My book on Quantitative Trading is published ~ forex trading system 96 winners
My book on Quantitative Trading has been published and is now available from Amazon.com. Many thanks to all of you for your ideas, comments, and support! More info for My book on Quantitative Trading is published ~ forex trading system 96 winners:
Embarking on my Bitcoin Trading Journey Learn Basic Technical Analysis ~ trading system using relative strength forex
My Trading Experience
I first dabbled with Trading and Technical Analysis back in November 2012, when I first got into Forex Trading. Back then, I was introduced to an Automated Forex Robot that could rake in passive income of about 5-10% a month, and used a Martingale (doubling) strategy for trading. In less than 3 months, half of my account went bust because I was using too high of a risk-reward setting, coupled with a highly volatile GBP/USD market on the 4th of January 2013.
I did a fair share of Finance courses during my Business studies, and had a basic understanding of the Equity and Forex markets, and thought that I knew what I was doing. But oh was I so wrong! After this setback, I began to learn more about Technical Analysis to supplement my Auto Trading, and more importantly, to really understand what I was investing in.
I continued using the Forex Robot for the next 10 months up till November 2013, as I began to shift out my funds into Bitcoin after finally turning a profit in August. Since then, I have been following Bitcoin more closely, and have been super interested in learning how to trade Bitcoin.
.@steveomarburg I would if I had more $$$. Im ALL-IN #Bitcoin. — Alvin Lee (@onemanatatime) January 8, 2014
Getting Started Back when I was learning more about Forex trading, I went to Forex school at Babypips, and learnt some of the fundamentals of chart reading and trading, such as reading candles and trading concepts. Unfortunately, I dropped out somewhere through Elementary School, after they lost me with all kinds of different indicators I could not see the use for. On the other hand, I still do think Babypips is a fantastic resource, especially for beginners who are keen to learn how to trade and better understand the Bitcoin market. More recently, since I made my first few panic buys and sells and lost some Bitcoins trading, I have been picking up again on Technical Analysis and Trading strategies. Im not an expert at this, and neither should you take my words as investment advice, but Im here to share some of my thoughts on Bitcoin trading, and I hope it is of great help to you!
If you have any questions, feel free to tweet me at @onemanatatime.
Learn the Basics of Trading
If youre a beginner trader, first thing you should learn is to read charts. Chart patterns signal to traders that the price of a security is likely to move in one direction or another when the pattern is complete. Id like to bring your attention three chart patterns that will appear very often. I also took the time to show you how these relate to Bitcoin trading with the charting tools I use on TradingView. Enjoy!
Head & Shoulders http://www.investopedia.com/university/charts/charts2.asp
Secondly, another analysis tool I think is very useful, is the Fibonacci Extension. Fibonacci is pretty tough to understand, and more so to chart with Bitcoin due to the lack of available tools which allow for it. But in essence, the Fibonacci sequence is a unique string of numbers which adds the sum of the two numbers before it, and is the deravitive of the Golden Ratio. People like to call them the "magic" numbers, and very aptly so, as theyre present all throughout Nature.
Jason Stapleton shares the secret of Fibonacci Trading; that is to understand that Fibonacci (extension) is simply a tool. But when employed properly, and in conjunction with other indicators, it can present enourmously profitable, high reward low risk trading opportunities. Watch his video here:
Lastly, Id like to share a trading pattern called the Elliott Wave Principle. It emphasizes an understanding of Investor Psychology, and explains why prices fluctuate in zig-zag patterns. If you thought Fibonacci was tough to understand, lets have Babypips put this in perspective. Babypips teaches Fibonacci in Elementary school Grade 3, whereas Elliott Wave is taught in "Summer School". In that sense, Eliott Wave would be a great concept to learn and understand, as a supplement to your foundational understanding. Click on the links above to read and learn more about both theories!
Bitcoin Trading
By now, youd probably be saying: "Sure, these resources all give me a good basic understanding of trading markets, but how does that apply to Bitcoin?" Since learning the fundamentals, Ive been looking around for good resources to learn Bitcoin Trading from but with not much luck. Here Ill be sharing some handy videos to guide you on your Bitcoin trading journey.
I didnt get around to learning proper Bitcoin trading strategies, until early December when I chanced upon Chris Dunns first Bitcoin trading video and prediction.
I watched @ChrisDunnTVs first Bitcoin prediction video on the 6th of December 2013, and the rest of his "How To Day Trade" 5 part series videos. Somehow, I had a gut feeling that he was the ONLY guy trading Bitcoin who actually knew what he was talking about.
Guys, #bitcoin is already up 20%+ from my buy zone last night. Read this post to profit! http://t.co/CLS2Jkv7UU pic.twitter.com/dY3aGHkJhR — Chris Dunn (@ChrisDunnTV) December 7, 2013
Another spot-on prediction as Bitcoin falls to $817 Bitstamp. "@ChrisDunnTV: Scaling into a short position for BTC - http://t.co/HpkdB6KnZL" — Alvin Lee (@onemanatatime) January 7, 2014
Since then, hes made and nailed 5 back-to-back Bitcoin predictions, each with 15-30% profit. Watch his last prediction play out with immaculate precision. Watch the video here: Incredible Live Bitcoin Trading!
Made 15% on my Bitcoin "short sell" listening to @ChrisDunnTVs tip. If youre thinking of trading Bitcoin, dont forget to stop by! — Alvin Lee (@onemanatatime) December 16, 2013
This is a long one, but heres another great video I highly recommend watching: 60 Minute Stock Trading Blueprint Webinar.
If you liked his content, watch his other videos on his YouTube channel and follow him on twitter @ChrisDunnTV for the latest updates!
Lastly, I also very much believe in Chris Dunns trading perspective. I think more than analyzing news articles, or technical analysis, the most important aspect of trading is to understand the market sentiment. Hence, I also want to highlight how many Bitcoin traders are currently looking at certain time frames (e.g. in 12 hours from now) to determine a price for entry. Id just like say that thats not going to work! Instead of narrow time frames, and random $ amounts; think about Price-Action, Resistance, and Support.
Another piece of advice, is to match the Price-Action of both a long term-time period as well as a short-term one, when trying to make judgement calls. I personally use Bitcoinwisdom.com for reading a chart, and use anything from a 6h to 1d Time Interval for a long-term period, and anything from a 5m to 30m chart for short-term analysis.
.@supershares $777 or lower? who knows. 12h time frame is too narrow. think price action, resistance & support; not hours and $. — Alvin Lee (@onemanatatime) January 8, 2014
Past Trades & Predictions
My very first prediction about Bitcoin came in my first blog post about Bitcoin hitting $1000 by the end of 2013. I wrote the post on 14 November 2013, and you can read it here: Is the Bitcoin train ever turning back? $1000 by year end?
Then on 28 November 2013, I wrote another blog post about an incoming Litecoin crash. I related the price surge during that time, to the Bitcoin bubble of Aprils Cyprus fiasco. At that time, I had no clue how to judge resistance and support, but interestingly, the wisdom of crowds (more or less) pulled through with the right answer. Litecoin peaked at $50, before crashing down over 50%.
Since I began learning to trade, the added market understanding has given me a better insight into estimating a fair price for altcoins, as well as to judge support/resistance levels to look for entry/exit points. I have made a few spot-on Altcoin predictions of my own over the last weeks, as you can see on my previous blog posts about WorldCoin, NXTcoin, and DogeCoin here and eMunie and EarthCoin here. Follow me on Twitter or my blog to get the latest updates on Altcoin opportunities!
And last but not least, here was my first Bitcoin prediction. Click the link to see how my first prediction panned out on TradingView. I didnt know what I was doing, but I guess thats what they call Beginners Luck. ;)
Thanks @baihk. Its not my first, and definitely not my last. Im still learning too! Here was my first w/ 25% gain https://t.co/FQEIiBLI8O — Alvin Lee (@onemanatatime) January 8, 2014
Todays Prediction I think Bitcoin will be looking to retest the $544 support level of Bitstamp, before picking up for a new All Time High. But before we can go the Moon, Earths gravity is causing a small nosedive into the $650-$720 levels, and Ill enter if my Sell order goes through at $850.
$BTCUSD chart: Bitcoin looking for a retest of the $544 levels, before new ATH.. http://t.co/c0B1F0Of4B — Alvin Lee (@onemanatatime) January 8, 2014
And heres a friendly reminder about following Bitcoin or Altcoin predictions:
also dont reply to my tweets from 8 hours ago saying "thx for the tip, buying now!" are you fucking insane this is a highly volatile market — CryptoCobain (@CryptoCobain) January 8, 2014
Follow me on TradingView as I create new charts with Buy/Sell opportunities, or Twitter @onemanatatime for the latest updates! Dont forget to enter your vote for the Bitcoin price poll on the right column of this blog. Heres my vote, whats yours?
With that, Id like to end off with this; good luck trading, and HUAT AH! And heres a quote from The Alchemist, by Paulo Coelho.
“Every search begins w beginners luck. And every search ends with the victors being severely tested." Paulo Coelho. pic.twitter.com/SQHXxc9cD1 — Alvin Lee (@onemanatatime) January 8, 2014
More info for Embarking on my Bitcoin Trading Journey Learn Basic Technical Analysis ~ trading system using relative strength forex:
My pairs trading workshop in London ~ simple forex trading strategies work
I will be holding a 2-day, hands-on, pairs trading workshop in London, October 14-15. It will be held in conjunction with the Automated Trading 2009 conference organized by the Technical Analyst magazine. Please see details here. More info for My pairs trading workshop in London ~ simple forex trading strategies work:
My interview stop loss and the Principle of Latest Information ~ forex trading strategies work
You can find an interview of me in the July 2009 issue of Technical Analysis of Stocks & Commodities magazine. I mentioned in that interview and also in my book that I believe stop loss should only be applied to momentum strategies but not to mean-reverting strategies. I explained my reasoning better in my book than in the interview, and so I will paraphrase the explanation here.
In algorithmic trading, it is reasonable and intuitive that we should always make use of the latest information in determining whether we should enter into a position, whether that information is price, news, or some analysis. Lets call this the Principle of Latest Information. (If someone can think of a better or sexier name, let me know!)
So lets say we have a stock model based on price momentum, and we entered into a long position based on a recent positive return on price. A few minutes later, the price went down instead of up, causing a big loss on our position. If we now ran this momentum model again, very likely it would tell us to short the stock instead because of the recent negative return on price. If we did that, we would be exiting the previously long position and became flat. This is in effect a stop loss, and it follows strictly from adhering to our model and our Principle of Latest Information.
In contrast, suppose we now have a stock model based on mean-reversion, and we entered into a long position based on a recent drop in price. A few minutes later, the price went down further instead of up, again causing a big loss on our position. If we now ran this mean-reversion model again, it would definitely tell us to buy the stock again because of the ever cheaper price. The model would not ask you to exit this position and take a loss. Hence, adhering to the model and the Principle of Latest Information will not lead to a stop loss for a mean-reverting model.
(Now, if we hold this losing long position long enough, the model will incorporate new historical prices into determining its long or short signals as it retrain itself, as the Principle of Latest Information says it should! At that time, it may indeed recommend that we exit the previously held long position at a loss. But this adjustment takes place at a much longer time scale, and therefore cannot really be considered a stop-loss in its usual sense.)
More generally, I find that at every turn, and not only in the realm of stock trading, applying the Principle of Latest Information always help me to be disciplined and not be afraid to enter into new positions, take loss or endure a drawdown as the case may be. More info for My interview stop loss and the Principle of Latest Information ~ forex trading strategies work:
Pre order my book from Amazon com ~ no brainer forex trading system and template
A reader told me that he can now pre-order my book "Quantitative Trading: How to Build Your Own Algorithmic Trading Business" from Amazon.com. The scheduled publication date is November 24, 2008. More info for Pre order my book from Amazon com ~ no brainer forex trading system and template:
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