In yesterday's installment, I suggested (albeit nervously!) that the final wave of yesterday morning's avalanche was capitulation. Namely, a climactic selling frenzy in which all the nervous hands are shaken out. Afterwards, the market should go dull and the remaining holders should be in no hurry to sell.
That's what happened today. Bitshares stayed in a range between 920 and 940, and the day was dull. The 24-hour volume as of now is a third of what it was a day ago. The calmness and quiet gave me a change to do some spread trading with a technique called laddering.
Ladder Up, Ladder Down
If you don't know the term, laddering consists of splitting up buys and sells and placing them in ascending order (for sells) or descending order (for the buys.) Here's an example that I set up in my Poloniex account:
At the time I placed these, Bitshares had last traded at 930: right in the middle of the range. The idea behind laddering is to gain spread-trading profits as the asset moves up and down the range. When one side of the ladder is largely filled up, as with this screnshot from this mid-morning:
you wait for the market to turn around. This works well if the market stays in its range - but it always requires a fallback plan if the range gets broken.
Dull Morning
The sideways, slightly angled action continued overnight (all times Eastern.) The two-day chart from 8 AM:
shows the avalanche and the quiet afterwards. The six-hour chart shows more clearly the resulting calm:
and intermittent bursts of buying and selling that kept Bitshares in its range.
Followed By An Even Duller Afternoon
To be honest, there's not much point in showing you a midday chart. This six-hour chart screenshot as of 6 PM pretty much shows it all:
This morning saw a similar trendlessness, although with more action. The highlight of the day appears in the left side of the above screenshot: a frenzy of dumping around 1:30 that tried but failed to saw through the 920 floor. Bitshares did spend some time below 920, but it climbed back up and is now sitting in the middle of the range. Overall, a blah day.
Except in one sense. Have a look at the two-week chart, also screenshot at 6 PM:
Today's grind does look like the mid-August wheel-spinning, which suggest that Bitshares' next move is upwards. The most likely cause would be a FOMO buying spree just before the blockchain-scanning period for the Peerplays sharedrop begins.
But of course, as I found out yesterday, the market can saw right through even sensible expectations. That's why I continually wondered what I should do if Bitshares ripped through the floor into the basement.
Lesson Of The Day
Dull markets are good for range trading, and laddering is a useful tool to use. But you always have to keep an eye on the market to make sure the range isn't sawed through and you have to have a fallback plan if it does.
That's why I cancelled all my buy and sell orders - and why I deposited a lot of extra margin into my Margin account.