Position Trading, Trading Against the Box, and The Basis
Well, after getting discombobulated . . . I slowly stuck my toe back in the water . . . initially selling perp . . . and later buying the futures. . . . in a small way of 20,000 to 50,000 at a time. . . .until I was short 180,000 perp and long 220,000 . . . and picked up about 1 btc legging my way in and collecting the short funding. Not quite half of what I had before getting discombobulated.
Remember I left 7 btc in the account after recovering my stake (14 btc) plus 2 btc . . . so had a net gain of 9 btc . . . also sold 7 btc into fiat for sayvving. . . yes, there is a world beyond bitcoin . . . and you need to distribute your success in the local economy or other investments around the world. https://medium.com/@homeytel/i-am-sayvving-2782e754eaba
I voluntarily became a small trader again . . . at least small compared to my net worth. . . after buying 500,000 futures under 6300 and selling out over 8100. . . and selling short against the box. . . . and I will try again to take a small stake of 7 btc and turn it into several hundred btc . . . in real time . . . without refunding . . . to demonstrate it can be done.
Now, 7 btc may seem like a large stake to you . . . and believe me . . . there was a time . . . not long ago that $56,000 was simply out of my league. . . bear in mind that I was released from 11 years in prison in 2002 with nothing. . . NOTHING. . . I bought my first 10 bitcoin in August 2013 just under $100 . . . with an ACH from Coinbase . . . that was financed on my credit card with over draft protection. . .
My point is you can do this with a fractional amount of bitcoin . . . I started with less that $1,000 or .1 btc in today’s values . . . so it can be done . . . and if you have ears to hear you can do it too!
DO NOT TAKE THIS GOAT LIGHTLY . . .
I only learned last week what GOAT means in the urban dictionary . . . two separate followers informed me. . . I had no idea. . . my name selection was not deliberate . . . but I believe in divine providence and this is who I am. And I say this confidently . . yet with all humility. . . if you have ears to hear . . . I will teach you to trade bitcoin successfully.
Remember, hodling and sayvving trumps trading! You must be accomplished in these two areas before you will have long term trading success.
Hodl, Sayvv, and Trade . . . in that order.
If you have ears to hear . . . you can duplicate what I have accomplished. . . it is free . . I am selling no course. . . this is a real time discourse for teaching . . with warts and all . . . or as close to real time as possible. . . I tried the other way but it doesn’t work because trading is dynamic, not static. I want to pass this on . . . but I know it is only for a few . . . to those few the Lord has given ears. . . I am teaching trading principles . . . not providing specific buy and sell points in time . . . which is actually contrary to what I am teaching. . . by definition this cannot be done successfully.
I just want to pass this on to the few with ears that will benefit. . . but now it is story time. . .
My father, who I respect deeply and love dearly, and is with Our Lord in Heaven was a brilliant conservative when it was not popular to be conservative. . . . was convinced he could discover a mathematical formula . . . that worked in all markets . . . that he could pass on to his children . . . as a legacy . . . as a family secret.
Because I respected him so much . . . for many years . . . I also chased this dream. . . only to find there is no system . . principles, yes . . . but no mechanical system can take good trading principles into account. That is why this goat loves bots . . . but that is for another day.
End of story.
Let me repeat, I have no idea where the market is going . . . I have no idea where the market it going. . . however . . . I do know that the June highs at 7850 now becomes support.
I did not predict the break . . . I had no idea if we would resume the uptrend or get a break . . . but I knew that if we got a break 7850 . . . which is the June high would now become good support. . . so when we got there I was a buyer. . .
Again, let me repeat . . . I have no idea where the market is going. . . however, I do know that the 7850 area is a low risk area to be a buyer . . . in a market that by my definition is in an uptrend.
I am not saying this is the bottom . . . I am only saying that now is the time to buy with a very low risk.
Bear in mind I am a buyer after I sold out completely over 8100. . . after going lightly short . . . after getting in the groove . . . and after trading against the box several times improving my position. . . I am a buyer because by the definition I use we are in an uptrend. . . and we are in an area of good support.
POSITION TRADING IN BITCOIN
Everyone has different ways to define a trend. . . and how you do it is really not that important . . . because defining a trend is subjective . . . the important thing is to create a definition and stick with it. Probably a better term would be reference point. . . my reference point for bitcoin . . . or my definition of a trend in bitcoin is . . . trading above the two week high is an uptrend . . . trading below the two week low is a downtrend.
This is my definition for bitcoin. . . it does not necessarily fit in other markets . . . but what it means to me is that we are now in an uptrend and I heavily favor being long than short. . . because that is how I subjectively define a bitcoin trend.
The two week high was 6850 and that also happens to be the area where we exploded on the upside without looking back. . . so the trick is to get on board before a major trend change . . . add to a position at the trend change . . . and add to a position on any pullback.
However, many times (in fact most times) the two week high or low is broken only to reverse sharply or to reverse all together. . . . that is why it is important as a position trader to establish a position before the trend change is recognized . . . which was accomplished.
While I would normally add to my position as the 2 week high is broken, in this case the market blew right through it. . . which tells me we are in a very strong market. This is the first decent break since we blew through the two week high.
Also, if you recall I made a cocky trade just before the low . . . which forced me to cut my position in half . . . which means I only had 500,000 long position when I was hoping to establish 1,000,000 and then add 500,000 as we blew through 6850. . .
Finally, apparently my terminology is not Hoyle. I define things differently from the norm. . . . like OPM (other peoples money). . . But I do define them. . . so it is important to learn and understand my definitions to understand what I am saying. A better term might be OPB (other peoples bitcoin). . . by that I mean my Bitmex account balance is not mine until it is safely off the exchange . . . it is there for the taking. . . just as your bitcoin balance is there for the taking. . . I do not want other traders using my bitcoin to trade. . . rather I want to be trading with bitcoin others have given me through winning trades and unrealized gains . . .so it important to skim profits and convert into other assets (sayvv) and hodl . . . and trade only with OPB. . . other peoples bitcoin.
I sometimes create my own terms and believe language, like trading, is dynamic and not static. Nevertheless, I do define each term I use and sometimes even add several new dimensions. . . for example, . . . Exthit . . . is pronounced with a lisp and a weak wrist. . . if you are not doing that every time you say the word . . . you are not conveying the true meaning!
BITCOIN IS UNIQUE
I was weaned on the super inflationary commodity markets of 1973. Later, I learned currency and metals trading. In these markets I regarded position trading to be at least 3–6 month. . . many a time I held Swiss franc or copper positions well over six months riding a trend.
Bitcoin is unique because it is what Tyler Jenks defines as a hyperwave. https://twitter.com/lucidinvestment?lang=en
This means the uptrend is for years, possibly for decades. . . which also fits into bitcoins unique fundamentals. . . subject to arbitrary 65–90% corrections.
The super trend is up. . . which means you never want to be net short bitcoin. . . but it also means you should trade against the box . . . or trade against your core position.
Understanding the basis really helps knowing which way to lean. . . . and is a way to profit in a sideways market. When we were in backwardation . . . futures were what to buy. . . . you should have bot the futures under 6300. . . and it was this anomaly which persuaded me we would not break 6000.
Please note we are approaching full carry. . . Perp is currently trading under spot . . . Sep is trading 70 over perp . . . and Dec is trading 120 over perp. . . . this is not high, this is normal. When we were above 8100 perp was trading over spot and the futures premium was about half of what it is now . . . which means strong sellers were selling the perp because it was not only higher than spot but was paying a handsome funding. Also note the the futures premium has increased with this sell off. . . substantially.
This does not suggest an imminent reversal.
But that’s not all.
THE EXTHIT IS ACCELERATING
(pronounced with a lisp and a weak wrist)
It should be noted that alts and ICO’s, especially the ethereum and bcash, continue to crash in relation to bitcoin. There is a huge insider flight to safety.
At the same time the dollar price is holding. . . if the dollar price of these alts also starts down bitcoin will resume its 90–98% dominance in short order.
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Hope this helps, UOG