ביטקויןלונג
shorting BTC / preserving crypto gains and avoiding lossses
Hi everyone,
This isn't relevant to anything so far in August as we haven't had too much bullishness. I thought I would share this as a general. I was considering a signal service / small hedge fund for BTC almost solely based on this (considering I am getting very annoyed with signal services online that are talking about "cup and saucer" and "head and shoulder formations"). What I was thinking was that the best way to preserve value in the crypto market is selling (/shorting) at the highs and buying back in at the lows. How do you achieve that in a consistent way? I don't want to sell early on a bull-run or to buy before the bottom.
I had a look at each peak and drop in BTC from 2013 to the present and this is the best I came up with: Look for bearish RSI divergence on the daily time-frame. What is bearish RSI divergence? When price action is creating a series of higher highs while the RSI is either declining or level (ideally the RSI trend-line and a pride action resistance line are going in different directions). When strong RSI divergence is identified, you can be confident that it will be associated with a price decline. Multiple trend-line touches are better than fewer.
RSI is basically a momentum indicator, so when the momentum is lost RSI is often the first to show this. This will allow you to see through the bullish price action and start to exit longs and look for a position to enter shorts.
Now, the market is in different stages at different times so;
1. a basic knowledge of Elliot wave is a bonus (I would rather not short the wave 3 peak - as wave 4 tends to be a shallow and complex corrections) and,
2. Your rules to close the short should vary based on the market - In a strong bull market you may want to lower the stop loss / stop aggressively and start to close the short when the RSI drops below say 45 - 35 on the daily. When in a bear market you may want to exit the short when the RSi is below 35 - 30. If BTC doesn't enter a sustained down-trend if may hit your stop at break even or for a small profit, but you are not in a worse off position).
Now, you don't seed to be in a rush. You have lots of time to transfer your BTC to a platform that facilitates trading short when bearish divergence appears on the daily. Using leverage over 5x is just risking your funds. A lot of people have entered shorts while BTC is near its yearly low and are about to get liquidated - don't try to make the trend, just follow the trend. The opposite applies to bullish divergence; when (a supporting trend-line of) price is declining while RSI is rising. In such a case, starting to spot or low leverage long positions would be a consistently profitable idea - enter the position gradually, averaging into a full position when the price drops more. If any finds are left when there is a breakout, you may want to buy into strength.
This is the most "bankable" discovery I have come across in 8 months of technical analysis and decided to float it out there for free. If you followed these rules you could have entered a short on the 18th of December and would have closed short positions on or around the the 6th of Feb and had 60 - 65% extra BTC (while the total value still decreased) or 65% extra funds to buy in at the bottom of the market. I don't change the RSI settings as it works fine on the default setting of 14.
Do I see any bearish or bullish RSI divergence today? None at all. If I was in a short position I would be taking partial or full profit / a (hopefully) small loss. Near he bottom of the market in the last 10 months may not the best place to be entering short - which is where a large amount of shorts have decided to enter recently. Please give me a thumbs up / share if you appreciate this. I also have other posts on the strange situation with shorts on Bitfinex at all time highs vs the low amount of longs and how this isn't very well related to price movement recently.
I am not a professional and am relatively new to TA. Preserve those funds people.
This isn't relevant to anything so far in August as we haven't had too much bullishness. I thought I would share this as a general. I was considering a signal service / small hedge fund for BTC almost solely based on this (considering I am getting very annoyed with signal services online that are talking about "cup and saucer" and "head and shoulder formations"). What I was thinking was that the best way to preserve value in the crypto market is selling (/shorting) at the highs and buying back in at the lows. How do you achieve that in a consistent way? I don't want to sell early on a bull-run or to buy before the bottom.
I had a look at each peak and drop in BTC from 2013 to the present and this is the best I came up with: Look for bearish RSI divergence on the daily time-frame. What is bearish RSI divergence? When price action is creating a series of higher highs while the RSI is either declining or level (ideally the RSI trend-line and a pride action resistance line are going in different directions). When strong RSI divergence is identified, you can be confident that it will be associated with a price decline. Multiple trend-line touches are better than fewer.
RSI is basically a momentum indicator, so when the momentum is lost RSI is often the first to show this. This will allow you to see through the bullish price action and start to exit longs and look for a position to enter shorts.
Now, the market is in different stages at different times so;
1. a basic knowledge of Elliot wave is a bonus (I would rather not short the wave 3 peak - as wave 4 tends to be a shallow and complex corrections) and,
2. Your rules to close the short should vary based on the market - In a strong bull market you may want to lower the stop loss / stop aggressively and start to close the short when the RSI drops below say 45 - 35 on the daily. When in a bear market you may want to exit the short when the RSi is below 35 - 30. If BTC doesn't enter a sustained down-trend if may hit your stop at break even or for a small profit, but you are not in a worse off position).
Now, you don't seed to be in a rush. You have lots of time to transfer your BTC to a platform that facilitates trading short when bearish divergence appears on the daily. Using leverage over 5x is just risking your funds. A lot of people have entered shorts while BTC is near its yearly low and are about to get liquidated - don't try to make the trend, just follow the trend. The opposite applies to bullish divergence; when (a supporting trend-line of) price is declining while RSI is rising. In such a case, starting to spot or low leverage long positions would be a consistently profitable idea - enter the position gradually, averaging into a full position when the price drops more. If any finds are left when there is a breakout, you may want to buy into strength.
This is the most "bankable" discovery I have come across in 8 months of technical analysis and decided to float it out there for free. If you followed these rules you could have entered a short on the 18th of December and would have closed short positions on or around the the 6th of Feb and had 60 - 65% extra BTC (while the total value still decreased) or 65% extra funds to buy in at the bottom of the market. I don't change the RSI settings as it works fine on the default setting of 14.
Do I see any bearish or bullish RSI divergence today? None at all. If I was in a short position I would be taking partial or full profit / a (hopefully) small loss. Near he bottom of the market in the last 10 months may not the best place to be entering short - which is where a large amount of shorts have decided to enter recently. Please give me a thumbs up / share if you appreciate this. I also have other posts on the strange situation with shorts on Bitfinex at all time highs vs the low amount of longs and how this isn't very well related to price movement recently.
I am not a professional and am relatively new to TA. Preserve those funds people.
כתב ויתור
המידע והפרסומים אינם אמורים להיות, ואינם מהווים, עצות פיננסיות, השקעות, מסחר או סוגים אחרים של עצות או המלצות שסופקו או מאושרים על ידי TradingView. קרא עוד בתנאים וההגבלות.
כתב ויתור
המידע והפרסומים אינם אמורים להיות, ואינם מהווים, עצות פיננסיות, השקעות, מסחר או סוגים אחרים של עצות או המלצות שסופקו או מאושרים על ידי TradingView. קרא עוד בתנאים וההגבלות.