You bought at the top and didn’t set proper stops to cut your losses quickly. You are still holding those losses? Congratulations! You are already proving to be tenacious. You didn’t quit at the first difficulties you faced. You will encounter more as a trader. Now, how do you recover; both emotionally and financially? Time.
Begin by working on your patience. Markets are one of the best revealers of character. It will test EVERY button you have. It will keep pressing them until you develop resiliency. Until you can learn where your weak points are and toughen them up, the same mistakes will keep occurring. Remember, becoming an expert trader is a journey.
Take a step back from where you bought. If you obsess over that one spot, you will miss the THOUSANDS of other opportunities the market gives you. As cruel as she can be, she can be equally forgiving. Look at the big picture. Markets move in ebbs and flows. For every peak up, there is a valley down. This is part of that journey. Find the bottom (or at least close to it) and that is where you begin again.
In trading and analyzing for over 21 years, I've learned that a Good Trader is ALWAYS a BAD trader who forgives himself for his mistakes, LEARNS his lessons and tries AGAIN. This is the ONLY way to become good at ANY endeavor. For newbies in Technical Analysis, this should be the greatest take home lesson. Why? You will ultimately bring multiple accounts to zero before gaining the experience to generate consistent profits. Emotional discipline will trump any technique. This is also why those with military combat experience often excel as traders.
To that end, I've learned that there is no happiness to be found in day trading. It doesn't work because the time scope is too short and so leaves little to no tolerance in price variation. This means you've got to be VERY accurate in each trade execution and such tactic is devoid of a de-risking strategy.
(See my Trading Tips for more insight on self-improvement: https://bitcoin.live/blog/trading-tidbits )
Be LONG TERM GREEDY because that allows much better adherence to the longer trends. Most of my trades are weeks to months apart in my Trading portfolio. This wider time scope allows a much greater tolerance in price change and more accurate trend grabs. Once you find the trend, it becomes your friend. Even the simplest 20 day Moving Average technique will outperform just about ANY day trader.
How and what technique one uses to follow this trend is what a Trader/Analyst needs to identify for oneself. Each will have variations of preferences of technique, indicator and their combination. However, this is the easy part!
Back to finding the bottom. Let’s stick with Bitcoin. I use Elliot Waves as my method to trade the market.
Pattern, Elliott Waves and Fractals call for higher highs to the range of $7,400 to $8k. However, I believe there will be a very scary downturn towards the $5,200 to $4,700 region.
The Semi-Log chart shows that the terminal end of this correction is in progress. For me, the BEST time to buy is at such terminal ends of major corrections. One need to be able to pinpoint a precision bottom; because this is where my laddering technique allows me to encompass that bottom region. And that has been a great technique to enter the market for a long term hold that results in MASSIVE profits. Who cares about 24%? Who cares about 50%? I believe BTC in 5 to 9 years will be at unbelievable levels.
There are several candlestick patterns and chart formations that can provide insight for a precise bottom and trend reversal. Tweezer bottoms, hammers, inverse head and shoulders, etc. Another thing to keep in mind is that for every epic bull run, there is an equally disastrous capitulation phase. If you are paying attention, you won’t miss it. The majority of people will be running for the exits. That is where you need to be bullish. ‘Buy when everyone is fearful.’
Once the next bull run takes place, assuming you bought at the bottom it won’t take long to break even. If you invested an equal position at the bottom as you did at the top, you will be neutral at the halfway point. Then it will be profit from that point on.
That is where the next stages of your journey take place. Learning to take profits and understanding where the tops occur. There is so much more to understand about overcoming your mistakes and recovering financially from them. Making mistakes isn’t fatal, it’s part of the growth process.
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