In trading, you can only control the entry, exit and position size. Once you are in a position, price is out of your control. If your trade setup is good, your position is statistically likely to be profitable, but never guaranteed. I personally think our brain sucks shit when dealing with random variables: poker, trading, and gambling. Traders, including myself, hold on to losing positions for too long, not willing to cut loss, not willing to let it go to fight another day.
Last week when bitcoin dropped to $160, many traders lost their shirts or quit. I empathize with you all. I said I would go over a few short stories of my past. I have personally lost fortunes trading the stock/futures market, multiple times. I would not be the person I am today if I hadn't paid the most expensive tuition of all.
First, I can tell you I am no different than any one of you. I understand the feeling of losing it all, it hurts so much that I've adapted and become more disciplined as a trader. So here is my first bust of the series.
Market is at the new lows, forming what looks like a descending triangle. Naturally this is bearish which is true for any consolidation at new lows. For the bull argument, we are barely below the previous low. What I am trying to say is that this zone is where a large number of long’s stops are at. Take a look at the past few times when market made new lows, the next day is a big crash on strong volume. As bearish as it is, a strange behavior.
This update will have 2 parts, first is the market update, and second is about analysis of my recent trade and mistakes.
Bitcoin market update:
Since yesterday, market has been sliding lower with above average volume, but the volume is much lower than the first wave down. As I speak, we are retesting the lows of the previous low. However, this time, price has been consolidating here instead of the gradual climb from before. Looking at the 4 hour chart, we have broken below the descending triangle and that is bearish even at these oversold levels.