THE MOST IMPORTANT SECRET TECHNICAL INDICATOR . . .
HINT: ITS PERSONAL . . . NO ONE BUT YOU CAN CHART IT!
Those who have followed this post since its inception, and even late followers as early as yesterday or an hour ago, know or should know my emphasis.
I know it sounds like a broken record but my emphasis is . . . MONEY MANAGEMENT, MONEY MANAGEMENT, MONEY MANAGEMENT.
My very first major medium post on April 5th this year, 2018, emphasized this point. And as a successful trader I remind you, my dear readers, constantly. You see, dear readers, as I remind you constantly I am constantly reminding myself. If you have not read this please do so now.
My personal success depends on this being engraved in my DNA. And your personal success depends on this message being engraved in your DNA. So while this may seem repetitive, it is repetition with a purpose . . . for this is how we learn! And for those who have ears to hear we will learn together.
If you think successful trading or investing comes from technical analysis, fundamental analysis, entry price, exit price or timing you have come to the wrong place. Now I do not diminish that many of these things can be useful, but they are on a relative low scale compared to money management. For traders, violation of money management is the only rule violation that can destroy you.
So my emphasis is now and always will be money management whether you are looking to transition into THE BITCOIN STANDARD or if you have already made the transition and are simply look to hone your trading skills.
If you ever believe money management is old hat . . . a lesson already learned . . . something you need not be reminded of daily . . . then the message has not really registered. . . learn it. . . beat it into your head and habits. . . and when that is done . . . keep on doing it!
And if I ever violate it. If I ever blow it. Do as I say, not as I do.
I pray that will not happen but I am only a very old goat and an ugly goat at that. . . not beyond making horrible mistakes. . . for that is the very nature of goats. . . . and I strongly suspect it is also the nature of humans!
This is why my emphasis is and always will be dollar cost averaging when entering a fundamentally sound market.
You can be the worst trader in the world, you can have the very worst timing, yet by following time honored money management techniques you can be a very successful investor on THE BITCOIN STANDARD and after that you can be a successful trader.
Ok, so now that you have endured another Ugly homily . . . just what is this all important secret technical indicator?
My dear readers, . . . the secret technical indicator is you!
Your personal equity is the secret sauce that only you can access! And on Bitmex it is your wallet!
It is measured minute by minute, trade by trade. It can be charted with a high, low, and close daily, on the 12 hours, on the 4 hour, on the 1 hour, on the 10 minute and even on the one minute!
Tone’s Vays Random Number Indicator can be programmed into it! When your personal equity reaches a 9, time to lighten up!
Now this is truly amazing! In my day, 40 years ago, I had to chart this on my own. Technology today can do on any time scale of your asking, and you can add all other technical bells and whistles on forums like Trading View.
All other charts are objective. All other charts report on data publicly available. This data, this chart, is personal. . . it is subjective . . . not objective. It is you!
My dear readers, this indicator measures you against the markets!
How many times have you seen equity spikes of sizable amounts disappear due to failure to take a profit, stubbornness, failure to use stops, failure to liquidate when a mental stop is reached or any other myriad of reasons.
Remember, many large traders become small traders. Most small traders remain small traders. A few small traders become large traders. And the wise large trader voluntarily becomes a small trader again!
But how can you know when to voluntarily become a small trader again? Well, tracking your equity is the only way I have figured out how it can be done. It can also aid you in other trading decisions.
Now what I am about to outline here, to the best of my knowledge, has never been quantified. The miracle of technology is that it is now possible.
One of my favorite songs is Kenny Roger’s The Gambler . . .
So simple, so perfect, great advice . . . for poker! And all the principles in this song apply to trading. . . except one. In poker you never want to count your money at the table until the dealings done because the game is face to face, person to person . . . and your giving a read. Not so in trading.
So let me outline briefly, how I just used equity to aid in a trading decision. I monitor my trading equity closely. Especially since I voluntarily reduced my trading account from 19+BTC to 2 BTC, with a goal to duplicate the process all over again in real time.
First, I saw the likelihood of reversal and acted accordingly by establishing a light long position on a scale down. This was in conjunction with being short 400 ETH basis BTC. Further, I was willing to add to this position on a scale down to 2800, not knowing where we would reverse but confident a reversal was coming. My equity never fell below 2BTC, but it would if we spiked down to 2800, so I sent an additional 5BTC in anticipation of this scenario, that never happened. The position was published here.
And the likelihood of reversal was published here.
I did not really want to do this, but I did consider it a unique situation . . . and necessary in the situation. And at 5 BTC it was less than one third of the 17 BTC I had taken home. Further, I trade with cross and use mental stops . . . and cross can really mess up trades as the liquidation price rises as the market moves against you. . . so the 5 BTC was insurance against a rket. Again, it turned out to be completely unnecessary . . . as my original equity was never in jeopardy.
By trimming and arbitrage by shorting ETH I was able to maintain my equity gains despite the additional drop in BTC with the last captured position published here. Again, the goal is preserve equity, tread water, trying to catch the next major move.
I deliberately did nothing, but the short ETH trade I re-entered did act as an excellent market barometer and nicely covered part of the sting I was experiencing staying with my long BTC. However, I did manage to trim my position on the initial thrust up by selling 10,000 March at 3408.5 and buying it back at 3288. And I sold the ETH primarily because with the Exthit (pronounced with a lisp and weak wrist) I was willing to re-establish half of my short ETH at a much higher level than I exited prior short of 400 ETH.
Further, there has been a market anomaly where a sell off in ETH is soon followed by a selloff in BTC. I consider this very weak selling. . . and indicative a bottom is near.
Finally, BTC is currently in one of those markets that just can’t seem to go up. No matter what it just can’t hold its gains. Now this is something that can’t be measured. And by itself it is meaningless. But with everything else telling me reversal is near this is a confirmation in that weak buyers or buyers on rallies are getting worn out. . . they just can’t get on board. So I really wanted to buy this dip and add another 10,000 BTC perp at 3265.
So I have gone through this entire song and dance routine. . . and I did not place the order. Now you must be thinking this stupid goat saw a great opportunity, nailed it, and did not act . . . what gives!
Well, let me tell you what happened. Two things. First, my 6 year old daughter had been nagging me for an hour to go to the beach . . . and second, my equity was at 2.7 BTC and I did not want to jeopardize my position adding to to it. . . even lightly.
So I went to the beach as I saw the market break only to immediately reverse and chuckled and had the most wonderful time with my daughter.
So now you have seen how my most important secret technical indicator influenced my final decision! MONEY MANAGEMENT TRUMPS ALL OTHER INDICATORS! Learn this. Stamp it on your forehead. Engrave it in your DNA!
I have passed this idea on to Tone Vay’s. It took him a minute to get it, but once he did he wanted to run it by Tyler Jenks, and I have offered to finance its development on the TD system . . . so if you also think this has merit. . . . press Tone a bit . . . as I do not want to steal his thunder! It will also require the coordination with Bitmex and Trading View. . . but will open a whole new trading tool in an area not yet developed. This just provided a peak into the most important secret indicator in my arsenal.
Here’s my current position.
Hope this helps.
UGLY
PS: I will be appearing on Chris DeRose’s show this week. We have yet to set the date. It should be fun and I think we will both being hitting on some very hard topics, neither of us will show each other mercy!
The website is coming along. Hopefully will be done and running at least partially before year end. Most of my content will remain free, but posts like this one will be by subscription only. A lifetime subscription will initially be 0.025 BTC (my life, not yours). But my sights have just been raised to a new level with the goal of providing the very best information on THE BITCOIN STANDARD with the goal of outshining Roger Ver’s deceitful bitcoin.com. So I expect to raise lifetime subscriptions to 0.05 BTC after the Unconfiscatable Conference.
The entire proceeds of your subscription will be put to work towards this goal. Further, I have instructed the developer to add a referral code so Lifetime Members can get 15% for referrals. Hopefully, this will get us the capital to expand and get the information viral while providing you with a small BTC incentive for your efforts!
