May 5th 2019, Crypto Chartbook

On the money

We all want to know what works. How can we extract consistently money out of the market? Looking for the holy grail is futile. There is no secret. No formula, no special indicator or indicator setting. There is so at times a thing or two that work for a period of time and it is the look out for such quirks that provide an edge. Stacking such edges upon each other, to create a higher probability, is a worthwhile goal. Let us see what edges can be found specifically in the Bitcoin market that could help to be on the money.

In the following charts you will see a Slow Stochastic with setting “SmoothK 5” and “SmoothD 3”. At closer look the divergences between price and Stochastic (yellow horizontal lines) are of true value.

Daily chart of BTC/USDT – Stochastic divergence as an edge to consider, Oct 22nd 2017:

Bitcoin in Tether US, daily chart, October 2017, On the money

Bitcoin in Tether US, daily chart, October 2017

On the money, BTC/USDT daily chart, December 18th 2017 – Divergence exit timing at bitcoin all time highs:

Bitcoin in Tether US, daily chart, December 2018, On the money

Bitcoin in Tether US, daily chart, December 2018

Daily chart from June 9th 2018 of BTC/USDT – Short reload entry timing support:

Bitcoin in Tether US, daily chart, June 2018

Bitcoin in Tether US, daily chart, June 2018

July 26th 2018, daily chart of BTC/USDT – Divergence help for turning point identification:

Bitcoin in Tether US, daily chart, July 2018

Bitcoin in Tether US, daily chart, July 2018

December 24th 2018, daily chart of BTC/USDT – Divergence Christmas gift:

Bitcoin in Tether US, daily chart, December 2018, On the money

Bitcoin in Tether US, daily chart, December 2018

BTC/USDT daily chart, April 24th 2019 – Stochastic divergence to time profit taking:

Bitcoin in Tether US, daily chart, April 2019

Bitcoin in Tether US, daily chart, April 2019

You may ask: “Why true value?”. Well, these divergences on a daily time frame did not generate much false signals at all. Also these divergences are to be found in an up-trending, in down-trending and in sideways markets. Yet they still are all valid. Many believe that a Stochastic indicator is only to be used in a directional market and that divergences appear too often and are therefore false as a result. In principle that is true, but it is also true, that if you find an edge in a specific market and if a specific time frame plus the data is overwhelming in your favor, you should take note of its.

In this case the edge can be used multi fold. For example we used this edge to time exits as described in our last chartbook

We, in the past, pointed out our Quad Exit Strategy. This is our exit strategy tool, which helps to produce a supporting psychology and as well solid returns. In addition, the divergence edge is very helpful to time these exits. It is also an early warning signal that a retracement is coming soon. Therefore, if the market is directional up, it is time to prep long entries. In a sideways market this tool it is an entry signal in itself. In a down trending market it helps to time the reload of short entries.

In conclusion, no single edge is truly meaningful but stacking such edge findings can be very profitable indeed.

All charts timely posted in our telegram channel.

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About the Author:

Outstanding abstract reasoning ability and ability to think creatively and originally has led over the last 25 years to extract new principles and a unique way to view the markets resulting in a multitude of various time frame systems, generating high hit rates and outstanding risk reward ratios. Over 20 years of coaching traders with heart & passion, assessing complex situations, troubleshoot and solve problems principle based has led to experience and a professional history of success. Skilled natural teacher and exceptional developer of talent.Avid learner guided by a plan with ability to suppress ego and empower students to share ideas and best practices and to apply principle-based technical/conceptual knowledge to maximize efficiency. 25+ year execution experience (50.000+ trades executed) Trading multiple personal accounts (long and short-and combinations of the two). Amazing market feel complementing mechanical systems discipline for precise and extreme low risk entries while objectively seeing the whole picture. Ability to notice and separate emotional responses from the decision-making process and to stand outside oneself and one’s concerns about images in order to function in terms of larger objectives. Developed exit strategies that compensate both for maximizing profits and psychological ease to allow for continuous flow throughout the whole trading day. In depth knowledge of money management strategies with the experience of multiple 6 sigma events in various markets (futures, stocks, commodities, currencies, bonds) embedded in extreme low risk statistical probability models with smooth equity curves and extensive risk management as well as extensive disaster risk allow for my natural capacity for risk-taking.

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