Bitcoin and my Trading Strategy
Bitcoin has been moving up over the past two days. From just below $6K, which I called by the way, to up over $8K. I caught some of the move up so far. Not nearly as much as I’d like. But I had some decent trades.
The test moving forward will be whether or not Bitcoin can hold that $8K level. It’s been testing it today a few times, going as low at $7951 before bouncing again. If it can hold these levels and push up past the highs, I think it pushes up to test the 12 EMA on the daily, which is around $9K.
Holding $8K is crucial for a continued move. There’s little conviction in holders of coins these days as they prices have tended to sell off. People are taking profits quickly on big spikes and buying the dips. $8K represents a key psychological level in my opinion. It’s the new support level and needs to hodl 😊
This is not investing advice, just my commentary. Please do your own research and execute according to your own strategy and risk tolerance.
My personal strategy has to do with setting risk and reward limits and sticking to them…religiously.
I identify a good entry point based on support levels. As the coin falls close to support, I dollar cost in. My risk is the bottom of the support level. If it breaks through support/risk area, I sell. For example, if a coin starts to fall to support…say from $120 to $100 range. I start averaging in around $110. By the end of the move, I have a cost average of $105 with support at $100. Hence, my risk is $5 per coin. If the price breaks through $100, I sell and take the loss.
My price target in this example and any example is 2x my risk. So, if I’m risking $5 in this example, my target is $10/coin or $115. And I like to dollar cost average out as well. What I usually end up doing is selling too early 😊 As my entries have been great, and the moves have been spectacular…20-40% in some cases. It’s hard to catch the entire move.
Once the price gets to your target you should take some risk off the table…sell half your position and move your stop up on the rest. Move the stop up as the price climbs. I don’t ever let it go red once I’m in the green, which is probably why I sell too early sometimes 😊
This strategy implements the 2 to 1 or 2:1 profit – loss ratio. It means I have to be right on 33% of my trades to break even, before any trading fees. Only 33% need to work out for this strategy to break even. If I can do a good job of identify support and getting a good entry average, I should be able to succeed in more than 33% of my trades and therefore, be profitable.
I use GDAX for my trades and I LTC is my coin of choice but I use Bitcoin to help set support and resistance levels and LTC follows the price of BTC very closely.
Again, this is not trading advice. I just wanted to share my strategy with you.
Good luck out there!
Chris