Pascal/Bitcoin - Increasing the reward potential. PASCBTC
Hi!
At this point the price has broken above the larger triangle pattern - a bit early maybe - and we now have another smaller triangle forming. The technique i'd like to try here is adding to the trade with a smaller stop size (shown by the second long position indicatior and the blue arrows).
What i'm going to do is, IF we break the small triangle higher, i will buy (have a buy stop in place) and move all stops to the new position indicated by the lower blue arrow. The amount i will buy will be the new amount (in btc) (based on my stop precentage) minus the old amount (in btc) (which was base on the old position stop). Essentially we are only buying the extra needed to risk the full amount we can base on the new stop. Another way of thinking of this would be that we will sell the old position and re-buy with the new stop percentage - but instead of selling we just minus the old amount of the new.
The reason for this is just to get a tighter stop and therefore a better risk to reward. Doing this does give a higher probability of being stopped out, but the risk of this is low and worth it for the extra reward we will get. If you look at the risk to reward (shown by the 'long position indicators'), you can see that by the time we reach the green line the old risk to reward would be at 2:1, but the new risk to reward would be 3.84:1, despite actually buying at a higher price.
Let's hope it works out!
Mark
At this point the price has broken above the larger triangle pattern - a bit early maybe - and we now have another smaller triangle forming. The technique i'd like to try here is adding to the trade with a smaller stop size (shown by the second long position indicatior and the blue arrows).
What i'm going to do is, IF we break the small triangle higher, i will buy (have a buy stop in place) and move all stops to the new position indicated by the lower blue arrow. The amount i will buy will be the new amount (in btc) (based on my stop precentage) minus the old amount (in btc) (which was base on the old position stop). Essentially we are only buying the extra needed to risk the full amount we can base on the new stop. Another way of thinking of this would be that we will sell the old position and re-buy with the new stop percentage - but instead of selling we just minus the old amount of the new.
The reason for this is just to get a tighter stop and therefore a better risk to reward. Doing this does give a higher probability of being stopped out, but the risk of this is low and worth it for the extra reward we will get. If you look at the risk to reward (shown by the 'long position indicators'), you can see that by the time we reach the green line the old risk to reward would be at 2:1, but the new risk to reward would be 3.84:1, despite actually buying at a higher price.
Let's hope it works out!
Mark
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