My last bitcoin trade on 6-14-2014

Bitcoin speculators:

I made a post a few days ago on what /r/bitcoinmarkets want to see. The most upvoted comment was to talk about my past trades and even live ones. So here it is. This is my post recent trade with great success. Before reading on, I want to disclaim you of the following:

  1. This is my opinion of the bitcoin market; this is not an investment advice. I do this for free.
  2. When I make a trade, my technical knowledge at the time says that this trade has a good probability of winning. Hindsight is 20/20 and loss does happen, but that does not mean I made a bad trade.
  3. You may not agree with my technical analysis, but feel free to share your idea with me.

My bitcoin trade on 6-14-2014:

Why the trade? Why this price at this time?

Earlier that day, there was panic selling all the way down to 522 usd/btc. How do you spot a panic bottom? (read the concept explained section on the bottom of the post). When we have a hammer formation accompanied by a long tail, this suggest that market is close to a short term bottom. After seeing this, I wait. bitcoin prices quickly bounced after a few hours while I was at work, notice the weak volume going up.

Soon enough when Asian markets opened up, market is going down again. But it is different this time, Volume was weak on this sell-off before I bought, and we know that there is support at 545 dollars from previous rally high on 4-15-2014. I bought in at 557 with a stop of 535. I expected a double bottom formation at these levels.

Holding on? When to sell?

As soon as I bought it, market decides to drop another 15 points just to prove me wrong. My stop is always calculated before the trade (sometimes my target too) so I just need to sit on my hand until it hit my stop. Making money ain't easy yo! I decided to set my stop and go to sleep.

Calculating Targets and possible exits

When I woke up, market has rallied 20 points higher and I knew that my first target was previous bounce high at ~580. If we rally above that, a confirmed double bottom target is 610. I sit on my hand watching bitcoin prices chop around for a whole day until it broke above 610!. From a bigger picture, and I post I made previously. This is a head and shoulder pattern on bitcoin! With this kind of pattern, I know that once it breaks out of this price level, it will quickly rally to the next resistance, 660. But bitcoin price stalled and stalled, the market felt really heavy and the selling on the orderbooks didn't feel like a rally coming at all. How do you tell that? From years of experience, you want to pay attention to the bid and ask orders. During a rally, there will be large bid orders with light selling/profit taking. However, there was no real buying and liquidity was gone; there was a 2.5 dollar spread! The news at the time was that whales are not buying now because of some auction? I sold my btc at 606 and called it a day.

That is it folks, it took a long time for me to post my past trades (I had to think it through, because it is personal). Feel free to shoot me a msg or leave a comment below. I'll keep doing this if there is demand for it, or else I can focus on something else. You can follow me on twitter at @ibankbitcoins.

What am I trading now?
Shorted BTC at 606 on bitfinex. Follow me on twitter already.


 

Concept Explained for panic bottom:

Panic bottom happens after a prolonged period of downward price action, it is usually the final stage of selling if not close to the final stage (short term). To spot a panic bottom, follow these rules below:

  1. Panic bottom only happens after lots of selling previously, IE very doomy scenario!
  2. The selling has to accompany with huge volume, 2x or even 3x is reasonable here.
  3. The candlestick is usually a hammer with a very long tail. What is a hammer? I'll do one if enough people request it.