Welcome to the weekly edition of the CoinDesk Markets newsletter!
Every Friday we will review our cryptocurrency price predictions posted during the week via CoinDesk Markets Twitter or our private room on StockTwits, the CoinDesk Dojo.
"Trades You Missed" will feature our favorite trade ideas or technical analysis insights that accomplished impressive gains, where as "Trades We Missed" will feature those that took a turn for the worse.
Wins and losses are both part of the trading game, so we hope you will learn how to replicate our successes and minimize losses!
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Focus on Longer Duration Charts
BTC/USD : Price: $10,180 | MCAP: $182.51 | Maximum Gain: +6.54%
Why we were intrigued:
Bitcoin began the week on a positive note with the hourly chart reporting an ascending triangle breakout, a bullish continuation pattern.
However, the longer duration charts were flashing bearish signals. Notably, the weekly chart showed a bearish crossover between the 5- and 10-candle moving averages (MAs), the first since February.
Further, the cryptocurrency fell 10.49 percent last week, reinforcing the bearish view put forward by the repeated failure to end the week above $12,000.
As per technical analysis theory, price patterns on longer duration charts always take precedence over the action on the intraday charts.
Hence, the analyst recommended selling bitcoin near $10,700 for a target of $10,200-$10,000 with stops above $11,000. The sell call was initiated on Aug. 19.
The cryptocurrency set a high of $10,956 on Aug. 20 before hitting our target of $10,000 on Aug. 21.
Looking forward...
BTC has recovered from $9,755 to $10,200 in the last 30 hours. The price rise, however, has taken the shape of a rising wedge pattern on the hourly chart. Further, buying volumes remained low during the price recovery.
Hence, prices could fall back to yesterday's low of $9,755 over the weekend.
The bearish case would weaken if prices rise above the bearish lower high of $10,956 created on Aug. 20. A weekly close (Sunday, UTC) above $12,000 is needed for complete bullish revival.
Read: Bitcoin Increasingly Bearish Despite Price Bounce to $10.2K
The Trade
The Result
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Letting Your Winners Run
MTL/BTC: Price: 4,167 sats | MCAP: 1,999 BTC | Maximum Loss: Nil
Why we were intrigued:
Metal, currently ranked 153 on CoinMarketCap, jumped 8.6 percent on Binance on Aug. 13. The move was backed by biggest single-day buying volume since March 19.
The high-volume price rise strengthened the case for a corrective bounce put forward by the relative strength index's (RSI) recovery from oversold (sub-30) levels. Further, the 5- and 10-day moving averages (MA) bottomed out on the following day.
So, a long call on MTL/BTC was initiated on Aug. 14 on CoinDeskDojo, when the cryptocurrency was trading at 278 sats.
Prices pulled back to 252 sats on Aug. 17 before rising to our target of 340 sats on Aug. 20.
Indeed, the bullish trade idea generated 22 percent profit. However, the number would have been much bigger, as the cryptocurrency rose to a high of 485 sats on Aug. 22.
So, in this case, our analyst is guilty of not letting winning trades run. The target price could have been revised higher or the buy trade could have been initiated again on Aug. 20.
Essentially, we could have made more than 70 percent gains from a single trade.
The Art of Cutting Losers and Letting Winners Run in Crypto Trading
As traders, we want to let our trades that are in the green run as long as the market is willing to provide. That, however, is often counter-intuitive for many people.
From our childhood, we are rewarded for being right, so having a high win rate is more satisfying. That obsession with having a high win rate, however, is what drives traders to take quick profits.
If we take quick losses and allow the winners to run, our win rate might be between 50 to 60 percent. However, we would be making more money on our best trades compared to what we would lose on bad trades.
So, do away with win-rate fixation and let your winners run. Remember, the captain of the Titanic was only wrong once. It is the size of the mistake that matters and not the number.
The Trade
 The Result
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|  We're excited to announce the launch of the CoinDesk Dojo, a premium subscription part of StockTwits' recently announced Premium Rooms product. Ask the analysts—Omkar, Sam and Seb—questions about charts and talk with other traders looking to profit off the volatility of the crypto markets. Create an account on StockTwits and then subscribe! Subscribe Here |
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| Disclaimer: The information presented in this message is intended as a news item that provides a brief summary of various events and developments that affect, or that might in the future affect, the value of one or more of the cryptocurrencies described above. The information contained in this message, and any information liked through the items contained herein, is not intended to provide sufficient information to form the basis for an investment decision. The information presented herein is accurate only as of its date, and it was not prepared by a research analyst or other investment professional. You should seek additional information regarding the merits and risks of investing in any cryptocurrency before deciding to purchase or sell any such instruments. |
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