A simple trading technique

4 de jun. de 2019

A simple way to trade:
(that does not need "indicators")

"The trend is your friend"
aka
"ride the wave" or "Go with the flow"
in a sense, it's also related to "Buy the dip, sell the top"

Identifying the "trend"

1:) Decide on which time-frame you want to trade.
You can have different trends depending on time-frame, week goes down but day goes up, so decide now and don't change time-frame while in a trade.
We're going to need an UPTREND for this one (even bearmarkets have uptrends within them)
This technique works well with daily or hourly (maybe even smaller) timeframes. On bigger timeframes Bitcoin starts to exhibit it typical 'exponential growth' which makes entrypoints a bit harder to spot (and is beyond the scope of this Tutorial)

part of the 2018 "Bearmarket (red) with some lucrative uptrends (green)


Word of caution in advance, you CANNOT just start drawing a trend wherever you like (even some legendary"top"authors do that)
A new trend starts when the previous one is broken .. so try to identify a few previous trends too ..
While in an uptrend the lower line or floor "Support" is al you need.
When in a downtrend, identifying the upper boundaries or "(overhead)Resistance" is a must, to spot a trend change /aka break-out.



My advice - do not ignore wicks - Lot's of (expert)people do that, but a wick on weekly chart can be several big candles on daily and hourly chart and will most certainly interfere with the trade -> trigger stoploss

2:) look for a broken downtrend, draw the uptrend: find the lowest point A and draw a line to the next (higher) lowest point B



3:) this might be a tricky part in the beginning and actually requires some experience .. but experience comes from trying .. so .. try
If you think the uptrend has just started and price could go further up: BUY (if you have just drawn several of the previous trends you should get a 'feel' about the average duration of those trends)
Caution here is advised, don't jump in to soon, a break-out might retest the previous resistance or come close (observe the wick just next to point B)
Use the trendline as guidance for the stoploss.



AGAIN - keep your emotions out of it - don't get greedy (don't go thinking you could've bought lower or sold higher - you will never know that in advance and captain Hindsight is out drinking beer with captain Obvious)

[u]Riskmanagement:[/u]

There's plenty to read about this but my personal advise:
Don't put all your money in at once, start with a small amount, once the price has risen, gradually keep buying in - if the price would fall right after getting in you didn't risk much, once it's higher, the lower buy-ins already made you money and will (partially) cover potential loss of the later buy-ins.


Also, if you manage to more or less double your initial funding, you might put that initial money away for ever. Worst case you're left with what you've started with

Buy and:
-set a stoploss (initially just below trend/supportline) - you may want to keep adjusting it while the price goes up.



or (if your exchange has this)
-set a trailing-stop (goes up with the price automatically)
or
- do it manually, keep a constant eye on the price, if it threatens or goes under your line .. pull out (sell) (this can go south very fast - literally and figuratively - only for more experienced and cocky traders)

once the stoploss is above your initial buy-price "you're in business"
if your unlucky you get your stop triggered very fast and lost (a little bit) money
retry (until success or you managed to lose all your money)

Congratulations, you've made money (or not)

DISCLAIMER:
I gave you a fishing-rod and a net, if you end up in the water and drown instead of pulling fish onboard .. not my problem.