Pt. 1 - The Perfect Trader
The Perfect Trader
Defined as an individual that never makes the wrong call. Someone that always buys the bottom and sells the top.
(This is contrary to the normal trader who buys the tops and sells the bottom)
I like to do something called "post-analysis". It is when I go back and look at historical situations to attempt to learn something (sometimes I do and sometimes I don't). When I do these analyses, I like to think of myself in the shoes of the perfect trader. When I think this way, I am able to work backward to determine what works and what doesn't! I have used this strategy to develop the exact trading algorithms that I use today.
It is a fairly straightforward process:
1. Pick a long-term chart
2. Pick out the perfect buy and sell points
3. Add your favorite indicators to the chart
4. Try to make those indicators tell you to "buy" at the right times and "sell" at others
Simple right?
Well, it can get a bit complicated when you have 30 lines on your chart at once so I am going to break it down.
Pick A Long-Term Chart
The chart above is a daily chart of
BTCUSD. It gives me plenty of data points to work with. I highly suggest using this strategy with longer time frames and with coins that have a lot of data. We want to be able to analyze true sentiment (not short-term noise) and that is best done in longer time-frames.
Pick Out The Perfect Buy/Sell Points
The green and red vertical lines are where the perfect trader would buy and sell.
I always start with a trend analysis (the blue lines). This means: Look for patterns and draw lines (kinda like geometry class in grade school). These lines normally are drawn at support and resistance levels over trends. So you want to find the bottom points of the trend and the top points of the trend and see how the prices bounce between the two:
EX.
You can see how the price ofBTCUSD has been bouncing between those two blue lines over the past few months. The perfect trader would have bought at the top of this trend and sold at the bottom! Think about this:
While all of you were losing your money, the perfect trader was increasing his BTC balance and maintaining his USD balance during this downturn (ie. Simply buying and selling at the right times in the long term is enough to have an incredibly profitable portfolio. DON'T make things complciated). If you had 1 BTC at the peak and sold, you would have 4 BTC at the bottom and you would still have $20,000 USD.
Too many traders forget this and they start thinking so short term that it kills them! We are playing a long-term game and the long-term must be understood before the short-term can be mastered!
Stop chasing after trades. Stop getting excited when everyone else is getting excited. Most people lose money in this game, so why should you follow them?
This post is going to be continued. I may continue it in the form of a video because some of the further explanations are difficult in written form. If you enjoyed it, throw me a like. Cheers!
Defined as an individual that never makes the wrong call. Someone that always buys the bottom and sells the top.
(This is contrary to the normal trader who buys the tops and sells the bottom)
I like to do something called "post-analysis". It is when I go back and look at historical situations to attempt to learn something (sometimes I do and sometimes I don't). When I do these analyses, I like to think of myself in the shoes of the perfect trader. When I think this way, I am able to work backward to determine what works and what doesn't! I have used this strategy to develop the exact trading algorithms that I use today.
It is a fairly straightforward process:
1. Pick a long-term chart
2. Pick out the perfect buy and sell points
3. Add your favorite indicators to the chart
4. Try to make those indicators tell you to "buy" at the right times and "sell" at others
Simple right?
Well, it can get a bit complicated when you have 30 lines on your chart at once so I am going to break it down.
Pick A Long-Term Chart
The chart above is a daily chart of
BTCUSD. It gives me plenty of data points to work with. I highly suggest using this strategy with longer time frames and with coins that have a lot of data. We want to be able to analyze true sentiment (not short-term noise) and that is best done in longer time-frames. Pick Out The Perfect Buy/Sell Points
The green and red vertical lines are where the perfect trader would buy and sell.
I always start with a trend analysis (the blue lines). This means: Look for patterns and draw lines (kinda like geometry class in grade school). These lines normally are drawn at support and resistance levels over trends. So you want to find the bottom points of the trend and the top points of the trend and see how the prices bounce between the two:
EX.
You can see how the price of
BTCUSD has been bouncing between those two blue lines over the past few months. The perfect trader would have bought at the top of this trend and sold at the bottom! Think about this:While all of you were losing your money, the perfect trader was increasing his BTC balance and maintaining his USD balance during this downturn (ie. Simply buying and selling at the right times in the long term is enough to have an incredibly profitable portfolio. DON'T make things complciated). If you had 1 BTC at the peak and sold, you would have 4 BTC at the bottom and you would still have $20,000 USD.
Too many traders forget this and they start thinking so short term that it kills them! We are playing a long-term game and the long-term must be understood before the short-term can be mastered!
Stop chasing after trades. Stop getting excited when everyone else is getting excited. Most people lose money in this game, so why should you follow them?
This post is going to be continued. I may continue it in the form of a video because some of the further explanations are difficult in written form. If you enjoyed it, throw me a like. Cheers!
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.