BTC - Memoirs of a 2013 Trader - History Repeats!
Updated
I want to first thank fineregex for posting a chart this morning of the 2013 top and correction cycle. This is something every good analysts looks at when to determine market cycles. What did the last one look like? What were the overall trends of market sentiment? Market Sentiment is why EW and FIbb are such valuable tools and rather accurate to say the least. Nature programs us to repeat the same patterns through our intuition, emotions, our "gut feelings". Whether it's geese migrating from Canada, wildebeests migrating in Africa, or traders in the crytpo market, people by nature are no different instinctively then other animals. What separates us from other animals? The intelligence to recognizing these instincts and take the steps to change them. In order to become a great trader we must remove our emotions from our actions. I recommend reading Ed Seykota's post on his website under "the process". the book Market Wizards (with preface by Ed Seykota) and Turtle traders both by Michael Covel. These provide a broader perspective into the minds of successful traders.
The chart from 2013 is very similar to the current chart we are in. Is this a coincidence? Maybe, but then is it a coincidence geese migrate south every year? The majority of traders trade on emotions. I see it in the comments. "I have a gut feeling we are going up", "I feel your wrong we broke the the tend line". Then when it doesn't go the way they felt, instead of reviewing their TA and learning from a self growth perspective, (that maybe they were incorrect in their assumption) go into excuse mode. It was the Ban in china, It was a hack in liverpool, it was the Korean syndrome. These are excuses for market reactions and not the reasons. These excuses, will prevent you from understanding why markets move the way they do. Now I want to be clear, there are black swan events that can change the course of a markets. but these are the exception and not the general rule.
You can see from drawing simple trend lines (the basis of all good TA) the different emotions traders went through during the market correction in 2013. I have labeled them with emotions to provide a better idea of how sentiment works regardless if you agree or disagree. We can see from the current chart these patterns and trends are almost identical. Does the correction this time have to play out the same way? No. But there is a high probability that history will repeat, and we do not need to look any further than the stock market corrections in 1987, 1999, and 2010. Some will deny this, stating the crypto market is different. It's not! History will repeat. When? Who knows, but geese migrate south every winter, and good traders know markets correct. Gold-bugs for 5 years have made excuses why gold is correcting. It's the FED, It's Mario Draghi, it's the ban in China (Oct 2016). The reality is markets correct!
TA is all about probabilities, and assessing them and then choosing the most probable outcome based on your homework. I am very aware that my TA may be incorrect. We can go to $6000 or higher from here, and I have posted this path numerous times, and mentioned it from the beginning. But based on MY TA, the way markets move, historical trends and patterns, MY opinion is we still have a further correction looming. Whether I'm right or wrong only time will tell, I am positioned to profit either way. This is why we do NOT do all ins on trades. We manage our money, monitor for changes and adjust.
If your a long term investor, your trades should be buying weakness and selling strength in the time frame your looking at. Whether short or longterm (avoid midterm trades). Confusing time frames will be painful. This is why even though my opinion is we are correcting further, I covered my position. Wrong time frame for the trade!
Look closely at the emotional trends of 2013 and then look at the chart on the right. To assume these same trends cannot happen again, is DENIAL and IGNORANCE!
The chart from 2013 is very similar to the current chart we are in. Is this a coincidence? Maybe, but then is it a coincidence geese migrate south every year? The majority of traders trade on emotions. I see it in the comments. "I have a gut feeling we are going up", "I feel your wrong we broke the the tend line". Then when it doesn't go the way they felt, instead of reviewing their TA and learning from a self growth perspective, (that maybe they were incorrect in their assumption) go into excuse mode. It was the Ban in china, It was a hack in liverpool, it was the Korean syndrome. These are excuses for market reactions and not the reasons. These excuses, will prevent you from understanding why markets move the way they do. Now I want to be clear, there are black swan events that can change the course of a markets. but these are the exception and not the general rule.
You can see from drawing simple trend lines (the basis of all good TA) the different emotions traders went through during the market correction in 2013. I have labeled them with emotions to provide a better idea of how sentiment works regardless if you agree or disagree. We can see from the current chart these patterns and trends are almost identical. Does the correction this time have to play out the same way? No. But there is a high probability that history will repeat, and we do not need to look any further than the stock market corrections in 1987, 1999, and 2010. Some will deny this, stating the crypto market is different. It's not! History will repeat. When? Who knows, but geese migrate south every winter, and good traders know markets correct. Gold-bugs for 5 years have made excuses why gold is correcting. It's the FED, It's Mario Draghi, it's the ban in China (Oct 2016). The reality is markets correct!
TA is all about probabilities, and assessing them and then choosing the most probable outcome based on your homework. I am very aware that my TA may be incorrect. We can go to $6000 or higher from here, and I have posted this path numerous times, and mentioned it from the beginning. But based on MY TA, the way markets move, historical trends and patterns, MY opinion is we still have a further correction looming. Whether I'm right or wrong only time will tell, I am positioned to profit either way. This is why we do NOT do all ins on trades. We manage our money, monitor for changes and adjust.
If your a long term investor, your trades should be buying weakness and selling strength in the time frame your looking at. Whether short or longterm (avoid midterm trades). Confusing time frames will be painful. This is why even though my opinion is we are correcting further, I covered my position. Wrong time frame for the trade!
Look closely at the emotional trends of 2013 and then look at the chart on the right. To assume these same trends cannot happen again, is DENIAL and IGNORANCE!
Note
Just an update, still no clear direction either way, but the fact we have had a correction similar to past corrections all we can say for sure is we are still in a correction! But I was looking at the chart this morning and thought I post what I am following on my charts. I added the PPO as the MACD is commonly used, but for long term trends is worthless.
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