Comprehensive Trading ProcessDisclaimer: If you are primarily interested in copying other people’s trades then this is not for you. However, if you are willing to put in the work that it takes to learn how to trade for yourself then you have found the right place! Nevertheless please be advised that you can give 10 people a profitable trading strategy and only 1-2 of them will be able to succeed long term. If you fall into the majority that tries and fails then I assume no responsibility for your losses. What you do with your $ is your business, what I do with my $ is my business.
Consensio: (King) 5% when Price crosses Short Term MA | 10% when Price crosses Medum Term MA | 15% when Short Term MA crosses Medium Term MA | 20% when Medium MA turns over | 25% Price cross Long Term MA & Long MA flattens / turns over| 25% Golden Cross
Patterns (Queen): Favorites: hyperwaves, parallel channels, descending triangle, head & shoulders, Wyckoff’s, double bottoms & tops, flags | Least favorite: symmetrical triangle
Horizontals (Rook): Horizontals > trend lines
Trendline (Bishop): Very powerful when used in combination with Consensio. One of my favorite setups is a trendline break alongside a reversal in Consensio.
Parabolic SAR (knight): Best tool I have found for setting / adjusting stop losses. Can also be used as no trade zone. For ex: if wanting to go long and SAR is bearish (above price) then could / should wait for SAR to break before entering.
BTCUSDSHORTS (pawn) : If shorts are at / near ATH’ levels then I do not want to be short and will actually have a bias for going long.
Funding Rates (pawn): Helps me to understand supply / demand. When shorts are getting expensive then I expect a short squeeze to be around the corner.
Contango / Backwardation (pawn): Not a timing indicator. Is used to determine bullish / bearish bias and can help to identify tops / bottoms / support and resistance. Watch the video series and Google “Ugly Old Goat Backwardation” to learn more.
TD’ Sequential (pawn): “The trend is your friend until it’s about to end” -Tom Demark | Used to identify when a trend is becoming exhausted which can be very helpful to confirm or deny an entry. Ex: if wanting to go long on a green 7/8/9 then would strongly prefer to enter on correction that is expected to follow.
Average Directional Index (pawn): Used to identify when trends are becoming exhausted. When ADX’ reaches resistance / ATH levels then it is likely that the trend is reaching a point of exhaustion
Ichimoku Cloud (pawn): Starting to use traditional settings across the board. Crypto settings seem to make the cloud useless when markets are volatile, whereas the traditional settings seem to line up nicely with the MA’s I use for Consensio.
Price Action (pawn): Helps me understand when markets are overbought / oversold in the short term. In my experience it is very rare for Bitcoin or Ethereum to move more than 10% in 24 hours. Therefore if I am wanting to enter long and the price is + > / = 7% in the past 24 hours then I will be very cautious and usually wait for a pullback / consolidation.
Bollinger Bands (pawn): Very helpful for recognizing when a trading range is coming to an end, which can be very useful for spotting trends that are just starting / about to start. Also like the Bollinger Band % to help illustrate extremes.
Relative Strength Index: Divergences can be very useful for understanding short term price movements and potentially full on reversals. When markets are moving I like to check the RSI on the 1h and 4h charts and pay close attention to divergences as indication that a trend could be exhausting.
Stochastic Oscillator: Very useful in trending markets that have not gone parabolic. Can be helpful in ranging markets as well, but not nearly as much. Can get some very good signals on the 3d chart. If there is a buy / sell signal then I think it is best to wait for %K and %D to cross the boundary lines before considering it significant.
Hierarchy of Indicators
The best traders know which indicators are most important at which times. A trader is like a carpenter and the indicators are akin to his toolbelt. Through experience he or she knows which ones to reach for, exactly how they are used and what adjustments could be required for a specific circumstance.
It is one thing to understand that an MA rolling over is an indication of a trend reversal. It is entirely another to fully believe it and be able to act on it. Next is understanding which indicators can be disregarded at which times and which should always be taken into account.
Above lists my indicators by order of importance. However that is only a default and it will change based on market conditions.
For example: if a hyperwave is present then patterns become more important than Consensio and trendlines become more important than horizontals. If market is parabolic then I find the Stochastic useless and will adjust the settings on the RSI to 30. If no trend is present then the Bollinger Band can go from a pawn to the King.
It would take much too long to go into all of the different variables I can think of and how it can change the hierarchy of indicators. What is important is that you start to develop the feel for it yourself. The only way I know how to do that is through checking all of them on a regular basis, in all different types of markets (bull, bear, flat, parabolic).
Learn -> Practice -> Fail -> Learn -> Practice -> Understand -> Apply -> Internalize -> Believe -> Achieve -> Fail -> Learn
Monthly, Weekly & Daily Processes
Daily
Check daily close every day. If entry or exit was signaled then make sure to get filled within 30 minutes of close. If passing on an entry signal then notate why. Never pass on exit signal.
Update trading ledger to reflect any changes (I will be posting my results in the 2 > 20 Bitcoin Trading Challenge).
Go through the TA Process listed above on a daily basis (I post my analysis in the Bitcoin' Daily Update).
Make sure that you are highly focused during the candle close otherwise the mistakes will compound. I prefer to go to the gym on a daily basis and be disciplined about my diet in order to maintain a high level of focus. I have also committed to a daily hot springs meditation session that has proven extremely valuable over the past year. For anyone that watches Mr. Robot think of Tyrell Wellick chopping wood while confined by himself in the forest. Having a task that is repeatable on a daily basis provides balance, perspective and focus.
I find a consistent sleep schedule to be vital in my performance as a trader. I make sure that I am in bed by a certain time so that I wake up feeling refreshed / energized and ready to trade.
Weekly
On Sunday I will analyze the weekly chart instead of the daily chart.
Trading ledger that gets updated daily is used for weekly PnL statements which get done on Saturday morning instead of preparing for traditional markets to close. I keep an excel spreadsheet for each exchange I trade on and include sections for Date, Entry, USD Inventory, BTC Inventory, Withdrawals, Delta, PnL, Unrealized PnL, In position.
When I first got into crypto I completely disconnected from my friends and family. To ensure the first doesn't happen again I commit to two social activities per week and for the latter I commit to calling my mother every Sunday.
Monthly
Review biggest trades from prior month. Dissect entries, exits and position sizes. Everything should be repeatable / explainable in hindsight. If it isn't that means I didn't stick to the guidelines and that is mistake. I cannot expect to be a perfect trader, however I can expect to learn from my mistakes.
Monthly Best & Worst Dressed List. After reviewing the trades find the best and worst examples. Print out the charts, notate why they made the list and put them in a binder. In the short term, how I trade is exponentially more important than how much money I make or lose. Therefore if the monthly PnL was subpar but very few mistakes were made on the worst dressed trades then I consider that a huge success and will expect the variance to even out in the medium - long run.
Weekly PnL statements is used for monthly PnL statements
-It feels really good to make a lot of money and it can feel very frustrating when results do not meet expectations. This is why I believe that is it vital to focus on the process and improving instead of the results. A few good results could be the byproduct of luck. One good / great process will lead to sustainable results as long as you can remain disciplined / diligent. While some may prefer to be lucky rather than good I strongly prefer to put in the effort that it takes to be good. Furthermore luck seems to be attracted to those who put in the consistent effort. Nevertheless I still track short term results because I have bills to pay. Eventually I would like to only pay attention to annual results.
“So you want to be a carpenter, do you?
Well it takes more than a hammer, boy, you're gonna need blueprints and a will to build, and
Straighten your cap! you look like you've been through a war.
Wipe that grin off your mug, you got a sturdy frame?
Sluggish posture just won't cut it.
You're gonna need schooling, and, and, and take notes!
And god if I catch you yawning again you're gonna regret ever asking for my help,
And dammit you gotta hustle, this is a slacker-free zone
And, where's my pencil? go get your hard-hat,
here's a nickel, go get us a ruler and a saw and a drill and lots of graph paper!” -Aesop Rock
