After making a number of expensive mistakes working my way through learning to read these charts and executing my strategy correctly, I have decided to put down exactly what rules I wish to impose upon my trading behavior.
I have also received a number of people asking me for trading advice. The best advice I can give anybody is to learn how to read and understand markets. There are a number of free online courses, and a multitude of resources to learn how to do this. If you are not willing to learn how to do this, you probably should not be investing in the markets. Many people lose money. Most people lose money. We have to be different. Executing this strategy with diligence, unemotionally, and with consistency should yield you some healthy profits. But you must first learn some basic concepts. I try to teach these concepts on my YouTube channel, and on my Facebook Page. This is my attempt to help you. We can use this to put ourselves in a great position for the coming years. It is difficult to comprehend what cryptocurrencies will be worth in the future. Learning to become proficient at this could, in my belief, make anybody a multi-millionaire. I don't casually throw this dramatically large number out there. Even the most conservative estimates of what these coins will be worth in the future make adopters at this stage very wealthy in just a few years. The power of large percentage returns combined with reinvested profits results in a mathematically parabolic growth rate for any money invested in this market. But, I digress. The mathematics behind these calculations deserve, and require, an article in themselves. I am committing to following the strategy I lay before you.
Until another currency matches relatively low volatility of Bitcoin, I will hold Bitcoin as the "reserve currency" of my portfolio. The goal is to acquire as much BTC as possible, as quickly as possible, as Bitcoin makes its way to much higher prices. This is not to say I am permanently invested in Bitcoin, but rather I see it as the safest option at this time.
Of my total portfolio, 75% will be held in trades lasting days, to weeks, to months.
I expect 2017 to be very bullish for the digital assets market, and as such, I will first describe my strategy and restrictions for entering into a Long position on any digital asset.
1) Pulling up the weekly chart is how we start to identify
where we are in the larger picture. We will find the interim low
on the chart, and use the fibonacci retracement tool to chart a
good entry price on the corrective minor wave 2 of the bullish
Elliott primary wave.
2) This price we are looking to enter at should be at a support
level between the .618 and .786 retracement levels.
3) We eye price movement in this area looking for confirmation
of a trend reversal which would signify the beginning of the third minor
Elliott wave, but do not take a position quite yet.
4) Before we define the exact entry point, we shall establish the
downside risk. How can we know our analysis is incorrect? If price breaks
down, below support at the swing low, we can be sure of a larger retracement
and should cut our losses short immediately. We will allow a little room for
price movement below and set a stop loss at this point.
5) THE ENTRY
a. In order to establish the optimum entry zone, we will zoom in
to either an hourly, or 4hr chart, in order to best analyze the first minor wave up
b. Wave one will begin after we confirm a trend reversal (this will be explained later)
and will move up to hit resistance at the top, which will likely be at a fib level
measured using the corrective wave culminating in the start of this uptrend.
We mark this resistance level as well.
c. Wave two begins after wave one confirms a reversal and is likely to find
support near the either the .618 or .786 fib level of minor wave one. It is within
this price range we will look to enter the trade.
d. By drawing a trend line on the corrective wave two, we can establish
a trading range for this correction. When we get a confirmation of a breakout
from this trend, we prepare to enter the position Long, at the first support level
in our ideal buy zone. We set the buy order at this price. We then calculate the
position size by recording the percentage loss we will suffer, if we hit our stop loss.
To play conservative, and not lose a whole lot of money, we limit our position size
to no more than 5% risk. Obviously, taking a smaller position means smaller rewards
than simply putting all our money in there, but this way, we keep from losing 20% or
more of our portfolio in one trade, if we are just plain wrong.
e. Now, here comes the hard part. We have to be patient as the currency goes
sideways, sometimes. Results don't always appear instantaneously. The key is to hold
on to it, until we hit our first profit zone, regardless of what some other trader tells you
in a chat room, regardless of whatever news you read on the internet. Trust in your
analysis, don't play emotionally, and the rewards can be huge.
6) TARGET ZONE ONE
a. We will get a ride up on the third minor wave, and it could be quite profitable,
depending on the volatility of this particular coin. We would be smart to take some
profits here, and adjust our stop loss, to beneath a support level, in a
profit position, as a way of ensuring this trade is a winner, no matter what.
Sell 50% of the position, and wait for a better price to re-enter, if the analysis holds up.
b. This first target profit zone will be the high of wave one. If wave three
has yet to start, we should sell to take some profits and wait for the bottom to
buy more, if desired.
7) TARGET ZONE TWO
a. Our next zone to take profits will be at near the 1.382 fib extension for
wave one. We will sell another 50% of our position here, expecting a
retracement, and possibly a reversal.
8) TARGET ZONE THREE
a. The next target zone is a good time to close the trade.
This will occur near the 1.618 extension. When all is said and done,
we will have made a very good chunk of profit off this trade.
Reward yourself. You have earned it; however, don't forget to reinvest
most of the profit. Compounding your returns pays unimaginable dividends.
The remaining 25% of my portfolio we will dedicated to day trading
on margin. I choose to place even more conservative risk limits on
these trades. Position size must be small enough to limit total portfolio
risk to 0.5%, or 2% of margin portfolio. Volatility, especially in the short
term can be hard to predict, so risk management is essential. My day
trading strategy will be playing the trading channels of my longer term
trades, essentially compounding my holdings in the longer term
trades of the former part of this strategy.
1) I will define the trading channels using only confirmed trend lines,
with three separate bounces off support and resistance. Only after this
channel has been confirmed, and a reversal has been confirmed
will we enter the scalping trade.
2) At the bottom of the channel we will long the pair,
and at the top of the channel we will close our position
and short the pair, after confirming a reversal. We will
continue to do this, until the inevitable breakout occurs,
either to our stop limit below, or our target zone one, above.
Every day, when I complete my trading workday, I will
balance the two accounts, to an even 25%/75%, as required
by the overall strategy. I will also record trade positions,
and their current profit (or loss) total, to keep track of the
success of my strategy.
I plan to write more in detail about some concepts I have
discussed in this strategy, as a way to help all levels of
traders, brand-new, and more experienced.
You are welcome to share this with everybody you know,
and I would greatly appreciate feedback from other more
experienced traders. Please ask for clarification if any of
this is unclear to you, and I will make this piece a work in progress.
Hopefully, we can all make some great money together.
-AgoristMillionaire
P.S. I choose to provide my work for free. Some people like to charge for their knowledge, but I believe in the free sharing of ideas, especially when it comes to investing. If our strategies our so good, and we are making so much money from them, why do we need to restrict access by charging for it? I instead believe if we are so good, and we help other become good as well, they will likely be more than willing to provide a donation or tip, so to speak, as a way of saying, thanks for the help, if they are able to profit by executing the strategy. Please send me a tip, if I have helped you make some good money.
Bitcoin:
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Ethereum:
0xf499da186bbd23209757e59acc383ccb413e81d9
Litecoin:
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Follow me on Facebook at:
http://www.facebook.com/agoristmillionaire
Subscribe to my YouTube channel:
https://www.youtube.com/channel/UCu0F5JTz88zIsoVl--quUfg
I am often active in the chatroom at WhaleClub margin exchange, while I day trade, under the username AgMillions.
photo credit: Jim Makos Sterling vs Euro chart via photopin (license)