's or flying Fibonacci Bats with inverted collars required. Just good ole fashion "identify the trend".
Now that does not preclude we can not see lower prices, WE CAN, but positioning closer to the lower end of the range, and using the trends as our guide we can increase the probability of success. This is what trading is all about, not magical unicorns, that poop golden trade signals. It is all about adapting to the current market conditions. This implies we are not counting on 6800 to be broken any times soon. That does not mean it can't, just we are not factoring it in at this time.
So as the market evolves we adapt to the environment. In lieu of bragging about our wins, we focus on our losses and look to see how we can adjust our strategy to increase our probability of success. Remember even though swing trading is a short term play, it is still a long term game. This is why capital preservation is critical. When the market returns to a defined trend how big of a hole will you be digging yourself out of. This is the reason we are selective and conservative in our trading, and not taking 5-10 trades simultaneously as I explained in the article.
To be successful you should be more focused on the losses than the wins. You should be more focused on capital preservation than making money. You should be focused on what is the proper trade size in this market environment. Sure everyone wants to make money, but it is minimizing losses that really what separates traders from gamblers.
How do you know if your a gambler or a trader? If your taking more than 1 or 2 trades in a range bound correlating market you are simply gambling. If you want to go long oil, do you pick 6 oil' trades, or look for the best oil' trade and position accordingly? If you are short the dollar, do you go long the Euro', GBP', and CHF'? Or do you pick the chart that is the best and position accordingly.
Traders pick the one they believe is best, gamblers see the wheel spinning and start throwing money down on 5,9,21,18,24,35, red & even and hope they the ball stops on 24 red. When it doesn't all their chips are called away. You will never be successful with this type of mentality which is the reason we emphasize position size, and not over trading.
So while many are bragging about their wins, I am bragging about my losses. Why? Because since September, using our position strategy, our swing trade capital is only down 4%. When a bull market returns, what will be in your wallet? Is all the fun you had trading worth it?
Again if you are going to post your 90% win ration, charts with 58 indicators and fill up my article with junk, please at least hit the thumbs up!! Have a little class!
