THE FLIP FLOP FLOP NOT! . . .and Contango

Trading is dynamic, not static. . .

That is why it is nearly impossible to successfully offer a trading recommendation at a specific price and time . . . and if you notice I don’t think that I have published any specific time and price recommendation that has worked out . . .

Probably it is because I only want to publish what I consider a sure thing . . . which is a unicorn in trading.

. . . Also, this is what the average trader wants . . . novices want specific price and time recommendations . . . not realizing . . . that the market is fluid and what is valid at the time may not be valid later as the market develops.

. . . . so my suggestion was to buy the market at around 8160–8180 risking new lows . . . thinking that might safely get us through the Death Cross. . . as we already had the flip flop.

Well, my thinking changed before we made the new lows . . . when we failed at the rally of the first arrow, I took a small loss selling at 8120. . . selling more than I bought at 8180 but maintaining my long position . . . albiet a smaller long position . . . second arrow. . . moreover, my long position has been in the futures established under 6400 when their was backwardation . . .

First arrow rally failed. Second arrow took loss and reversed.

At the same time I went out with my family and kids and only had a cell phone and an iffy signal . . . I hate trading from my cell phone. . . but family comes first.

So while on the road I cover one quarter of what I sold at 8081 (or trimmed the position in the event I was wrong). . . the market proceeded to take out the 2 day low and collapsed . . . I was so happy I protected myself with the short sale . . . and was mentally preparing and actually placed some large orders to cover all shorts if we took out last week’s low at 7369. . . again, I define a trend by the two week high. . . and the first time we take out the previously weeks low I am a buyer. . . this sounds so easy but the stop is the two week low so the risk can be substantial . . it is similar to shorting the Tone Vay’s random indicator 9. . . The sell signal on the daily started at 7690 and went to 8507. . . If you sold early you got crucified. . . the way I get around this is I sold on a scale up and averaged 8107 selling perp against futures . . . and collecting funding.

Daily 9 had a range of 7690 to 8507. Early sellers were crucified.

I will be a buyer under 7370, but will we ever get there? And problem is two week low is 6327 and the reversal means this is now highly unlikely.

Well, we did not continue down . . . we reversed and we went right back up to where we started . . . so we had a Flip Flop Flop followed by a Flip Flop Flop Not!

But that’s not all. There was a reason for this short term sell off . . . I saw the potential . . . did not write about but will now so you can see.

Contango and the Flip Flop Flop Not! Exited shorts slightly lower than entry. Result is net long full position 50 points lower plus gained substantially on the contango. Musical note perp at premium to spot, thumbs up perp at discount to spot. Large funding going to shorts. Professional traders bought spot sold perp at musical note and sold spot bought perp at thumbs up.

The fist arrow is the rally that failed . . . note there was large funding going to shorts, yet Bitmex perp was trading at a premium to spot at the musical note. . . this means spreaders, arbitragers, and other strong hands were buying the spot and selling the perp. (You must remember for the most part very large traders hold relative small net positions, but large spread positions. For example, I had my largest net position under 6400 all in futures and sold perp against it at an average of 8108.) Essentially the bullish sentiment was overdone. Further, just before the collapse the premium was substantial 20–40 over spot. The correction in the spread set off stops. The weak hands were taken out of the market. . . and we reversed big time and the market went to a discount to spot reflecting funding at thumbs up . . . selling by strong hands dried up . . . selling by weak hands commenced . . .and viola!

Its the same pattern fellas, only a bigger flip flop which tells me this market remains very strong.

Finally, the spread of Sep futures actually widened out from 50 point premium to a 120 point premium. The result is even though I was net long during the decline and subsequent reversal I actually picked up about 1 btc in equity, plus I fully re-established my long position at 8120 or about 50 points lower than we started out.

I was also out of office so did not trade the break. . . was expecting much more . . . did not get it. . . rallied back up like nothing happened . . . same song . . . different verse . . . I am more bullish than ever after today’s action.

Again, I have no idea where the market is going . . . but I reestablished the same long position at lower level and with an increase of equity. . . . I give up trying to give any specific recommendations in time and price . . . and I am silly every time I try. . . . and will stick with teaching you how to trade rather than try to follow what I do.

Again, the technical skills are quite secondary to managing your equity. . . I was dead wrong but wound up landing of my feet. . . I only hope you did the same. . . trading is not easy!

UOG