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TrendFollower

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Posts posted by TrendFollower


  1. When adopting trend following principles it is not necessary to trade for the sake of trading. One can simply wait for the right trend or trading opportunity. I like to wait for the 'Strongest Trending Assets' opportunity and if I can identify them as early as possible by watching the price action then I like to try and trade them either 'long' or 'short' depending on the directional movement. 

    One of the problems traders get into is the need to constantly trade when there is simply not a trading opportunity there where the 'odds and probability' are stacked more in your favour. I do not trade daily or weekly. I may only place say ten trades a year and sometimes more or sometimes less but they will be when I think the 'odds and probability' are more in my favour and the chances of success are greater because the trending action on a particular asset is so strong. My trade could last days, weeks or even months but I set no time limit or profit goal. 

    There is nothing complex in my trading strategy, trading style or trading philosophy. It is heavily inspired by and based on historical trend following strategies that are out there and available for all to research. I have not created anything new or invented anything of significance.

    I am merely trying to identify the strongest trending asset with a view to trading it in the direction it is moving in with a chance to profit from that movement. 


  2. Your trading plan should include something different than what everyone else is doing. That uniqueness which gives you an edge over other traders.

    I would like to take this opportunity to quote Sir John Templeton (below):

    If you want to have a better performance than the crowd, you must do things differently from the crowd.

    The trading plan does not need to be complex. In fact the simpler the better. Articulate things in 'Simple', 'Plain' and 'Clear' English. 

    As Warren Buffett once said:

    The business schools reward difficult complex behavior more than simple behavior, but simple behavior is more effective.

     


  3. So the trend is finally weakening for Beyond Meat!

    It was a matter of time. 

    It is trading below its 20, 50 and 100 DMA. For me this is a short as the company is loss making and the valuation is absurd on any metric. 

    1022924042_BeyondMeatInc_20191014_20_01.png.b4f92a50448ffc2a89af57851ca0765f.png

    What a surprise that this is not available for shorting on IG's platform via UK Spread Betting. This is one example of how the odds are stacked against the trader and in favour of the broker. The trader cannot trade 'long' or 'short' when it chooses to do so. It can only do so if IG make that particular function available at a given time and if it does not then that option is not available for the retail trader using their platform. 


  4. Let's just say that Bitcoin now tumbled down to $7k or even $5k. Those who have been following Bitcoin over the past many years have seen such falls constantly. The way Bitcoin operates it would still be capable of making a new all time high from that position. 

    It is not impossible in my view that Bitcoin can be amended, upgraded and improved to make it an even stronger and better asset. If this were to happen and there are some extremely clever minds at work on this then would it not stop Bitcoin crashing to zero?

    This is where an understanding of the underlying technology behind Bitcoin, Blockchain, comes in. I just simply do not see Bitcoin crashing to zero this year or next year. If it does then I will be wrong and I am fine with that. Too many large organisations are now getting involved with Bitcoin who had not say 3 years ago or even 5 years ago. I think many others will join the journey so this Christmas 2019 should be an interesting one.


  5. I have discussed having a 'edge' in your trading system and this has also been discussed by others so I will not go over old ground or repeat this.

    I write a lot of about 'odds and probability' in my threads and posts. I am not a mathematician but understanding that trading requires the acceptance and understanding of odds and probability in my personal opinion is vital.

    For me having a trading edge is simply having the ability to have a higher probability or greater odds of being right over being wrong in a trade. I appreciate it will mean different things to different traders but to me having that something in your trading system which resembles an edge is extremely difficult. Many traders think they have an edge when in fact they do not. Others do not accept that they need an edge. There are those who will never have an edge. 

    It can take many years for a retail investor to get an edge in their trading system. 


  6. I think Bitcoin needs to go above $10k and every day it now remains below $10k given an increase in the chance that the next big move is downwards. This is based on my personal experience, gut feeling and instinct. One needs to see Bitcoin aggressively drive past $10k for there to be this 'big' move some of us are expecting (including me) that will take Bitcoin above its all time high before it comes crashing back down. 


  7. For me, Bitcoin, is a high risk asset to trade. There is no doubt about it. It is not for the feint hearted. You do not have to believe that Bitcoin is good or that it is going to succeed. You are merely looking at profiting from the price movement. If you can be on the right directional side of the trade then this will increase your chances of profiting from the price movement in Bitcoin. In another words, trade Bitcoin using some form of trend following. 

    I want to trade in the direction of the Cryptocurrency market in general. This can be either 'long' or 'short'. This simply gives you an advantage as far as I am concerned. Don't worry about whether the Bitcoin price is absurd or the value of Bitcoin or another of Cryptocurrency for that matter. It may well be over hyped and full of speculative capital but one does not need to get bogged down in those arguments. 

    Now for Bitcoin I tend to use the 'daily' timeframe. This is well documented in most of my threads and posts. That is the timeframe I prefer based on my own trading style but you must make your own decisions based on your own trading styles. 

    The other thing I do is monitor the price action of Bitcoin on a daily basis. I try and live and breathe the asset. That is important so that you are in tune with the asset and the type of news that makes it go up and the type of news that makes it go down. The risk is that Bitcoin can move without any news in either direction which is why it is such a risky asset to trade. Now I use moving averages but these are time lagging indicators so one must understand this. 

    One can complicate trading Bitcoin but I try and keep it simple. By looking at trend lines one can clearly identify the path Bitcoin has the potential of taking. One can then look at breakouts which are strong around these trend lines. There is no guarantee that using such a strategy will result in 100% correct trades but that is not possible regardless of the trading strategy one adopts. I am merely presenting a simple trend following style that one could consider and do more work on themselves to give them a chance of succeeding in trading Bitcoin. 

    Of course there are many ways to skin a cat but this thread is in relation to trading Bitcoin using Trend Following techniques. It is one of many ways in which to trade Bitcoin and you need to make up your own mind which is better for you. This in my opinion will be one of the less complex and more simpler ways to trade Bitcoin.  


  8. Blockchain is being used more and more in supply chain and traceability problems. From the reading I am conducting, Blockchain, is trying to solve these problems and issues.

    It is well documented that there is implementation of Blockchain technology when it comes to the production and movement of Diamonds. De Beers has been instrumental in this area. This can be applied in food, drink and high value items. For food, IBM, has played a leading role. 

    In my opinion there are two key issues that one must consider when looking at applying Blockchain technology to say commodities and its supply chains. One is the need to establish trust amongst different companies that could be anywhere in the world. They may not even speak to the same language and it may be totally different cultures involved when conducting business. The other is to manage securely large amounts of sensitive data. 

    Blockchain can and is being used effectively in both of these areas. Yes it is small and yes it is slow but great things come to those who wait. Patience is required. 

     


  9. Personal View on Bitcoin - At Present (This may well change as time passes)

    The problem I have with Bitcoin is that I can see it making a play towards its all time high based on a historical pattern of halving events and limited supply arguments.

    However, such is the nature of Bitcoin that I can all see it come crashing down also based on historical patterns and lack of appreciation, value and understanding. Speculation is rife in this asset class and for Bitcoin specifically. It is speculation that will drive prices down sharp and quickly. 

    One of the things that would change my mind is if there was serious regulation in the US and UK in relation to Bitcoin and Cryptocurrencies. Another is if India changed its stance on Bitcoin. One important thing could be if the US approved a Bitcoin ETF. These things would change the landscape for Bitcoin to change historical patterns which have played out in a similar fashion. Until this happens I fear we could see similar patterns playing out in the future.

    I think Bitcoin is going to make a play for $20k. I have no idea if it will exceed but it could easily do so. Once we are closer to the halving event then I see large profits being taken and a massive drop coming in Bitcoin because there will be a long time before there is another halving event. The only thing that could change this is if any of the things in the above paragraph in blue happened. If not then I see a major downside move in Bitcoin. 


  10. Some contacts which I have within the Hedge Fund industry highlight to me that one of the most common algorithmic trading strategy that is followed in this industry is following trends using moving averages. They also use channel breakouts, certain price level movements and of course other technical indicators. I try to do something similar. It is one of the easiest and simplest strategies to implement because it does not simply involve making any predictions or forecasts. 

    Trading decisions are based on trends which are more easier to identify and trade and there is no what I call 'predictive analysis'. Don't get me wrong. I use 'assumption modelling' when I am following the price action so this is prior to the trade execution but once I am in the trade then I have no goal or target apart from exiting when the trend reverses or the trade goes against me. I mean there are a few popular trend following strategies such as going long when the price goes above a certain moving average. I mean the famous one is using 50 DMA and 200 DMA's. 

    The point I am trying to make is that if you are struggling to decide upon which is a better trading style for you then it may be worth considering adopting a trend following system and see how you do. If you decide it is not for you then fine. You may decide after trailing such a system that it can work for you with some tweaks in which case you have a trading strategy to build upon as you have found the foundation. 


  11. Trading Size and Risk Management are two important factors to consider and include in your trading plan. When you combine the two you should be in a position to allocate the right amount of capital to your trades based on the level of risk you wish to take. This sounds easy but can be tricky. 

    The one thing you will read is to never put all your capital on one trade. I agree but I also think that if you have a very strong conviction on one of the strongest trending assets which you have identified as early as possible then to maximise your returns you may decide to allocate more capital on that particular trade compared to other trades. I do not think there is anything wrong in that but different text books will have different ideas on this. This is where your risk tolerance and mindset comes in.

    This needs to be articulated in your trading plan in some manner so that it is clear how you will allocate capital to each trade and what the rationale will be. Without this how can one determine trade size on positions we wish to trade?


  12. Soybean Mean seems to be looking like it wants to break out. It is about identifying potential trading opportunities which can become the strongest trending. 

    Now this may not lead to a strong breakout. This potential move may die pretty soon but there is no harm in monitoring the price action in case it is the start of a big move.

    2035028760_SoyabeanMeal_20191011_17_21.png.4641051875259c4aa67a81a64ffe905b.png

     


  13. Even though I personally think Bitcoin is going to increase in value prior to the halving event this is a mere assumption that will need to be tested and confirmed by the price action. A validation of sorts. 

    From a trend perspective, one could argue that:

    • On a 'monthly', 'weekly' and 'daily' basis it is not in an uptrend but a downtrend looking at potentially breaking out into an uptrend but no confirmation as yet. It could easily continue on its longer term downtrend. 

    So for higher risk takers they may anticipate a strong trend action at this juncture going forwards and could go 'long'. Obviously at this stage there is a stronger chance that the trend does not materialise but if right then there would be a great points potential. So it is about risk/reward. Both are great at this time. 

    Or one could wait until key moving averages are crossed and more lower risk trend traders may wish to wait for the moving averages curves to begin sloping upwards. 


  14. The price behaviour of Bitcoin could be described as erratic. I don't think it helps that there is uncertainty around the globe on whether the asset should be a commodity, security or currency. This certainly does not help. Also regulation is slow across the globe too and even this differs depending on the jurisdiction. 

    Until these things are resolved the price of Bitcoin is going to behave erratically and continue with the extreme volatility we have seen. 


  15. @Mercury,

    So historical price action is one part of the information which can go into the 'decision basket'. Another can be news being released both positive and negative. One can also have a 'gut' feeling or 'instinct' on a trade which can also go into the decision basket. You can also make 'assumptions' based on your knowledge and experience and this too can go into the decision basket. This can be used to 'visualise' mentally how you think the future prices could look like. Of course there is no guarantee but when we make a trading decision based on various factors what ever they may be (different traders will have different factors) we are visualising future price action. Whether this visualisation becomes a reality is determined by how the price behaves and ultimately the price action going forwards once the trade is initiated. 

    So to put this into the context of Bitcoin. I have visualised the future price action of Bitcoin as increasing prior to the halving event in 2020. I am making an assumption which the price action is going to test. I am visualising future price action. Elements of this visualisation are based on historical price action. So for example how the price of Bitcoin has reacted to prior to previous halving events. Of course there is absolutely no guarantee that Bitcoin's price will behave the same way prior to the next halving event but trading is based on 'odds and probability' and one could argue that based on the information we have and what we have experienced when it comes to Bitcoin then could be more than likely that Bitcoin could repeat a similar pattern. I don't necessarily think the this is a given but based on the fact that Bitcoin has not crashed or gone $1k or even $2k suggests that there is likely to be another mighty rise before the next mighty fall.


  16. When one makes a plan they are thinking about what they want to do in the future.

    So a trading plan should articulate what a trader wants to achieve in the future. It should clearly highlight what they intend to do to ensure they achieve what they want to. 

    A trading plan will have to include decisions (right or wrong) as it cannot be wishy-washy. The trader must decide upon its trading methodology and the trading plan should clearly show this.

     


  17. Tokenisation is still seen by  some as a FAD or some fraudulent ICO, etc. It is this misunderstanding of what tokenisation really is and how it will benefit both companies and its consumers in the future which is so critical at the moment. 

    Once you open your minds to Blockchain and Tokenisation and put aside the daily Cryptocurrency price fluctuations then you will realise how this area is gaining shape and how it is looking to be implemented. 

    Tokenisation as a Future of Payment Security - Payments Journal

    https://www.paymentsjournal.com/tokenization-as-a-future-of-payment-security/

     


  18. UNICEF have launched a Cryptocurrency fund so those who are bearish and negative against this asset class should really contact UNICEF and warn them!

    UN Children’s agency becomes first UN Organization to hold and make transactions in cryptocurrency

    https://www.unicef.org/press-releases/unicef-launches-cryptocurrency-fund

    I welcome such news (above). Just ask yourself this question, why would they want to hold and make transactions in Cryptocurrencies such as Bitcoin and Ether?


  19. @GodInyou,

    If you are asking if it is good to mine Litecoin then that really depends on you. It can be very costly so how deep are your pockets? Do you have the specialised equipment necessary to mine Litecoin? Do you have access to cheap electricity? Why do you want to mine Litecoin? What is it that has made you think of this?

    The key question is do you think the price of Litecoin is going to continue upwards to make it worth while mining Litecoin at current prices? What if the prices decline?

     


  20. @Mercury,

    I would add that TA is merely a way to visualise 'historical' price action.

    I think for Bitcoin, sentiment is driven by positive or negative news as it is still very difficult to value Bitcoin compared to other more traditional assets. Yes there is a limited supply of 21m and yes it is worth what someone is willing to pay regardless of whether it is worth that much or not. 

    My view is that the 'whales' will buy and drive price up prior to the halving event next year. That is my assumption and the price action will either accept or reject my assumption. The the 'Big Dump' will come where profits are taken and the herd are left nursing losses.

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