18/08/2018/10:10CET
Buy? Sell? hold? panic?. How to have a clear strategy and trade this crazy market.
Is the bull back in the ring? Or is this a fakeout rally? Who knows?
Cryptos hit a sickening low a few days ago.
This low triggered my apocalypse strategy which I executed over the last few days.
Was I bummed that I missed this rally? No. Not really.
This is mainly because I have been training myself to be emotionless in my trading.
I develop strategies and trigger moments in market conditions that I execute in cold clinical fashion, or so the theory goes.
I am not there yet, but I am getting much better at it.
We can look at it like a business contract.
Business contract should be written when everything is going fine.
In the contract, in a sane and calm emotional state, you lay down what you will do when certain events happen.
So if one of these events happen, all signatories know what comes next.
It would be difficult and even dangerous to try and pen the same clauses in a contract freshly after the event has occurred. Too many emotions would cloud the result.
The same can be applied to trading. This is why a buy and hope strategy is bound to fail most of the time.
Panic selling and panic buying are rightly called "dumb money" in trading parlance. The smart money preys on the dumb.
The smart money uses cold strategy to do this.
We can all use such strategies because they are not difficult to understand or develop for yourself.
The strategy I use is called the 21dema strategy. (this is my name for it)
Since I am not interested in hording this strategy I will openly talk about it here.
So where are we placed for this strategy?
This is the daily chart of btcusd
the blue line is the 21dema indicator (21 Day Exponential Moving Average)
I am looking for a close above this line as a buy trigger.
At press time we we trade at the 6490 usd handle
the 21dema is at 6697 usd.
We have +3.1% to go for this trigger.
Important I wait for the daily candle to close above this indicator.
In previous posts I have documented detailed analysis of this strategy as applied to the entire bear market period of #bitcoin in 2018. This strategy would have had a +12% return throughout this period of time. check out this post
What about the alts?
I have only lightly analysed this strategy in the altcoin markets.
2 questions come immediately to mind:
Do we use USDT or BTC as the base of the trading pairs?
Is 21 the correct interval for the moving average for the more volatile alts?
Ignore these questions for now, let's take a look at some alts to see how they are doing vs btc and the 21dema strategy...
Note: this is just a general cross section of alts, no preferential bias
ADABTC
EOSBTC
ETHBTC
NEOBTC
SUBBTC
XLMBTC
XMRBTC
ZECBTC
Of this group of alts I have a few points to make :
ETHBTC
I am not bullish on ether in the short term. I think it will suffer as we get the flush of alts that hold their working capital in eth. There will be a lot of forced selling as these projects cling for life.
XLMBTC
Very choppy over the 21dema, though if we had executed on this strategy, we would have had 3 trades the first of which would have yielded 9% but then 2 more that bring your aggregate yield down to 3.5%
XMRBTC
Monero is moving into a buy position if it can close the day over 1.56mill sats. The hourly chart is looking strong and this could be our next swing trade if it stays strong through the afternoon.
General sentiment in alts
In general we are moving in the right directions, but this rally of thursday and friday is peatering off in some cases.
It was no surprising to have a buy surge after such savage losses the mark our week in crypto.
I have the gut feeling that we need to see a wash out of alts. Many of the 1800+ alts on CMC are clones of btc at best and/or scammy garbage at worst. In the long run I would be happier to have the entire market drop to 150bill to wash out this crap and give fresh oxygen to the survivors. This would be the market cap of cryptos back in early October 2017.
Not meaning to be a bear here, just someone who wants to have a healthy market rally rather than on weighed down with crap.
As always leave comments, have fun and trade safe.