Liquidation games

What is a Decision Tree and How to Make One [Templates + Examples] -  Venngage

Well the past twenty four hours have been a roller coaster. I got way to cocky with my leveraged ETH long, and I’ve been on the verge of liquidation twice today, both times I added more collateral to the fire in order to stave off disaster.

I’ve been playing the funding game on Perp.Fi for the last week or two, setting up some conservative long positions to make some income on the negative funding rates that are available. I’d been doing pretty good for a while with my 1.5x BTC position, then I went and got all stupid with a 4x ETH long. I apparently forgot what happened to me last time I pulled some shit like that. So last night I went to bed, disgusted at myself and telling myself that I deserved to get liquidated for the $8k that I had laid down as margin. I had a little trouble falling asleep, but slept well and woke up with it on my mind. I didn’t want to know.

I told myself I was cool with the loss, and held off looking at the chart while I did my morning routine, but I accidently saw the chart when I unlocked my phone. I was right at liquidation. I meditated on the best course of action to do, veering between doing nothing and adding more fuel to the fire. I tried to figure out what the best course of action was. I went for a two and a half mile jog to clear my head, then finally went upstairs, pulled a few thousand out of my BTC position margin and threw some of it at the ETH position, trying to bring them somewhat into parity. I think I was actually in a liquidatable state when I did it. I guess the bots had bigger fish to fry. Lucky me.

So I spent a lot of time staring at the five minute chart again today. I managed to get several hours of work done on some Rust challenges, but I kept looking at the chart every couple minutes. As the day went on and I got interrupted more and more with the kids it became harder and harder to concentrate, but I managed to get a lot done. Plus I did a lot of cleaning and cooking. But the precariousness of my position plus some trouble with the girls put me a bit on edge, so I lost my temper a few times. Missus saw my stress and asked what was wrong, so I told her, then went and cut the grass.

I came back in and commiserated over the situation, watching the chart. In a way it would have been better if I’d been washed out in a quick scam wick. Just put me out of my misery. This long drawdown is going to suck in more and more of my capital to keep the position alive. I don’t know how far down I can go, but sunk cost fallacy is surely a factor right now. It’s my fault for not having a plan for this. Surely ETH can’t go down $2000 again! The whole situation makes me fear about how low BTC can go. If this crap goes on too long I’m going to wind up liquidating everything in my portfolio just to keep this long going.

A few minutes ago the price got really close to my liquidation price, so I put another $1000 in margin, giving me another couple hundred dollars reprieve on my liquidation price. I’ll sleep better, and who knows, maybe I’ll see a reprieve and make it out of this alive. What a mess. This is definitely not how disciplined trading is supposed to work.

DeFi level up

Trade notes: Pickle, Perp and CREAM

I was pretty busy yesterday, as I got the latest tranche of funds transferred from my brokerage TradFi IRA over to my AltoIRA and onto Kraken. Tracking my portfolio to my original plan was very difficult, due to the various wallets, chains and apps that I’m using to track it. My original plan was to do a 40/40/20 BED portfolio, (BTC, ETH, DPI,) but it’s changed a bit. The current portfolio looks a bit like this:

BTC16.75%Native BTC
wBTC18.25%also includes BTC2x-FLI-wBTC SLP
ETH31.00%also includes ETH2x-FLI
DPI/BDI7.50%Staked BDI, BASK
ALCX6.50%Staked alUSD, ALCX and ALCX-ETH SLP
Solana8.50%SOL, SOL-RAY and STEP-USDC LP
USD stables5.00%
Other6.50%BAL, RUNE, others, Star Atlas NFTs

I can’t actually seem to get the total value of the other category to calculate correctly, leading to a margin of error around five thousand dollars. It made trading a little bit difficult, since I wasn’t quite sure how to balance what I was doing. So I’m sitting on about seven percent more cash than I want to right now, and was not sure exactly how to proceed, so I made a few trades into ETH and wBTC, sent some USDC to Solana, and decided to look at some other things.

I’m not quite sure what brought me to it, but the V1 Yearn 3crv vault is migrating to the V2 version and is not earning boost, so it needed to be moved. I decided to pull it entirely and move it to the native USDC vault, which is getting a higher yield right now. I came out a bit ahead, thankfully, but only a trivial amount. I’ll have a full report on the reFIREment fund in June.

I did start poking around the other Yearn vaults while I was there, and contemplated the yvBOOST vaults. It basically holds yveCRV tokens, which go into a one-way vault, and earn 3crv tokens in return. The BOOST vault compounds these of course, but there’s another one that interested me was the one that deposited it as yvBOOST-ETH SLP on Pickle.Finance. The first time I looked at it a few weeks ago I couldn’t wrap my head around it, but this time it clicked. I’ll explain, with a slightly different example. I’m holding ALCX-ETH SLP, which I have staked on Alchemix for more ALCX rewards. I unstaked my SLP from there and deposited it on Pickle, where the jar, or vault, follows a basic auto-compounding strategy. This turns my 250% APY into a 500% position. On top of that, I can stake this resulting pSLP, as it’s called, for an additional 10% APY in PICKLE tokens.

I also spent a lot of time on yesterday. I’ve been trying to wrap my head around perpetual contracts for some time, but have been somewhat limited as a US-citizen. I’ve done some basic leverage trading on Kraken, but found the experience to be a bit lacking. has some leveraged products available, but using margin with my IRA triggers a taxable event, and I haven’t done KYC with my regular account yet. Perpetual Finance, while still geo-locked for those of us in the US, is available 100% on-chain. Better yet, it’s trade engine is on xDAI, which means it’s very cheap to use.

Even better, funding rates are negative, meaning that shorts pay long. So I can basically get paid to take a long position. Everything’s done through USDC, and I already had some wETH and wBTC on xDAI, so I liquidated some of my position and opened longs using the proceeds as collateral. So I’m sitting on a couple of 5x positions, that won’t get liquidated unless we have a further market correction that takes us lower than this week’s lows. In the meantime, I’ll get a little bit of funding from the spread.

I’m really impressed with the Perpetual team. Their docs are put together nicely, and their code repos have some nice treats, including a CLI client (!) and an FTX/Perp arbitrage bot, which is nice. They have their own token, which receives some of the trading fees, but I haven’t decided whether to take a position on that. The main use case seems to be for taking short positions, as this video shows. Taking a market-neutral position to facilitate high interest yield farming really opens some doors.

Perp is limited to a few trading pairs, mostly BTC, ETH and a few DeFi blue chips. One really important note in the video is how you can use CREAM’s bigger selection of tokens to short the other side. I clicked with me, and opened up the door to another piece of the yield farming puzzle. I’ve got plenty of tokens and LP I can use as collateral in CREAM and borrow some of the low interest rate tokens, such as DPI, and, which I can lend to Impermax; or VSP, which is 25% to borrow, but yields 125% in the Vesper vault. There’s obviously some liquidation risk, but it is something I’m going to be taking a further look at in the coming days.

Cryptoassets intro for equities traders

I came across a request last week from someone asking for help writing up an intro to crypto for traditional equities investors. I offered to help, thinking that I had already done most of the work, but it soon occured to me that I hadn’t written anything aimed directly at people new to the space. So, let this be a quick introduction to a few things that I think anyone coming over from the space needs to know. This won’t be an explanation of bitcoin or blockchain, or even DeFi, as there are numerous resources out there.

My background is in tech, and I’ve done well over the last twenty years, investing in tech companies for the long haul. I caught all the FAANG plays before it was cool, and have made some missteps over the years, either being wrong with India and China plays, or being to early, like with 3d printing or pot stocks. For of my career, I followed the advice of The Motley Fool, only buying stocks that I was interested in holding for five-plus years. I let that subscription lapse after I went down the crypto rabbit hole about six years ago, but the philosophy sticks with me. I treat crypto more as longer-term play, and find that I do better the less I try to worry about TA and swing trading, and just buy tokens and sit on them. I could brag about picking Ethereum at thirty cents, or getting in on ChainLink right after the ICO, but I’ve held numerous bags to zero over the years, and lost thousands on scams that I thought we’re going to have a big payday. And my biggest returns have been from good old-fashioned dollar cost averaging Bitcoin, every week, every month, for the last three years.

So let’s get to it. I have a couple pieces of interesting advice, and many, many warnings.

Crypto exposure outside of crypto

If you’re like me, you already have a brokerage account opened up, maybe within a tax-advantaged IRA or self-directed 401K. If so, you’ll want to read my post about checkbook LLCs, but in the meantime, there are plenty of ways to gain exposure to Bitcoin, Ethereum, or the broader crypto space inside your traditional account. The standard way to do this is through Grayscale’s Bitcoin and Ethereum trusts, which trade on the OTC markets under $GBTC and $ETHE. There are other Grayscale funds available, but as a novice, I would stay away from these until you understand the inflows to these funds and the premiums associated with them.

Alternatively, there are many companies holding Bitcoin on their balance sheet. has the most comprehensive list, let me just say that my favorites are miners like $MARA and $RIOT, which have been outperforming BTC. Voyager Digital is my personal 2020 favorite, which is an exchange play that has returned over two thousand percent in the last year.

Every crypto transaction is a taxable event

Let me repeat myself: EVERY CRYPTO TRANSACTION IS A TAXABLE EVENT. With the exception of buying spot with fiat, and some instances of wrapping Ethereum (which I won’t explain here), every sale, swap, airdrop, deposit, claim or stake will need to be tracked for cost basis and capital gains. I am also not referring to straight up withdrawals, transfers or deposits between your exchange accounts or wallets that you control.

Crypto tax guidance from the IRS is abysmal, and will hopefully get cleaned up this year, but till then it is an absolute nightmare. Most of the exchanges will prepare your tax documents for you, but once you start getting involved in DeFi, you will want something to help you prepare you tax documents. CoinTracking (reflink) is one I’ve used for years with moderate success, but the new one that I would probably recommend is called TokenTax. They both can track your Ethereum address directly, and import data from most exchanges via an API. There are alternatives, so experiment with a few and find one that works for you. You do not want to skimp on this. They should offer you a choice on how you want to calculate your gains, FIFO, FILO, or whatever, I prefer HIFO, for highest in, first out.

So no, there’s no “like for like” exception for crypto like there is in real estate. If you buy ETH with BTC that you bought on Coinbase, you have to calculate gains on the BTC and record the cost basis of the ETH in fiat terms. Same thing goes if you — god forbid — use your crypto for something useful, like actually buying something. That’s right, you’ll have to track cap gains on that proverbial cup of coffee that you bought with your bitcoin. This may change under the Biden admin with more crypto-friendly officials, but for now that’s the way it is.

The only way to legally avoid all of this is through a tax-advantaged account like an IRA or 401K. Beware though, these “crypto” retirement accounts may be custodial accounts that restrict what you can buy, don’t let you withdrawal your coins, and charge high trading fees or insurance. Again, you can read my post about checkbook LLCs to see how I’m keeping tax-advantage status and controlling my own funds.

Crypto never sleeps

For the most part, equities traders are used to standard NYSE hours, 9:30AM-4:00PM, Monday through Friday, save holidays. Not in crypto. Markets are always open, although the mood can change as traders wake and sleep from the East coast to the West, Asia to Europe. Many times I’ve caught myself getting ready for bed, only to see Bitcoin make some big move that I want to be a part of. It’s easy to lose sleep. Crypto is also immensely addictive, and if you’re like me you may need to take steps, like deleting apps off your phone, if you find yourself checking the price of Bitcoin every five minutes. If you drink or smoke, you might also want to set limits and rules so you don’t FOMO into a stupid position while you’re bent and wake up rekt the following morning.

Exchanges are not your friends

It’s easier than ever to purchase crypto these days, but one of the biggest mantras in the industry is “not your keys, not your coins”. This means you don’t use exchanges as your banks. If you’re dealing with any substantial amount of funds, you HAVE to get a hardware wallet. Trezor and Ledger are the two most common ones, but you should do your research. If you’re dealing with Ethereum you’ll probably wind up dealing with Metamask, but you’ll want to hook this to your hardware wallet as well. Same goes for any other software wallets such as MyEtherWallet, Exodus. Newer tokens might not have support for anything other than an executable that runs on your computer, or just a website that you interact with. Do your research, and never get in a position you can’t afford to lose.

Exchanges get hacked, and most don’t carry any type of insurance, so never keep more on them than you need for a trade. You can use leverage on some exchange as a way to negate this risk (not to trade more than you have!), but for the most part, you’ll want to keep things on your wallet where possible. The rise of DeFi lending and interest bearing accounts which provide yield on deposits are making it very attractive to do the opposite, but beware counterparty risk, and spread your funds if you feel compelled otherwise.

If your Exchange doesn’t allow you to custody or withdraw your funds, i.e. Robinhood or Paypal, then you’re not really buying crypto, you’re buying an IOU. Stay away from them. The major fiat onramps in the space if you’re in the US are be Gemini, Kraken, Voyager (reflink), BinanceUS, and I hate to say it, Coinbase. If you’re using Coinbase, or Gemini, make sure you swap to the “pro” versions with proper limit orders, not the market order only interfaces that they put up for noobs with the three percent fees. These aren’t available on the mobile apps, so use the desktop/web versions to access them.

Speaking of limit orders, no crypto exchanges that I’m aware of have implemented trailing orders, which is a shame. I have my own cynical theories as to why. A few, like Binance and Kraken, have access to leverage and OCO type orders, but for the most part you’ll be dealing only with limit and market orders.

And even after all all these years, the major exchanges haven’t figure out how to stay up during moments of high volatility and activity. In fact, one of the sure signs of a bull run is Coinbase going down.

Beware limit orders and leverage

Just stay away from leverage unless you know what you’re doing. Period. It can be tempting when BTC is posting a huge green candle and you want to go in 5x with everything you got, but you’re playing with whales, and they love to stop hunt. They routinely pump or dump the price to trigger cascading liquidations, so they can buy back up or dump on the market after the carnage has cleared. Sometimes it might even be the exchanges, countertrading against you. Beware.

On the other hand, don’t count on that stop-loss hitting. Exchanges have gone down, during these flash dumps, preventing those orders from closing, and leaving people holding a bag after the carnage has cleared.

And never short Bitcoin in a bull market. Just don’t do it.

Don’t listen to anyone

The trollbox on TradingView can be the absolute worst, most toxic place in the world sometimes, everyone’s an expert and knows exactly what the market is going to do in the next five minutes, believe me. They’ll shill their bags, pump them, and talk them up and up and up. It’s easy to get caught up in it. Same thing goes for Twitter, as well, and I say that as someone who spends an inordinate amount of time on Twitter. Just assume that anyone who is talking up a $cashtag or posting a chart is shilling their bags.

Sure, you can ape along with them, and maybe you’ll do alright, but if you read up on projects after you’ve aped into them, you’ll eventually be able to sort the cream from the crap.

And never, never buy the FOMO on a huge green candle on the five-minute chart, unless you’re prepared to exit your position at a moments notice. Like I said, I don’t trade like that, anymore. I prefer to open a small position, do some research, and scale in over time if I think the project has promise.

Hopefully this advice will be helpful to you. I know much of it seems doom and gloom, but I want you to be warned. In 2017, I saw life-changing riches come in the blink of an eye, and in 2018, I watched it drain away cause I failed to take profits. This year, we’ve seen just the beginnings of the bull market return, and I’ve already seen more than 4x returns in my cryptoequities account in the past six months. And I truly believe we haven’t even seen a tenth of what we should expect before the end of the year.

If this piece is helpful, please drop me a line with some feedback, or your question, as I know I have more to share. As they say, an expert is just one who’s made enough mistakes in a given field, and I can help you avoid the same mistakes, then my day’s work is done.

Kraken margin trading calculator

Determining position size, leverage, and liquidation levels

If we are indeed at the start of a bitcoin bull run, then it is going to get progressively harder to accumulate a full BTC. Raising the FIAT needed to buy one outright is beyond my means without taking some credit risk. Trading alts is another to do this, but I’m not willing to risk much of the BTC that I already have on alts. Instead I’ve decided to see what I can do with a small amount of fait and some margin trading. So I opened an account on Kraken.

US residents don’t have many options when it comes to leveraged trading. Kraken is one of the few, and the one that seemed most accessible to me. Getting verified was simple enough, but I was a bit shocked to find that they don’t allow ACH transfers from bank accounts, only wire. Alas. I was able to use stablecoins to transfer from my preferred exchange, as well as some BTC I had earmarked in a trading wallet, as well as some ETH I had mined.

With these meager funds, I made a small swing trade on spot. I’ll admit that I didn’t know much about leverage, but I did know that there was a call level and a liquidation level. For the life of me though, I couldn’t find a way to calculate this. Kraken’s documentation shows that they have a profit and loss / liquidation calculator, but it’s on the futures site, and not available to me. I’m not sure this is an oversight, or a way for them to get over on noobs.

I spent an hour or two last night trying to calculate these numbers myself. With a few examples and some algebra, I was able to put together a spreadsheet that allows me to plan my entry and stops, and validate that they are well outside of liquidation range.

Using an example from Kraken’s documentation: Using $5000 in equity to open a $10,000 position with 5x leverage results in a $2000 margin level. The margin ratio on the account is (5000/2000) x 100 = 250%. A ratio of one hundred percent put us in danger of liquidation. Kraken can margin call at around 80% (the exact percentage depends on some obtuse factor), and the liquidation process starts at 40%. But how to figure this out.

Kraken’s example gives us a hint. If the account takes a paper loss of $3500, this puts the equity at $1500 (5000-3500), and the margin level is now 1500/2000 = 75%. So we know have enough information to write it out as an equation.

margin rate = (equity - original position price - current position value) / margin amount

What we really want, though, is to estimate the current position value. Using a bit of algebra we can isolate it as such:

current position value = (margin rate * margin amount) - equity + position cost

Now we can substitute the call and liquidation rates in our spreadsheet to determine the current position value, further breaking it down by market price and position size.

In order to use the spreadsheet, fill out your equity size, entry and stop loss. The risk amount is set to two percent, change as you like. If the position size is more than five times your equity, OVERLEVERAGE will return true, which means that the parameters you’ve entered are so conservative that you won’t come close to the full risk amount. You can lower your stop loss to find the sweet spot.

In our example, we have $10,000 in equity, and are going to enter a position at $10,000, with a stop loss of $9900. This will allow us to open a $20,000 position, which we will be able to open using $4000 of margin (collateral) at 5x.

As you can see, the spot price will have to drop to $7000 before our margin level falls to 100%: (14,000 position value + 6,000 equity remaining = original position size of $20,000.) Since our stop loss is well, well above this level, we shouldn’t have to worry about getting called at 80% or liquidated at 40%.

Hopefully this spreadsheet is helpful, and please, please use risk management before you take these trades. If you’re new to leverage, as I am, I recommend you read CryptoCred’s Comprehensive Guide to Position Size and Leverage.


Boom time

Today was absolutely insane. There was some good news about another COVID vaccine which set the equities markets up today, and $ETH hit $600, which set the crypto markets roaring. It was amazing. I finished the day up eight percent, for my first five digit day, (and then some.)

The news behind $DPW was that they announced some partnerships with restaurants to provide electric vehicle charging stations. I’ve had a standing trigger since September to set a trailing stop next time it pumped past five dollars, and it triggered at 5.39, which cut me out of a couple hundred dollars to the close.

Overall, I’m glad to be out of this one. I had picked it after I misinterpreted some news about their involvement with bitcoin, and got caught up in that first big pump gap a week after I opened the position. By the time I hit my value averaging targets in the grey box, I was down, so I set the trigger, hoping that it would have another big spike that I could capitalize on. Turns out it worked, so yay me. I feel a lot better about the other, pure-crypto plays in my portfolio, and would rather put my focus there than worry about these guys in the future.

Ethereum was obviously the driver in today’s rally, and again, the fact that the mining companies are up even more shows me where I need to be focusing my cash. $RIOT and $MARA and the rest are doing really good.

Strangely, BTC has been pretty flat despite a big dip over the weekend, I think the fact that it’s basically back where it was Friday has proven really bullish for the market. In fact, $BTC was down from Friday’s levels, but $GBTC was up five percent.

I have actually been anticipating a BTC dip when we get near ATH levels, and I had calculated a GBTC price of 22.40 for a sell order. Today’s close set us at 22.15, so I’m thinking I may want to reconsider that order. If the premium keeps running up like today, we may hit it without any price movement by BTC, and I may get stuck holding the cash. I’m going to sleep on it and see what happens overnight.

In spite of today’s mind-blowing rally, I still managed to get pulled into four different fires at work. And it gave me a bit of solace while dealing with the bullshit, knowing that none of it mattered and that ultimately I didn’t have to put up with any of it if I didn’t want to. I got so much done today, I even managed to take the girls to the playground for an hour this afternoon, cooked lunch and dinner and did grocery shopping.

All in all, today kicked ass in more ways that one.

Uniswap limit orders

Most people who are used to trading on centralized exchanges are familiar with using limit orders, where one is able to set orders that are off from the market price. Automated market makers such as Uniswap don’t have these features, which makes trading Uniswap-only pairs a bit of a problem, especially when one is trying to take advantage of volatile tokens such as $PRIA.

I’ve been looking for ways to set limit orders with Uniswap, and after several dead ends I’ve found two that may work. One is an on-chain protocol, the other is a bot.

On-chain method

Pine.Finance calls itself an AMM order engine. They only support limit orders on Uniswap v1 and v2, but they say they plan on adding stop loss and market functionality across the DEX space, like Aave, Balancer, and others. In order to use it, you have to submit the input token along with your order details through an on-chain transaction, then wait. When the price hits the target, Pine’s network relayer’s should execute the transaction.

There’s a lot more detail in the link above. What is important to note is that each order gets its own order vault, meaning that your order input funds will be stored in a discrete Ethereum address. You can see them on chain.

The project is in beta, and hasn’t been audited, so this one is use at your own risk. I did go ahead and put in a very small order that I’m still waiting on to execute. The gas cost was nominal, about as much as a standard transfer, but I’ll also have to pay gas if I want to cancel the order. This is similar to the way that on-chain DEX like iDEX or Metamask have worked in the past, although Pine is a custodial solution, probably a requirement of the fact that the relayer pays the gas when they execute the trade (and arbitrages the difference).

[Update: Pine replied wanted to clarify the custodial claims:

I’ll need some more time to delve into the process used here. What I am sure of is that during the order process, a deterministic funds vault is created, and tokens are transferred to this vault. Even trusting that these funds are self-custodial, they are removed from the user’s wallet. This may be similar to how 0x works, as mentioned below, and I promise to do more research and follow up on this. ]

Bot method

LimitSwap is a Uniswap limit order bot that is available on Github. After downloading, you’ll need to export your private keys and configure several settings to get things up and running. Set the tokens you want to trade, set your prices, and then let it go. You’ll also need to hold LimitSwap’s $LIMIT token in your wallet in order for the bot to function.

That’s the promise, anyways. I wasn’t willing to actually give it a shot. The project’s sole developer, who goes by the handle Crypt0Gnome, seem legit, but has taken steps to obfuscate his code. I understand his motives is to fund his development efforts via the $LIMIT token and prevent people from easily modifying his code to circumvent this requirement, but I’m not willing to trust my private keys with something like that.

I won’t go too far into the technical details but to say that he’s written the bot in Python using a Flask front-end and packaged all the dependencies in the zip file. This may make it easy for Windows users to get up and running, but shocked me a bit when I went to download the source code and found an empty repo.

I’m not trying to be unjustly harsh here, Crypt0Gnome seems to be sincere and to be community focused. However, in addition to the closed source nature of the project, I did find the Flask interface buggy and less than polished, and it was hard to justify digging into it when all I wanted to do was set a single limit order for a small amount. I do hope Crypt0Gnome can find a way to fund his project and open it up so that others might contribute to it as well. We’ll see.

The search continues

So while I’ve decided to do a small test transaction with Pine for now, I’m still looking for other solutions, preferably non custodial ones. The 0x protocol may offer a solution if one can find relayers supporting the tokens one wishes to trade, but I’ll need to do more research on that front to say more.

The bot approach would also be preferred over a custodial, on-chain solution if one is willing to maintain the bot, but a closed source solution with a single dev is a bit to risky for me to use, let alone recommend to others.

Google is a graveyard of dead links and others looking for solutions to this problem, so there is a need for it, but for now it seems that there is no good solution. I’ll keep searching and will probably do more research into both of these solutions for a future update.

Trading notes

Today was a pretty good day for crypto markets.

Jack Dorsey, CEO of Twitter and Square, announced that Square bought $50 million of bitcoin, about one percent of Square’s treasury. Markets pumped, and my portfolio did pretty good, up 4.52%.

That puts me up 50% in $GLDC after a week! $ETHE is above water finally, after a month. I spent a good deal of time trying to refine my new trade plan calculator, to figure out how to protect my position. I need to protect my capital, but I don’t have a rule yet on how to do that. The TD Sequential was supposed to be my indicator for stepping my stops, but I’m beginning to wonder whether my strategy is sound.

My recent strategy has been a bit of knife catching, trying to open a position when it marks a ‘nine’ down on the TDSeq. I set my far enough below support lines that I don’t get taken out by some whale hunting stops, and then wait. Here’s the most perfect example of what I’m talking about.

The hypothesis is that seller exhaustion will spawn a turn around on the nine mark, and the price will move up. I got lucky here.

The question now is what to do. From a capital preservation standpoint, I should raise my stop above my entry point to make sure that I don’t lose money. This will also open up my capital for another trade, since I’ve already got six percent of my capital at risk. I could tighten the stop to just under my entry, which would have a lesser protective effect.

Or I could take profit. I’m not going to do this, however, as I’ve started noticing another trend off of these TD Sequential signals. I’ve noticed that breaking above a green sell signal can mark the start of a parabolic run. In the GDLC chart above, you’ll see the green dotted line coming from the left. We have a daily close above it, and then two days later… POW! Seven to thirty-six dollars in three days. GDLC is a bit of a bad one to use as an example though, as the pump lagged a similar movement in BTC by three days.

While I figure out my strategy, I’ve been working on my trading spreadsheet, incorporating some new tips I’ve learned with regard to some formulas. Hopefully it will make my planning process more coherent in the future.

I really feel that things are really close to popping off. The fundamentals of bitcoin are strong, and despite all the bad news that has been going on lately, the market has been holding strong. I’m trying to prepare for some crazy times coming up. We’re less than a month away from the election, and who knows how things could go at this point. The fact that BTC hasn’t taken a tumble these last few weeks is very, very bullish, and I can’t wait to see what happens next.