Blackjack Analogy of Trading

Steven Goldstein (@AlphaMind101): "Traders who take a pure house approach will often live by the mantra that ‘You never go broke taking a profit’. They take many small profits & accumulate these, which compensate for the occasional larger losses... Traders who take a pure player approach believe that ‘You never go broke taking a loss’, though the caveat here is that losses are limited in size. This way the trader takes many relatively small losses, which are compensated for by the outsize wins which come along periodically"

Scaling in / Pyramiding

Whether you enter a trade in one go or build up a position with 2-5 buys depends on the trading style, strategy or price action. There's no 100% correct answer.

But here are some general rules, which are quite adaptive and reduce risk & potential losses: 1. Once your signal triggers & the signal is reliable, best to buy the biggest chunk of your position. If you want to get in with 2 buys, it could be 50-66%. With 3 buys 33-50% of the full position. Overweighs the lowest price in case the asset goes up as expected.

Past BECKI/BELLA trades clearly show that a trade fails if it changes direction shortly after entry. Why I created the fast out rules. So far if both BECKI & BELLA were in & one went out, the other followed.

Jesse Livermore said the same: "I decided that I would... ... not hold stocks that did not move in the direction I had anticipated. I would wait for what I considered to be the perfect time to buy the stock, if it did not move as I believed it should move within a few days or... say a week or two, I would then sell out the position.

All out now! BELLA turned 🔴 again on BTC. Don't want to wait for BECKI. Fast out rules triggered too.

Had a 2.6% drawdown. Not much for BTC. Even better as it occurred with altcoins, which are 2-4x more volatile. Not scaling in too fast & selling fast did the trick. If it turns around, I can still get back in. Too risky in the market right now.

Trend following doesn't work well with V-shaped bottoms & bear rallies. So BECKI/BELLA triggered "late" here. My new bottom/top algo should get me in sooner next time. Would've meant profits.

Supply Shock Theory says:
Exchange balances (EB) down ➡️ BTC price up
EB up ➡️ BTC down
🟢 Occurred 8 times since 2013!

Invalid cases:
EB up ➡️ BTC up
EB up ➡️ BTC flat
EB down ➡️ BTC down
EB down ➡️ BTC flat
🔴 Also occurred 8 times!

Something 50% valid = COINCIDENCE! Alternative explanation:

Central exchanges increased in popularity up to 2019, then became less important because of decentralized exchanges, more hodling & payments, DeFi etc.

2.5 million BTC on exchanges = huge amount. This is no supply shortage that could drive price up!

Bull/Bear Cloud (BBC) 🐂🐻☁️

New indicator that tries to classify bull and bear markets and offers long term entry & exit points.

The cloud now runs between 53k and 61k. Important resistance area. If the cloud expand further, it means that the bear market continues. If the cloud contracts again, which would happen above 53k, it means that the bull market continues and was only interrupted by a mini bear market.

Currently the cloud is 2.6x wider than in mid 2013 and 2016. The cloud expanded beyond the 2013/2016 levels in mid July.

There are 3 types of BTC price models:

✈️Power models state that Bitcoin keeps growing with the same decreasing speed.

🚀Moon models assume that Bitcoin grows at the same pace.

🏎️Classic models imply that Bitcoin's growth decreases even faster than in the past. 🚀 Moon models:
Time Traveller (TT), @100trillionUSD (S2F)

✈️ Power models:
@gsantostasi (LM & PLM), Trolololo (TL), @hcburger1 (PLC), @InTheLoopBTC (RGR)

🏎️ Classic models:
@SwissRexAG (SR), @davthewave (DTW), @BitBallin(QM)