Crypto Portfolio Update (Sep 15 2018)

One should be always thankful for the Stop Losses. They did save me again this time when Bitcoin and other tokens got whacked.  I got stopped out of Bitcoin at 6400 and Bitcoin Cash at 520 as the Stop Losses triggered. (Click here for the previous update from Sep 1)

Since then, I haven’t bought back BTC or BCH though Bitcoin is now back above 6400.  As a result, only XLM is still in the portfolio and rest all is in cash.

I expect another dip this month for BTC and the other cryptos before they consolidate and move up again. I am going to basically wait for that dip to re-enter. I have no entry targets right now for BTC and BCH but when the charts give out signals, I will post my thoughts here and on Twitter / StockTwits.

Click here for the Sep 1 update

Click here for the July 29 update

Click here to learn “Trading Strategies & Risk Management”

 

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Flourish Alerts – today is our First Anniversary!

Hello folks,

I am extremely pleased to report that today (Sep 14, 2018) we are completing one year since the official launch of Flourish Alerts. Many thanks to our supporters and patrons without whom this would not have been possible.

We have had our share of success and failures over the last 12 months but overall, the performance has been generally good to great except for a couple of bad months. As I always say, the focus is not on winning all the trades (which is impossible given the market-risks we face everyday) but on winning a majority of trades and to consistently win more than we lose by adapting proper trading techniques and risk management.

Flourish Alerts is open to new subscribers now. You can find more details here or write to me at: flourish.alerts@gmail.com for details.

Training on Risk Management:

On this wonderful occasion, I am also pleased to announce that the next 2 batches of classes (online, live) for the training program on “Trading Strategies and Risk Management” will be held in October 2018. You can register here for the programs.

In case you would like to learn this program at your own pace, a video-based training curriculum is also available (at a lower price). Please write to me at: flourish.alerts@gmail.com if interested.

At Flourish Alerts, we look forward to another great year. Happy Trading!!

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Trading the Risks

We all know that markets carry high uncertainty & risks. Despite that we are all here to win. However, trading is not about being right all the time but about maximizing your wins, cutting your losses & maximizing your overall returns with 3 things –

(a) Adapting a proper trading strategy

(b) Formulating a trade plan that has the right set-up &  an ideal Risk-Reward element

(c) Exercising discipline with Risk Management techniques

If these 3 basic things are taken care of, you can be a winner. I lose 3 out of 10 trades on an average. But when I win, I win big. When I lose, I lose small. But how? Just by adapting a rule based trading system that covers all the three elements listed above.

If you want to learn more about the system I use or about Trading Strategies or about Risk-Managing your trades, please click here 

 

 

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Top 10 Trading Psychology MYTHS

I found this article very useful – the Top Ten Trading Psychology Myths (by Dr Gary Dayton)

  1. People are born traders. While it is true that certain personal characteristics make it easier to trade, no one is born a trader. One of the main themes of the Market Wizards book written by Jack Schwager is that almost none of the market wizards was successful from the start. They all worked hard at it.
  2. You have to have a high IQ to trade. Just not true. In some ways, an above average IQ may be a hindrance. Trading is a human performance activity where very strong intellectual abilities are unnecessary.
  3. Top traders are successful because they have the “right trading personality.” There is no such thing as the “right trading personality.” Researches have been unable to find a strong correlation between personality type and trading success. It is important, however, to understand your personal characteristics and how they may help and hinder your trading.
  4. Trading is easy. It sure looks that way, doesn’t it? Just draw a few lines on the chart, watch your indicators, and follow the price bars. The truth is that trading is a difficult business to master. It involves different skill sets and abilities from what are needed in most other professions and careers. The trader must understand his or her personal strengths and limitations and develop specific skills to deal with the mental and emotional demands of trading. The later skills are the most difficult to develop and the most overlooked.
  5. You must be tough, hard charging, and fearless to be successful. That’s more media hype than anything else. It glorifies a strong ego, which is a detriment in trading. The most successful traders I know quietly do their research, study the charts, and patiently wait for the right moment. They strive to keep their ego out of their trading.
  6. You must trade without emotions. If you are human, that’s impossible. More importantly, when you understand your emotions you will realize they are assets, not liabilities. The real keys are: 1) to be aware of how your emotions interact with and influence your trading, and 2) to develop the skills needed to trade with them.
  7. Top traders are usually right about the market. Top traders have many, many scratch and losing trades. Top traders are at the top because they exercise good risk control, limit the amount of loss from any given trade, and have developed a psychological edge that allows them to be unfazed by small loosing trades. Most of their trading consists of modest profits and very small losses. When conditions are right, they step up size and let the profitable trades run.
  8. Paper trading is useless-it’s not a real trade without money behind it. If you aren’t paper trading, you are doing yourself a disservice. You should always be paper trading your trading ideas. Why limit your education and experience by the amount of capital you have? Paper trading keeps you sharp; you learn the conditions under which your trading ideas work best. Where else can you get such vital education at so little cost?
  9. Master the technical skills and you will be successful. This is where most traders spend the vast majority of their time, but it’s only part of the picture. You also have to learn important performance skills. Traders should spend as much-if not more-time learning to develop their psychological edge as they do in developing their technical trading edge.
  10. Trading is stressful. It certainly can be stressful, and it certainly is stressful for many. It doesn’t have to be. Successful traders have a certain mind-set. They put little importance on any given trade. Their focus is on the long haul. They know that if they attend to the aspects of trading that are within their control (i.e., trade selection, entry, risk control, and trade management) the profits will take care of themselves.

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Some interesting August charts revisited

Here are a few interesting charts that I had posted on Twitter & StockTwits during early August:

Ripple XRP (Aug 8 chart): And you know where it exactly went!! (below 22 cents)

ChartStorm XRP

Ethereum ETH (Aug 8 chart):  “Expect $100 drop” & ETH dropped 102 to hit a low of 257

ChartStorm ETH.PNG

Bitcoin BTC (Aug 7 chart): Went from 7000 to the “potential 6000” and then bounced. Now waiting to see if it can break above the upper Trend Line Resistance

Chartstorm BTC

Semi-conductors SMH (Aug 7 chart). It is getting close to that trend line Resistance now

ChartStorm SMH

AVGO (Aug 7 chart): Hanging in there. I still have a high conviction on that 160 target

Chartstorm AVGO

TWTR (Aug 8 chart): Bearish as long as it stays below 36.

ChartStorm TWTR

BABA (Aug 8 chart): Did touch the 165-166 support zone as expected and then bounced to 180. Now we can expect another test of 166 if the tariff talks with China end in stalemate.

ChartStorm BABA.PNG

TSLA (Aug 7 chart): Broke above 360 only because of that popular (or notorious?) “Funding Secured” tweet but now it has broken below the 50 WEEK MA and even below $300 (currently down 23% from the post-tweet high of 387).

ChartStorm TSLA

Current forecast for TSLA: Still bearish.. Could test the 265-270 zone very soon (see the Aug 30 chart below) and if the trend line breaks, possibly will go to 220-240 

TSLA Aug 30.PNG

 

 

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Crypto Portfolio Update (as of Sep 1 2018)

Cryptos took a dive in August fueled by doubts if SEC would allow crypto ETFs to become functional. Thankfully, as posted in my July 1 portfolio update, I was determined to manage the risks better this time.. Had a Stop Loss for BTC at 7400, for ETH at 10% and for LTC, XRP and XLM at 20%. All the Stops got triggered except for XLM.

So here is how the portfolio looked like by mid-August, after all those Stop Losses were triggered:

5000 XLM @ 0.20                1,000

Cash                                        13,120

TOTAL                                    14,120          (portfolio down by 9.3% as of mid-August)

My conviction for Aug was that BTC wont go below 5600-5700 in any case. And that one could buy it if it tests below the 6k zone & bounces back above 6300.  Also, Bitcoin Cash (BCH) may be a better buy considering it has more elasticity.

Hence based on the not-so-happy experience with ETH, LTC and XRP, I decided to exclude them from the portfolio and narrow the focus down to just 3 components for the time being: BTC, BCH & XLM.

Patience seemed to have finally paid off as BTC bounced back above 6300 eventually, and my Buy order at 6400 got triggered.  And along with it, the planned BCH Buy order at 520 also got triggered. Meanwhile I also decided to add some more XLM at 22c.

Here is the current status of the portfolio (as of Sep 1, 2018):

Crypto update Sep 1 2018

Now let us wait & see how the month of September plays out for BTC & the other cryptos. Will post some charts in a day or two.

Prior updates:

Click here for the July 29 update

Click here for the July 1 update

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Sunday Musings (it is all about parabola)

I am thinking August  & September months are going to be all about major tech stocks and how the parabolic arc pattern plays out for FANG (not FAANG as I am leaving out AAPL for now). While I do think this pattern is going to push NFLX and FB considerably down, I am not so sure about GOOG and AMZN. They also certainly fit the pattern but might not have topped yet in my opinion.

What goes up must come down: Parabolic arc is a reliable reversal pattern but when a stock has gone parabolically bullish, it is extremely hard for any one to predict its top and bid on a reversal. However, once the price breaks below the arc, the stock can typically retrace 50 to 80% of the gains it made on its parabolic run. This pattern is generally rare but currently, especially after the 9 year bull run in the markets, we may be seeing many instances / stocks where this pattern may be playing out.

Before we get into FANG, let us see how this interesting pattern has played out in the past in respect of a few stocks & cryptos.

Bitcoin (BTC) – a recent break of the parabolic run after hitting close to 20,000. It dropped 70% from the highs

Parabola BTC

Ethereum (ETH) – a recent break of the arc and a very big reversal. In just under a month, it lost 83% of the gains it made between Dec 2017 & Jan 2018

Parabola ETH.PNG

And here is the parabola break forecast I posted on Jan 10, 2018 before that fall in ETH:

Ethereum Jan 10 2018

Nectar Therapeutics (NKTR) – another great example of parabola arc reversal. Retraced 77% of the bullish wave

Parabola NKTR

Qualcomm (QCOM) – the 1999-2000 classic parabolic run and bust

parabola QCOM.PNG

That explains it. Parabolic arc patterns are rare but can certainly lead to major reversals, after exhaustion of the run. Now let us see where we are with FANG stocks currently:

NFLX – this is a Forecast chart that I posted before the recent fall in NFLX (on Twitter & StockTwits on 7/13). My forecast was for the price to break below the arc after topping in the 400 – 450 zone. Now that the arc is definitively broken, I am expecting a further drop (retracement of at least 50% of the gains from the parabolic wave).

NFLX July 13.PNG

FB – here, the arc is most certainly going to break. A drop below 170 would confirm it. Looking now to test that support at 115 (minimum target) if 168-170 breaks this time.

Parabola FB.PNG

AMZN – this is the toughest one and I am always scared to short AMZN but certainly this fits into the parabolic pattern. It could break the arc around 1775 (OR) it could run a little more, may be to 2100-2200 and then drop to break the arc. At this time, I am not sure if last week’s ER was a good enough catalyst for the break. Gutsy bears are going to win eventually, sooner or later. (I posted this chart on Twitter & StockTwits on 7/27)

AMZN July 27 2018

GOOG – another one, but I think it is not yet ripe for a break. Some more steam may be left before it becomes a victim of the pattern.

Parabola GOOG

SPY – And finally, I have for you, the SPY chart. Tough one again – the reversal might happen right now or after a jump to the 310-320 zone but when it happens, 180 might very well come into the picture.

Parabola SPY.PNG

Let me not say all these reversals are bound to happen but based on the past, I would say these reversals are “very likely”.

So folks, what do you think? Would appreciate your comments.

Happy Trading!

 

 

 

 

 

 

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