The Wolf Den #51 - Stocks Rolling Over, Alt Charts, Requests And More
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This newsletter is sponsored by 2 amazing companies: VOYAGER and PHEMEX.I use Voyager for my spot trading and investing (and to compound interest) and I use Phemex for trading with leverage . Sign up to both with the links above and get some free Bitcoin. I really encourage you to check them both out - you know that I never endorse a product that I do not use!There is a famous saying in poker - if you can't spot the sucker in the room, you are the sucker.I recently read a tweet that made a similar observation about trading - if you can't spot the liquidity in the market, you are the liquidity.Or as I often say - your stop loss is a whale's entry.Have you ever experienced the following scenarios?1) You identify a trade, set your stop loss and take profit and wait to see it play out. You set your stop loss below a support level, demand area or Fib level. Price drops down to your stop, triggers and immediately goes the other way. Your trade idea was correct, but your stop loss was slightly too tight.2) You take a trade without a plan. Price goes against you, dropping and dropping. You finally decide to sell, and the minute you do, price goes the other way, creating what would have been a profitable trading opportunity.Why does this happen?1) You have placed your stop loss in a liquidity pool, which a whale has identified as an area that they can likely fill their order. Your stop loss is a sell order - they need sell orders to buy en masse to fill their large bids. This is often seen in the form of an SFP (Swing Failure Pattern) - price flies down past a previous swing low, wicks into the liquidity and then closes back above the swing low. Someone actually sells down into that liquidity to fill their buy orders. You can see a BEAUTIFUL BULLISH SFP on the NEO chart in the requests. There is a nice BEARISH SFP on the XMR chart.DO NOT HAVE YOUR STOP LOSS SITTING IN AN AREA OF LIQUIDITY. They are "hunting your stop," "sweeping the lows" or whatever other euphemism is used for this phenomenon. In the same area that you have placed your stop, other have placed their shorts - support is "breaking" and they want to get in line with the new down trend. Your stops and their shorts = liquidity for buy orders.2) Every chart is a visualization of human emotion - namely fear and greed. The moment that you finally feel fearful enough to exit your position is usually the same moment that a big player is capitalizing on that emotion and buying. As crazy as it seems, you will see this on a chart all of the time. Your fear usually strikes at the same point on the chart as the liquidity pools described above.THINK LIKE A WHALE.The simple fix? Wider stop losses and smaller positions. It's not rocket science, but giving your position a bit more breathing room, placing that stop a bit lower is likely to save you from this error. You will still get stop hunted, it will happen sometimes. But trading with more of a margin for error and a looser stop will save you a ton of money in the long run.The ability to place proper stop losses and then size your position correctly are two of the most important facets of trading - and they can only be learned and improved upon by testing them over and over again.Let's talk briefly again about correlation. I have gone into extensive detail regarding my belief that the stock market and Bitcoin market are uncorrelated. This is supported by the math. Regardless, for those who were viewing them as correlated in the short term (which is not really how you view correlation anyway), we have seen Bitcoin rise significantly while the stock market has dumped hard over the past two days. No matter where you stood before, as of now they are not even trading similarly.A general note - whenever I draw a line on a chart, it should be viewed as elastic and not static. It is more of a zone. So the areas around those lines are usually more accurate. Further, I try to use multiple techniques and indicators on various charts, so if you are learning TA, you should read through all of these to see how I blindly look at a chart.If you are a new member, please refer to Issue 10 (you can click on it here - https://www.getrevue.co/profile/TheWolfDen/issues/the-wolf-den-crypto-newsletter-issue-10-219754 and have it sent to you) for instructions on how to make my charts your own.IMPORTANT NOTE - I will only accept requests on Wednesdays, between 8 AM and 1 PM EST. That will make sure that they are your most pressing requests. Please mark it in your calendar and email me by responding to this email!What's In This Issue:Bitcoin CME GapWolf Of All Streets Podcast Ft. Nathaniel WhittemoreMiners Closing ShopThe Market Trades 24/7, But You Shouldn'tWhy Exposure To Bitcoin Reduces Overall Portfolio RiskLegacy MarketsAltcoinsChart Requests
The Wolf Den #51 - Stocks Rolling Over, Alt Charts, Requests And More
The Wolf Den #51 - Stocks Rolling Over, Alt…
The Wolf Den #51 - Stocks Rolling Over, Alt Charts, Requests And More
This newsletter is sponsored by 2 amazing companies: VOYAGER and PHEMEX.I use Voyager for my spot trading and investing (and to compound interest) and I use Phemex for trading with leverage . Sign up to both with the links above and get some free Bitcoin. I really encourage you to check them both out - you know that I never endorse a product that I do not use!There is a famous saying in poker - if you can't spot the sucker in the room, you are the sucker.I recently read a tweet that made a similar observation about trading - if you can't spot the liquidity in the market, you are the liquidity.Or as I often say - your stop loss is a whale's entry.Have you ever experienced the following scenarios?1) You identify a trade, set your stop loss and take profit and wait to see it play out. You set your stop loss below a support level, demand area or Fib level. Price drops down to your stop, triggers and immediately goes the other way. Your trade idea was correct, but your stop loss was slightly too tight.2) You take a trade without a plan. Price goes against you, dropping and dropping. You finally decide to sell, and the minute you do, price goes the other way, creating what would have been a profitable trading opportunity.Why does this happen?1) You have placed your stop loss in a liquidity pool, which a whale has identified as an area that they can likely fill their order. Your stop loss is a sell order - they need sell orders to buy en masse to fill their large bids. This is often seen in the form of an SFP (Swing Failure Pattern) - price flies down past a previous swing low, wicks into the liquidity and then closes back above the swing low. Someone actually sells down into that liquidity to fill their buy orders. You can see a BEAUTIFUL BULLISH SFP on the NEO chart in the requests. There is a nice BEARISH SFP on the XMR chart.DO NOT HAVE YOUR STOP LOSS SITTING IN AN AREA OF LIQUIDITY. They are "hunting your stop," "sweeping the lows" or whatever other euphemism is used for this phenomenon. In the same area that you have placed your stop, other have placed their shorts - support is "breaking" and they want to get in line with the new down trend. Your stops and their shorts = liquidity for buy orders.2) Every chart is a visualization of human emotion - namely fear and greed. The moment that you finally feel fearful enough to exit your position is usually the same moment that a big player is capitalizing on that emotion and buying. As crazy as it seems, you will see this on a chart all of the time. Your fear usually strikes at the same point on the chart as the liquidity pools described above.THINK LIKE A WHALE.The simple fix? Wider stop losses and smaller positions. It's not rocket science, but giving your position a bit more breathing room, placing that stop a bit lower is likely to save you from this error. You will still get stop hunted, it will happen sometimes. But trading with more of a margin for error and a looser stop will save you a ton of money in the long run.The ability to place proper stop losses and then size your position correctly are two of the most important facets of trading - and they can only be learned and improved upon by testing them over and over again.Let's talk briefly again about correlation. I have gone into extensive detail regarding my belief that the stock market and Bitcoin market are uncorrelated. This is supported by the math. Regardless, for those who were viewing them as correlated in the short term (which is not really how you view correlation anyway), we have seen Bitcoin rise significantly while the stock market has dumped hard over the past two days. No matter where you stood before, as of now they are not even trading similarly.A general note - whenever I draw a line on a chart, it should be viewed as elastic and not static. It is more of a zone. So the areas around those lines are usually more accurate. Further, I try to use multiple techniques and indicators on various charts, so if you are learning TA, you should read through all of these to see how I blindly look at a chart.If you are a new member, please refer to Issue 10 (you can click on it here - https://www.getrevue.co/profile/TheWolfDen/issues/the-wolf-den-crypto-newsletter-issue-10-219754 and have it sent to you) for instructions on how to make my charts your own.IMPORTANT NOTE - I will only accept requests on Wednesdays, between 8 AM and 1 PM EST. That will make sure that they are your most pressing requests. Please mark it in your calendar and email me by responding to this email!What's In This Issue:Bitcoin CME GapWolf Of All Streets Podcast Ft. Nathaniel WhittemoreMiners Closing ShopThe Market Trades 24/7, But You Shouldn'tWhy Exposure To Bitcoin Reduces Overall Portfolio RiskLegacy MarketsAltcoinsChart Requests