EC Bitcoin, How Not To Lose

With a twelve-month bull run from US$3,782 to US$58,352, it is easy to get complacent as a trader—one of the most dangerous places to be. No one could blame you if you were fortunate or skilled enough to catch some or all of this 1,443% advancement of Bitcoin and now feel a bit cocky. Unfortunately, in trading, you are always your own worst enemy. Losing sight of even the smallest amount of discipline can cause dramatic losses. Making money is the goal but risk control and holding on to your profits is even more critical. Bitcoin, how not to lose.

BTC-USD, Monthly Chart, Conservatively Bullish:

BTC-USDT, monthly chart as of March 8th, 2021.

BTC-USDT, monthly chart as of March 8th, 2021.

One of the best ways to keep one’s emotions in check is reducing position size. It allows for accepting risk and, as such seeing the market for what it is. Looking at the monthly chart above, this size reduction on new entries is also in accordance with the risk at these more extended levels. We see prices progressing higher, but entry risk once the price has moved up this far aligns to our risk control parameters from a psychological perspective and a statistical one.

BTC-USDT, Weekly Chart, Steep and steady:

BTC-USDT, weekly chart as of March 8th, 2021.

BTC-USDT, weekly chart as of March 8th, 2021.

This weekly chart shows price behavior even more clearly. For nearly three years, Bitcoin prices meandered around the mean (yellow line). Last year in October, Bitcoin prices broke out of this range. Already four weeks later, in November 2020, prices extended above typical standard deviation levels. Nothing atypical for Bitcoin, which loves sharp advances. And again, we do not see prices decline from here rapidly. However, what is affected are stop levels and entry probabilities, which makes the astute trader behave more risk-averse both in exposure size and trading frequency.

BTC-USDT, Daily Chart, Bitcoin, how not to lose:

BTC-USDT, monthly chart as of March 8th, 2021.

BTC-USDT, daily chart as of March 8th, 2021.

The green arrows on the daily chart show our long entries last week. We posted these in real-time in our free Telegram channel. Each of these entries had a position size reduced by thirty-five percent. We were also able to finance all three trades (=take partial profits shortly after entry based on our Quad exit strategy to eliminate risk). For now, we are holding remainder small position sizes for possible price advances without a skewed view due to the more than usual conservative approach (= minimal position size).

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Disclaimer: All published information represents the opinion and analysis of Mr Florian Grummes & his partners, based on data available to him, at the time of writing. Mr. Grummes’s ...

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William K. 1 month ago Member's comment

Quite a detailed set of advice, and all of it reasonable. My take is that to actually make a profit on the rise of share prices, one must sell those shares. Otherwise it is just potential wealth, a collection of valuable, not very liquid, assets. And the challenge of selling is always that it requires buyers, folks willing to pay that higher price, for whatever reason. Without the buyers, one just owns a bunch of impressive numbers, usually a challenge to spend.