*sniffs* What is that smell?
Why, it's the smell of the birthing of a brand new crypto addict. Johnarb will be so pleased.
Baron's Crypto Trading Journal
- Thread starter Baron
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*sniffs* What is that smell?
Why, it's the smell of the birthing of a brand new crypto addict. Johnarb will be so pleased.
Baron
ET Founder
So I woke up this morning to read this:
Bitcoin Falls Below $43K, Leads to $800M in Crypto Liquidations
Over 87% of losses arose from crypto traders in long positions.
In the last 24 hours, crypto futures worth over $812 million were liquidated as bitcoin broke its $46,000 support level and fell to $43,000, according to data from analytics tool Coinglass.
The keyword here is "liquidated", meaning that traders were essentially forced out of their positions due to their use of leverage in the form of margin.
I always look for certain keywords when I assess what's going on, and liquidated is one of those that's like a gift from the universe. The bottom line is that when traders are forced out of their positions in a situation like this, WE BUY WHAT THEY ARE BEING FORCED OUT OF.
I'm going to buy $5k worth of BTC here in a couple of minutes.
Bitcoin Falls Below $43K, Leads to $800M in Crypto Liquidations
Over 87% of losses arose from crypto traders in long positions.
In the last 24 hours, crypto futures worth over $812 million were liquidated as bitcoin broke its $46,000 support level and fell to $43,000, according to data from analytics tool Coinglass.
The keyword here is "liquidated", meaning that traders were essentially forced out of their positions due to their use of leverage in the form of margin.
I always look for certain keywords when I assess what's going on, and liquidated is one of those that's like a gift from the universe. The bottom line is that when traders are forced out of their positions in a situation like this, WE BUY WHAT THEY ARE BEING FORCED OUT OF.
I'm going to buy $5k worth of BTC here in a couple of minutes.
Baron
ET Founder
And by the way, if you're going to be trading in crypto or pretty much anything with volatility like this and you have a perspective on this stuff longer than a couple of weeks, please DO NOT USE LEVERAGE IN THE FORM OF MARGIN. Why? Because your position can be liquidated at any time by your broker/exchange if certain conditions are met and the last thing you want is to be forced to sell when you really didn't want to.
If you're going to use leverage, please use it in the form of an uncorrelated asset, meaning that you're borrowing against something else entirely, and that asset is not tied in any way to the performance of what you're trading. That could be a home equity loan or line of credit, a loan against your business, a personal loan from any of the gazillion online sources out there, etc. When you borrow to trade from these sources, at least your trading positions are not at risk from getting liquidated because the value of those positions are not getting monitored every minute of the day from some risk manager like they are with your brokerage or exchange.
If you're going to use leverage, please use it in the form of an uncorrelated asset, meaning that you're borrowing against something else entirely, and that asset is not tied in any way to the performance of what you're trading. That could be a home equity loan or line of credit, a loan against your business, a personal loan from any of the gazillion online sources out there, etc. When you borrow to trade from these sources, at least your trading positions are not at risk from getting liquidated because the value of those positions are not getting monitored every minute of the day from some risk manager like they are with your brokerage or exchange.
this is not a trading advice.
Will it erase all of 2021 gains and trade for a year in low volatility environment to frustrate everyone before mounting another advance or will it march higher.I am more inclined to the former than the latter.
Will it erase all of 2021 gains and trade for a year in low volatility environment to frustrate everyone before mounting another advance or will it march higher.I am more inclined to the former than the latter.
Baron
ET Founder
Aside from the keyword indicator I mentioned earlier, another indicator I like to use is the Bitcoin Fear & Greed Index.
- Extreme fear can be a sign that investors are too worried. That could be a buying opportunity.
- When Investors are getting too greedy, that means the market is due for a correction.
~35,000 is my target area.