Veteran Trader Shares Tips on how to Profit from Bitcoin and Altcoin investing

Profitable merchants deal with buying and selling like a enterprise and a part of treating your buying and selling like a enterprise includes preserving a journal. Whereas everybody has a distinct format and desire, I usually use an Excel spreadsheet to assist with calculations and supply organizational readability.

Crypto buyers are at all times interested by one another’s positions and usually these conversations happen in non-public DMs and telegram chats. The aim right here is to offer some transparency on my buying and selling routine and I hope merchants discover the method of observing every step of each commerce academic. 

Buying and selling place sizes are redacted, however they’re at all times calculated based mostly on a 1% portfolio loss utilizing the cease loss and entry as a information. 

Chainlink (LINK)

Entry: .00016499 Satoshis (sats)

Targets: .00018564 (sats) for an 11% achieve close to the highest of weekly demand zone and .000224 (sats) for a 26% achieve close to the underside of blue resistance (see chart). 

I’ve positioned a cease loss at .00016064 (sats) which equates to a -2.6% loss.

It’s additionally good follow to think about the danger to reward ratio when investing, particularly with altcoins given Bitcoin’s present dominance price. The danger to reward ratio measures the distinction between a commerce’s entry level all the best way to the stop-loss and promote or take-profit order. 

Evaluating these two gives the ratio of revenue to loss, or reward to threat. For this commerce, it’s roughly four.5 at first goal 12.6 on the second goal.

As talked about earlier, place sizes are redacted and every commerce exposing the overall portfolio to a 1% threat. 

9/13/19

Basic evaluation 

LINK caught my consideration on Sept. 9 because it was in a transparent corrective downtrend since hitting an all-time excessive. The blue zone was offering sturdy assist and was successfully the underside of a descending triangle. LINK value broke down from this zone and retested it a variety of occasions as resistance earlier than transferring away. 

The altcoin then bounced off of the important thing assist at .00016499 (sats) and finally broke down, which grew to become my first space of curiosity to commerce. The inexperienced zone was an space of every day demand (.00014863 to .00018564 (sats)) and a break under this might be bearish, and certain result in additional value depreciation.

LINK/BTC Each day Chart. Supply: TradingView

Entry concepts 

If it breaks down right here, the primary attention-grabbing entry can be a breakthrough .00016499 (sats) which might recapture the previous assist. Ideally one want to catch a retest, however being prepared to probably commerce the breakout with a good cease was the thought, as LINK tends to actually transfer and punish merchants ready for a clear retest. 

In hindsight, I want I may have shorted this down as I used to be very assured that value would drop after dropping the blue zone.

If LINK value broke the descending trendline it could be one thing of a definitive finish to the downtrend. A break or retest of this space would turn into a second commerce. 

The way it labored out

By Sept. 19 the commerce proved to be successful. There have been 2 consecutive swing failure patterns (SFP) under the earlier swing low on the backside of the inexperienced vary with tweezer bottoms on the every day chart. 

Swing failure patterns are recognized when value shortly strikes to a key swing low (or excessive for a brief), wicks under and closes above. That is an indicator that a whale has pushed value to that degree to search out liquidity to fill their orders and sometimes called “engineered liquidity.”

LINK/BTC Daily Chart. Source: TradingView

LINK/BTC Each day Chart. Supply: TradingView

This was interpreted as a robust reversal sign and was an indication that LINK was about to pump. A full place purchase order fired as value broke via the crimson line and as talked about earlier than, I selected to play the escape with a preset restrict order. 

Promote orders had been set at .000185 (sats) (50%) and .00022 (sats) which was the remaining 50% of the place. I’ve discovered that placing promote orders decrease than the targets helps to keep away from being front-run and it is a technique I make use of with all my trades.

LINK/BTC Daily Chart. Source: TradingView

LINK/BTC Each day Chart. Supply: TradingView

Total the commerce went nice. Each targets have been hit and closed 50% of the place at every goal. LINK appeared to have extra gasoline within the tank however I selected to stay to the plan. 

I wasn’t on the lookout for re-entry right now however I might think about a re-entry with a retest of the crimson line, or a break of the descending line talked about earlier. This commerce produced an 18% revenue. 

Bitcoin (BTC)

Since topping out at $13,800, Bitcoin (BTC) has been on a little bit of a curler coaster however this doesn’t imply intraday and swing trades can’t be capitalized on. My targets have been set at $9,700 via $10,028 and concept entries have been at $9,367 and $9,321. 

The danger to reward was three.1 for the primary goal and 11.5 for the second goal. A stop-loss was positioned at $9,260 which equates to a 1.14% and zero.65% loss if that area is hit.

BTC/USD 4hr Chart. Source: TradingView

BTC/USD 4hr Chart. Supply: TradingView

Basic evaluation

I chart Bitcoin (BTC) greater than another asset, so I’m effectively tuned to its basic motion. Importantly, as an American, I don’t commerce on any leveraged change since I don’t belief them. This implies I lack the flexibility to quick although Kraken available. I merely don’t belief the supply of margin or the “rip-off wicks” which are usually seen liquidating and stopping out unassuming merchants. 

Bitcoin value has been slowly dropping for days and round Sept 24 it regarded able to fall off of a cliff. That mentioned, there’s a excellent threat/reward for an extended if that is the underside however one would wish a good cease. 

It is a clear scenario of “shopping for assist.” The one difficulty is that the assist has been examined a number of occasions which tends to make it weaker. The nearer to assist the higher entry to tighten up the cease loss. The channel can be unconfirmed on the backside and the resistance on the high is obvious. 

The crimson line represents a earlier swing low and I need nothing to do with any candle closes under this line as a result of it would clearly invalidate my premise. 

BTC/USD 4hr Chart. Source: TradingView

BTC/USD 4hr Chart. Supply: TradingView

Entry concept

The confluence of a key assist from the earlier swing low ($9,321) and the underside of the potential channel represents a do or die level and it is vitally straightforward to chop bait with a good cease if this goes the improper manner. 

The danger is having a cease loss fireplace and this degree turning into an SFP with only a wick under the crimson line. That will be brutal and has occurred many occasions. Setting the cease at $9,260 offers about $60 of leeway under the assist for an errant wick.

I made a decision to unfold the orders in a circle and the primary wick down stuffed about 70% of the orders and was adopted by a pleasant bounce. I believed that will have been the top of the dump there, however the remainder of my orders stuffed on the crimson line. 

Not ultimate, I might have reasonably had the orders all fill on the primary drop. The truth that the worth bounced and returned to assist is bearish however I’m sticking to my plan.

BTC/USD 4hr Chart. Source: TradingView

BTC/USD 4hr Chart. Supply: TradingView

The way it labored out 

The commerce was a complete practice wreck. That was the quickest that I’ve been stopped out of a commerce in a very long time, in all probability underneath 5 minutes from the second entry. Bitcoin value hit the crimson line and dumped via it in epic trend. 

Clearly this was a completely terrible learn on the chart, however fortunately a good cease loss helped to mitigate losses. This might have been extraordinarily ugly with out a tight cease, because it ended up being one of many largest crimson candles in current Bitcoin reminiscence. This commerce led to a lack of zero.9%.

One factor that may be taken away from this expertise is that preserving a journal permits a dealer to backtest and overview candle patterns and assist / resistance ranges with out affirmation bias. This improves the flexibility to execute and handle future trades.

The views and opinions expressed listed here are solely these of the (@scottmelker) and don’t essentially mirror the views of Cointelegraph. Each funding and buying and selling transfer includes threat. It is best to conduct your personal analysis when making a call.

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