Bitcoin Price Diary: Shorting BTC is Dangerous, So I Went Long at $6.9K


This has been a combined 7 days, with some tiny gains and losses on Bitcoin (BTC) longs and small earnings on alt trades which I will focus on in the coming months. I would like to get this possibility to explain a couple matters about my trading type and tactic in typical, as it can be bewildering for many.

Initial, I do not short Bitcoin. This is not simply because I have no desire to appear for brief positions, but simply because I am American and can’t legally trade on leverage exchanges that supply Bitcoin shorts. The only trade where I can legally shorter is Kraken, which is infamous for huge wicks on candles that do not exist on other exchanges. I will not trade any place that my risk management strategy are not able to be correctly executed – so extensive wicks that end out traders who would or else be wonderful elsewhere are not satisfactory for me.

That explained, I only appear for prolonged entries, which is not an excellent circumstance, as it forces me to trade from the development when I want to enter a situation. I am snug with this because I have a tested and nicely-described investing technique. It makes it possible for me to just take quite a few compact losses, compensated for by a few of substantial gains a year.

This performs for me but is unlikely to function for one more trader who does not absolutely recognize my situation and system. To that close, no person ought to copy my trades, or anybody else’s. The accountability to develop and enact a system is yours, and your program will be a result of your personal economic scenario, timeline, and expectations.

It is also essential to take note that I only trade with a modest share of my total portfolio. I only trade 15% of the money allocated to my crypto portfolio and my complete crypto allocation represents only 10% of my overall expenditure portfolio. As I generally say, I strategy my losses, expecting some of the trades I make to go towards me. As this sort of, I am cozy dropping my entire investing portfolio, and it would not have any influence on my existence. That is my program.

I would also like to fall a rapid take note about longing and shorting cryptocurrencies. In my feeling, longing is most likely much much more successful and considerably less risky than heading quick on Bitcoin, or any other asset. I just lately tweeted about this and was a little bit stunned at the deficiency of knowing of this idea amongst traders that are actively shorting with leverage.

At the core, a zero leverage short’s greatest earning opportunity is 100% if the asset goes to . You are not able to do improved than doubling your funds. The theoretical upside of a extensive posture is infinite. That is why a short from the Bitcoin prime at $20,000 all of the way to the reduced of $3,200 was considerably less rewarding than a uncomplicated prolonged from $3,200 back again to $6,400. Newcomers should really not small, they must get dips in an upward trending current market.

Update on the Bitcoin posture

As talked over in the final journal entry, I opened a Bitcoin situation at $8,375. The price tag rose instantly, so as I usually do, I moved my prevent reduction up. I ended up stopping out at my entry price tag and broke even.

I also took a further placement as rate ongoing down, at $8,010. Value retraced to the 78.6% Fibonacci amount, a really deep retracement relative to past corrections. This appeared like a fair spot for a bounce. There were also very clear bullish divergences on all time frames from 6 hours down, which finally failed.

BTC USD 4 hour chart. Source: TradingView

BTC USD 4 hour chart. Supply: TradingView

The most persuasive motive for a lengthy placement in this area was the opportunity “bullish breaker” revealed in pink. This was an region of supply that was blown by in a one candle. These zones are usually retested as assistance – identified as a bullish breaker when they are effective. I stopped out when the selling price failed to hold this level, at $7,900 for a position reduction of about 1.4%.

BTC USD 6 hour chart. Source: TradingView

BTC USD 6 hour chart. Resource: TradingView

I took an additional Bitcoin place at $7,420 when the selling price arrived at the upcoming zone that I had outlined. It did so in impressive vogue, proficiently going from zone to zone in a solitary 4-hour candle. I straight away moved my halt decline up to $7,500 when the rate crossed $7,600. I shortly stopped out with a compact profit of 1%.

BTC USD 4 hour chart. Source: TradingView

BTC USD 4 hour chart. Supply: TradingView

I am presently extensive Bitcoin when yet again from $6,900. The Relative Power Index (RSI) on the 4-hour chart is at historic lows, touching 6.02 currently just before climbing a little. This is the most oversold that Bitcoin has been this total 12 months as well, so I see it as a really probably area for at least a relief bounce.

BTC USD 4 hour RSI. Source: TradingView

BTC USD 4 hour RSI. Resource: TradingView

The daily RSI has also come to be oversold. That does not indicate that cost will bounce now, but it does suggest that sooner or later, RSI should really travel back again to overbought, getting the price with it.

BTC USD daily RSI. Source: TradingView

BTC USD day-to-day RSI. Source: TradingView

I have already closed 50 % of my lengthy posture at $7,350, the very first vital resistance that demands to flip for the opportunity reversal to keep on. I will permit the rest ride for now.

BTC USD 6 hour chart. Source: TradingView

BTC USD 6 hour chart. Source: TradingView

More trades:

I stay in my place on Harmony (One particular). I also nonetheless hold positions in Dogecoin (DOGE) and Holo (Scorching), which I will update when the price tag motion aspects these kinds of an update as applicable. I have not too long ago taken a new position in REN (REN), based simply on a confluence of horizontal and ascending assistance and a bullish divergence on the 4-hour chart. I will update this as it progresses.

REN BTC 4 hour chart. Source: TradingView

REN BTC 4 hour chart. Source: TradingView

REN BTC daily chart. Source: TradingView

REN BTC every day chart. Source: TradingView

The views and opinions expressed listed here are solely people of the (@scottmelker) and do not always replicate the views of Cointelegraph. Every single financial investment and buying and selling move entails possibility. You really should carry out your own research when making a conclusion.


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