FBlocktrader

No free lunch! How BTC pushes traders out..

BITFINEX:BTCUSD   Bitcoin / Dollar
Do you sometimes get pushed out of a profitable position? Do you see the market coming back to your breakeven stop, only to then continue going in "your" direction?
The market is doing this constantly, so be aware of this. I will show you two areas where this has happened yesterday.
Traders often do get no "free lunch", which means a riskless profit. After the trade entry, you may have a nice profit but then see prices turn against your position.
Of course you do not want a profitable position to end up in a loss, so you move your stop to breakeven at some point.
Is there a solution to this dilemma?
Yes, you can exit a good position at a reasonable target, giving up more profit potential.
Or you can leave your stop in its original place and risk taking a (small) loss, but stay in your position which can still become very profitable (again).

Yesterday there where two examples of this "breakeven stop hunting":

1. The "breakout" longs
In the chart I marked the breakout area (red box), where traders entered long, after prices went above resistance levels at 7550 to 7930. Not a bad decision, prices went up to hit the resistance at 8400, nice profit.
Traders who hoped it would go higher still, like 9000, of course stayed in position and may have moved their stops to breakeven. But now BTC             turned down and made several legs back to 7550. So now the bulls all have seen their stop hit, and what happens? Right, it goes up 1000 points!

2. The "early" shorts
Aggressive short traders may have entered below the resistance at 8400 when they saw the market showing weakness there. In the blue box you can see the short entry levels between 8400 and 8100.
After seeing a little profit the market then goes up again to 8400, hitting stop loss or breakeven stops of these shorts. Now of course it goes nearly straight down where everybody thought it was going (7800-7600).

After all this there was a nice long entry:
The long entry (blue circle) also was created by a short trap below 7800, which looked like this:
People saw the short term downtrend and break below support at 7800 (former resist).
Then a pullback from 7550 to 7800. When prices turned down below 7700 again, some traders would think bearish and short ("Hey, double top and strong downmove, we are going to 6200 again.")
Now the bear trap strikes, presenting a long entry:
The market makes a second entry long (second push up from 7600).
Stops of shorts are being hit and drive prices up, not looking back to this level (7800)!
Now how could you have anticipated something like that?
Think about a possible range, because prices are moving above and the below the EMA .
Think about the breakeven stops of the longs (see above my point 1). Longs are out and so the market is "free" to go up again. Longs might have to buy in again.
Think about another leg up (second big leg) and a new high.
As you can see, Bitcoin             moved up to the upper side of the range in two equal legs and also made a new high!

Feel free to post questions or PM me! Or just follow me ;)









Eh, well i noticed crazy amount of bots on exchanges that are filled with millions of dollars. They do weird things, like moving price down/up on critical candlestick close.
This happened today on 12h candlestick close, the price was dumped below < 8500-8400 so it does not close above that.
+1 Antworten
@mark124, So true. I think this is not only about "How BTC pushes traders out..", but actually there might be signs of manipulations. Sadly, people in charge of regulating those kind of matter, have no clue and rely on banker's or big four's flawed advice.
+1 Antworten
FBlocktrader EspressoDopio
@EspressoDopio, I would not be surprised if there is some kind of manipulation. Even in regulated futures markets, there has been manipulations in the orderbook. But only relevant for automated HFT (high frequency trading). In the crypto market right now it is like the Wild West of finance ;) So, manipulation and fraud are to be expected...
But as long as a liquid market like Bitcoin moves according to my price action rules I do not feel too repulsed ;)
Antworten
EspressoDopio FBlocktrader
@FBlocktrader, LIBOR, Euribor, Gold, OPEC's attempts to boost the oil price.... Any market is or has been rigged and crypto market is no exception. Just a lame excuse for bankers to point fingers at how dangerous it is :)

But we should be documenting any signs of manipulations. Some people should be behind bars....
+1 Antworten
FBlocktrader EspressoDopio
@EspressoDopio, Could not agree more!
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