"MATIC" Polygon growth potentialHello guys.
hope you are good
today im going to explain a few about the reasons MATIC skyrocketing these days.
i look this happenings in 2 sides:
first Fundamental News
and second Technically.
lets go...
"On Monday, deltaDAO, a data economy solutions company, launched its Gaia-X Web3 Ecosystem network upgrade based on Polygon Supernet.
The Polygon team said the collaboration brings the blockchain at the heart of European data economy.
The partnership enables a global trustless data economy where users are in full control of their data, it added
Antoni Martin, co-founder of Polygon, said the partnership will help provide an open and federated data economy for the European digital ecosystem.
Earlier, Wall Street bank JP Morgan said it successfully executed a trade using the Polygon blockchain network.
This came as a big boost to the Polygon community as it led to MATIC price rise.
Similarly, another major collaboration news came in the form of Instagram with Meta saying it will be using Polygon for its first NFT marketplace. "
Sooo excellent reasons exist for this rally.
now lets see it technically...
the price action breackout a long side move from JULY and surpass the 200MA.
and break the important 1$ resistance.
asnd when we add 55EMA to the chart we see a nice GOLDEN CROSS.
what a nice situation...
lets imagine its just a step of correction so we have C wave in play with at least 78.6% fibonacci level target 1.76$.
and maybe 100% level on 2.6$!
BUT...
be careful if bitcoin come back below 20000 , maybe we see a pullback to 200MA and price 1$ or 0.97$
and after that again it starts.
and in the end
all of this analyze is my personal opinion and you shuold DYOR (Do Your Own Research).
so i use I THINK already :)
dont forget to manage your capital and risks.
and dont forget we play in a VERY RISKY market
so ALL THINGS POSSIBLE...
i hope success for all of you my dear friends.
Capitalmanagement
BTC/USDTBINANCE:BTCUSDT
As expected the price after hitting the level of 0.786
It started to climb and managed to break the roof of its canal
And it has grown well without reform, but now the process needs reform
Has to be able to be directed upwards with more power
XRP AnanlysisBINANCE:XRPUSDT
In the chart is an ideal pattern of head and shoulders that show
The donor is that the price can go up to the channel ceiling
But if you pay attention to the last microwave, you can see the joys that have formed
See that going back up and this indicates weakness
Be sure to try to open a deal in the process
Use capital management and risk management
We make losing trades profitable. Martingale + Position Trading.The graph shows, by the example of BTC / USD, the combined 2 money management strategies for taking high profits with minimal risk. And for all the trading time, only 4 transactions were made, including the loss-making one, almost 2 times more expensive than the minimum price!
I showed a specially bad option when a person could not or did not want to exit Stop Loss and suffered tremendous losses. The price of the first purchase is almost two times more expensive than the minimum values! This is in order to show the high efficiency of this symbiosis of work. And how to pull even the most hopeless unprofitable transaction into profit.
There is a similar work on altcoins, but there are some peculiarities. On the one hand, they are easier to work and many times faster, but there are nuances. There will be free time I will make an article.
Let's say the first purchase of BTC was at a price of $ 6400 per coin at the bottom, which turned out to be not a bottom at all. Let's say that you didn’t get out on Stop Loos, or you had a coin in a cold wallet. And of course, during the dump, the input / output on the top exchanges was closed and you could not transfer coins to sell. When the exchange opened coin input, you no longer wanted to sell at a loss of -30% or so. What to do in such a situation? If you are still a bad trader and can not cover the losses due to the skill of work within the day.
In such a sad situation, the Martingale money management method will help you.
Martingale with proper operation will take out losses and help to gain a position at averaged reasonable prices.
A straightforward positional trading , about which I have already made a teaching idea, will help you get profit at average high prices when the trend changes to an upward one.
The main thing in this matter is understanding of work and patience. Also, you don’t have to stare at the charts every day.
Due to the entry with a volume 2 times larger than the losing trade, we get profit. The most important purchase of even 2 BTC was at a potential price bottom, from which a trend reversal could take place. It is important to buy not on support, but when it is confirmed.
As a rule, 2-3 purchases are made before a trend reversal. In no case should there be more.
Note that in the purchases and sales that I showed on the chart there are no lows and highs. The position was exited by breaking the uptrend line and fixing the price below it at a bitcoin price of $ 10,000, and the maximum price in this trend was $ 13,888! Coin purchases were also far from the minimum values. And the first is almost 2 times more expensive than the minimum price of a downtrend! Minimum prices and maximum prices let us leave the hamsters. We need to get real profit in real money with minimal risk.
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To summarize the example of work in numbers:
1 losing trade purchase of 1 BTC ($ 6400)
Spent $ 6400
Work - MARTINGALE
2 purchase 2 BTC ($ 3900)
Spent $ 7800
3 purchase 3 BTC ($ 3,500)
Spent $ 10500
Total Average Position 6 BTC
No loss comes at a price of $ 4100 for 1 BTC
Spent $ 24,700
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Work - Position Trading.
We have 6 BTC with an average average purchase of $ 4100 for a total of $ 24,700
A long sideways movement begins.
We are waiting for its change to an uptrend.
We hold a position in an uptrend.
Stop Loss under the uptrend line if there is no way to control the position every day.
We exit the Stop Loss or market position when an uptrend line breaks through and the price fixes below it.
The important thing is not breaking through itself, as there may be a false breakthrough, namely, fixing the price below the trend line.
In this example, the position was exited when the uptrend line was broken and the price fixed below it at a price of $ 10,000 . Once again, I recall that the maximum price in this trend was $ 13888! The sale was very far from the highs, but for that with a confirmed trend change. And even with these values, the profit was:
6 BTC at a price of $ 10,000 = $ 60,000 - $ 24,700 = $ 35,300 net profit, with the initial loss-making transaction, it is almost 2 times more expensive from the lows of the trend!
And the most paradoxical, for all this time only 4 transactions were completed along with the first unprofitable !!!
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I will describe in more detail these 2 methods of money management. Let's start with MARTINGALE.
Martingale - is a bet management system discovered by French mathematician Paul Pierre Levy in the 18th century.
According to the Martingale money management method, the new entry point should be exactly two times larger in volume than the previous losing trade. This is done so that the minimum price movement in your favor covers previously unprofitable transactions due to the accumulated large volume at lower prices. This is all achieved through math and volume increase when the price moves against you. But not everything is so smooth, we will consider all the shortcomings and dangers of this method in this article.
Not everything is so smooth, it is very important that there are a limited number of unprofitable transactions. After all, all losing trades in order to get profit must be covered with double volume or at least a large percentage of entry. It all depends on the consistent number of losing trades. The longer this sequence, the higher the likelihood that the deposit will not withstand the load and the remaining funds may not be enough to maintain another position in the market. The whole effectiveness of this method lies in the correct entry points and the right tool selection.
Using Martingale can increase your chances of making a profit. But if you do not own dimensionless capital, then you will certainly encounter a situation where a series of losing trades at an accelerated pace will take its lion's share. Therefore, in order to protect yourself, determine for yourself the share of your trading capital that you can use for each next series and the limit of losses that you may incur. If you reach this threshold, then trading should be stopped. In this case, you will have to admit defeat, but in the alternative you will only lose the previously set amount and protect the rest of the funds.
Initially, you need to choose the right tool, weak tools that forever in a downtrend without kickbacks are not suitable here. The tool chart can tell you whether this depot management method is suitable for this tool or not. The use of Martingale on trading instruments in an eternal downtrend is a direct way to zero the deposit. Coins are candidates for delisting, or abandoned without active developers in the social. networks and without the presence of a major player similarly - the way to drain the deposit. You can use this method to control an unmeasured amount of unnecessary program code. The delist of the coin is from the exchange, and you will have unnecessary program code for anyone that will always remind you of your stupidity.
It matters a lot where you enter the deal . Do not catch falling knives, do not try to buy at the lowest possible price, it is important to buy at those levels where the price stops, where there is a reversal potential. A doubled position or tripled when the price moves is much lower than the initial entry will make a big profit. At the same time, chaotic entrances to the transaction when the price goes against you, without understanding what is happening and why the bistro will empty your deposit.
It is also very important to have an initially large deposit that would withstand a drawdown and a double purchase volume.
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Benefits of money management using the Martingale method.
1) It is possible with the right choice of instrument to significantly disperse the deposit.
2) Very often, you make a purchase at the lowest prices or close to the minimum values. This is achieved due to the fact that when the price goes against you, you should buy lower, and with a high degree of probability one of the purchases will be the minimum value of the trend. The main thing is that the deposit does not run dry until this moment.
3) With the help of Martingale, sometimes you can pull out at a loss, or even in a plus, it would seem a hopeless position with the help of an additional asset with an increased volume from the first entry. And when the price moves in our favor, we can exit with the entire volume of one transaction and thereby close the losing trade. By other methods, we had to wait a long time for a certain price, or to make a lot of positive transactions in order to cover losses.
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Disadvantages of money management using the Martingale method.
1) Martingale's capital management method, especially its classic version, assumes a sufficiently large deposit that will be able to withstand a large minus in open positions and will allow opening new positions with an increased volume.
2) The effectiveness of the Martingale method directly depends on your trading strategy in which it is applied. If the strategy has low efficiency or is completely unprofitable, then this method will only aggravate it.
3) A high proportion of the probability of a deposit being leaked if the trading instruments are chosen incorrectly. The Martingale method has an increased level of risk. If the classical rules of money management allow a risk of 3-5% of the deposit, then the riskiness of strategies with Martingale is about 60%.
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I would like to add that martingale is often used (almost always) on viola when recruiting a large position, only in a modified form. This is still more of a “market maker” strategy, but one of the components of the work is martingale. With each new entrance, loading a glass with a dialed position.
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Position trading.
Position Trading Rules:
1) A signal to enter a position is the beginning of a trend on a large timeframe (with a timeframe of 1 day or 1 week).
2) Exit from the transaction is carried out only if there are sufficient grounds for the end of the trend (trend change).
Positional trading is suitable for those who have already traded an impressive depot and are already tired of staring at the monitor and burning their time, spoiling their eyesight. For those who no longer get high from the excitement of management and so on. Because a large depot can in most cases be dispersed only by such methods. A person must have iron patience and an understanding of the market cycles. Because profits need to wait a long time. As you can see from the graph, for example, only one trend can last up to a year.
Positional trading is the work on the trend on a long-term basis, on charts covering a large time scale. For its implementation, fundamental and technical analysis is often used. Position trading is suitable for all types of markets: cryptocurrencies, stocks, goods, Forex.
In other words, position trading refers to a relatively long-term holding of a position in the direction of a global trend.
Thus, position trading is an independent style, significantly different from others. Market participants can use this approach to hold short-term and long-term positions.
Maintaining a position in the trend, and not work on small weekly fluctuations. This is the main difference from swing, which involves working on the basis of market cycles of several days. In positional trading, you can hold a trade for months or even a year or more (Dow Jones index), it all depends on the trend.
Coins for positional trading are selected very carefully, they must be reliable, be closer to TOP or be this top as an example of Litecoin. There should be a real development of the project in the long term, with a strong team that really does something, and not only has a promise legend. It is very important that the coin you choose for positional trading be highly liquid.
You can work (or rather need) as in long and short. In any direction the price you earn.
Only the large time frame is important, we do not pay attention to small price fluctuations.
The purchase / sale of an asset is made only upon confirmation of a change in trend.
No hai and loy! Minimum prices and maximums will be left for hamsters.
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The advantages of positional trading.
1) Does not take into account small price changes, that is, does not require constant monitoring of the situation.
2) There is no need to be near the computer all the time. In positional strategy, the most important thing is a deep and thorough analysis, on the basis of which a further decision is made.
3) An open position simply needs to be monitored if there is a situation that can change the position or price.
Positional trading strategy is an analysis of daily, weekly and monthly timeframes; holding an open position for at least a few days to several months.
In simple terms, positional trading is a meaningful and balanced entry into a transaction based on holding a position in a trend.
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The disadvantages of positional trading.
1) a long expectation of results that can actually be measured only after months or years;
2) high responsibility for each forecast and analysis, since it can take many days and weeks to hold the wrong position;
3) slow progress in trading (holding positions is good if the trader already has experience, but you won’t be able to gain it quickly by opening deals once a year);
4) the need for significant investment (you can get a tangible income from position trading only if you have a decent amount of money in the account).
As a result, holding a position in certain cases is a significant advantage for an experienced trader, but fatal for beginner speculators.
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Also in positional trading, I made a training idea on examples of the LTC / BTC pair. bidding and everything described there is relevant for working now on a coin.
EDUCATION LTC / BTC Positional trend trading in the channel with a step of 190%.
Also in the fixed ideas under the description of this, all my teaching ideas are published here on Tradingview.
Pyramiding money management. 2 part. Short LTC/USD This is the second part of the training material on the method of capital management - pyramiding or scaling as it is also called. Let me remind you once again in the first part of working long with an uptrend, we earned $ 20,000 - $ 52,000 time.
Read more about the process of working in long in this trading idea: Pyramiding How to earn 52000 with a risk of 5% from 20000 1part
After the breakthrough of the upward channel and exit from a long position, a downtrend and a downtrend are formed for us on the LTC / USD pair.
Here is my idea for June before breaking through the rising channel.
LTC / USD June
The trend is broken. A downtrend and a downtrend formed. Here is my trading idea for August:
SHORT LTC uptrend is broken. Trading in the downward channel.
LTC / USD August
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Let's go back to our example of LTC / USD money management by pyramiding in a downward channel. When working long in an uptrend, we earned $ 52,000 on this coin from an initial deposit of $ 20,000 . Round up to $ 50,000.
Divide the amount into 3 parts of the entrance. A less risky entry point is the first, like a coin at the beginning of its downtrend and a big profit from the uptrend. Therefore, the first purchase will be a large amount.
First purchase - $ 30,000
Second purchase - $ 10,000
Third purchase - $ 10,000
Stop loss is always 5% and moves behind the price of a downtrend. Stop loss should always be behind the downtrend line. (outside the upper boundary of the downward channel). Breaking it will mean a potential change in trend.
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As a result of currently open trading deals, we have a profit:
1 purchase for $ 30,000 + 42% = $ 42,600 (net profit $ 12,600)
2 purchase for $ 10,000 + 19% = $ 11,900 (net profit of $ 1900)
3 purchase for $ 10,000 + 0% = as soon as we opened a deal (there is now an option to break the downtrend).
The risk is always 5%
The total net profit of work in the downward channel is currently + $ 14,500
$ 6,400 total position
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If all 3 sales target work out as planned, then the potential from the entry point:
1 purchase - $ 53400 (net profit of $ 23,400).
2 purchase - $ 17,000 (net profit of $ 7,000).
3 purchase - $ 16,200 (net profit of $ 6,200).
Total short profit: $ 86,600 (net profit $ 36,600).
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If we take into account the work in an uptrend that we started with $ 20,000, then the net profit is $ 66,600 and this is on the same coin with a 5% risk and during this period we will only make 8 transactions. This is not fantasy, this is reality. I worked like this for more than a year on the ETH / USD pair in the downstream channel, all the ideas and work in the channel were published in my chat, also partially had ideas here, for example this one for December 2018 I complicated the work a little, but I increased my profits several times, I worked from trending channels. Also, most of the trading transactions were made from the trend lines of the internal channel.
This trading idea for December 2018, but I started trading this downward channel from March 2018.
ETH / USD
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Money management by pyramiding or scaling.
The pyramiding method of money management (scaling) today is very popular among traders with experience. The essence of this method is the sequential opening of several transactions on the trend. We increase our position as profit grows, not loss.
Pyramiding method of money management is perfectly combined with a positional trading strategy. Also, this method increases the deposit well when a trader trades in upward (long work) and downward channels (short work).
Pyramid trading is a strategy that involves adding a new position to an existing profitable position. In other words, these are purchases or sales in order to add to an existing position, after the market has developed movement in a profitable direction for you. You are increasing your position. At the same time, the size of each next transaction may change taking into account the result of the previous one, that is, the position increases when you make a profit in the previous transaction to increase the deposit at a faster pace or after receiving a loss to accelerate the exit from the drawdown.
This is the main advantage of using pyramiding in trading. If you did everything right, then do not expose your trading capital to additional risk. In fact, you reduce risk as the market moves in a profitable direction for you. The main thing is to correctly determine the trend and "sit" on it. The most difficult moment is to determine the beginning of a trend.
On a bull trend it is better to always work on the bull side; on a bearish trend , on a bearish side. Always follow the trend!
However, just as pyramiding can be profitable, it can also be dangerous if used improperly. The main thing is to determine the trend correctly.
Many experienced traders consider this method the only possible way to quickly disperse the "deposit". One well-defined trend lasting only 1-2 weeks can double, triple the deposit with the right approach. Moreover, the risk is only 2% -5%.
It is very important, do not confuse averaging and pyramiding, since these two approaches are completely different. Averaging occurs when the price goes against our position. And pyramiding is the other way around when the price is in your favor.
Pyramiding allows you to achieve a super effective profit / risk ratio by transferring stop loss as the trend moves in your favor.
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How to carry out a set of positions according to the trend, when to enter.
Another important issue in pyramiding is: when do you actually enter a deal, gain a position more? The answer to this question can be divided into several approaches. Each of them has its pros and cons and in different situations will give different results. Just who is comfortable and who is more used to what they trade.
Entrance to the transaction during the construction of the "pyramid":
1) On kickbacks.
2) On signs of continued movement. For example, it can be a powerful volume entry or a hammer candlestick pattern.
3) During the breakdown of important levels.
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How to use stop loss when building a "pyramid".
Naturally, with pyramiding, stop loss is used. It is recommended to use a separate stop for each entry (to buy the position). As the trend develops, it should be pulled up.
For example, I use 2 stop loss. Regardless of how much I had as the trend of inputs on kickbacks grew. The first is the top, which is about 30% of the entire position. As a rule, it is equivalent to the stop loss level of the last entry (buy by trend). The second is 70% of the position, this is when the trend breaks. Both stop losses are tightened as the trend grows.
It is logical to use stop loss outside of some important levels. The trader as a whole should decide on the overall risk that he is ready to bear. For example, it is 3% -5%. Therefore, it is necessary to calculate the following positions in such a way that, taking into account the profit of the previous steps, compensate for the loss of the subsequent ones and keep within 3% -5%.
You need to understand that with the correct determination of the trend, and the correct scaling of the pyramid, a loss of 3-5% is purely arbitrary, as long as you have a stop knocked out, you can already double or triple the total profit. The main thing with the price increase is not to forget to tighten the stop loss. And so put so that they are not knocked ahead of time. As a rule, I go out when stop loss is touched, just two, as the first one can knock out, and the price can go up further.
It is also worth adding that sometimes on some coins due to their volatility , their feet are knocked out by 5%, so that this does not happen, the size of the stop is not so important as the moment of entry.
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Profit taking.
How to take profit when managing money using the pyramid method? There are several different methods of closing positions:
1) According to the planned profit. For example, you planned to take profit + 100% from this tool. You have reached your take profit. We left the position, took profit and forgot about this tool.
2) With a slowdown in profit growth. For example, you have already doubled the profit on this trend and this is quite enough for you. The trend has moved in a lateral movement, profit is not growing, or growing slowly. It is more advisable for you to close this profitable deal and transfer the profit to the trend that is emerging, thereby building a new "pyramid" on a more rapidly growing trend.
3) At the first sign of a trend reversal. Not breaking through important resistance levels, reversal patterns, breaking the trend line .
4) By tightening stop loss. Knocked out stop loss. Depending on which stop loss ordering technique you use, either single or fractional for each entry separately. Stopped, took profits and forgot about this trading tool. They began to search for a new instrument with a good entry point at the stage of trend emergence. Started the construction of a new "pyramid".
In my opinion, a reasonable solution is to partially take profit at some maximum levels with the trend growing. I am also part of the position about 30% aggressively trading increasing the asset. An important point at local maximums I sell these 30% almost completely, I already shop a large amount of assets from the support if I trade in an uptrend. As the trend progresses, I constantly pull up the lower stop loss (main position). 70% of the position is exited when the trend unfolds completely.
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Benefits of money management by pyramiding or scaling.
Pyramiding works well with strong steady trend movements.
The advantages of pyramiding:
1) the bistro is increasing the deposit.
2) minimal risks, and with the development of a trend, there are no risks.
3) psychologically comfortable trading due to the absence of great risks.
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Disadvantages of money management by pyramiding or scaling.
As you already understood, pyramiding works well in the trending market. If the market turns into a flat or a trend movement is accompanied by deep pullbacks, then the pyramid can be destroyed very quickly. On few liquid, weak instruments, this method does not work! On cryptocurrencies, this method only works on TOP. Coins such as BTC , LTC, ETH.
This method does not work:
1) In lateral flat movement.
2) With a weak trend.
3) In a trend with deep pullbacks, in which there will be uncertainty about further movement and they will knock out stops.
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We all heard the well-known trade axiom: reduce your losses, and give the opportunity for profit to grow. This is the aspect of money management in your trading system that issues major winners. Money management throws aside the subjective sensations present in people.
Richard Dennis
Pyramiding How to earn 52000 with a risk of 5% from 10000 1partPyramiding. How to earn $ 52,000 with a risk of 5% from 10,000 1 part. LTC/USD Jobs in Long.
Money management by pyramiding or scaling.
When building a "Pyramid" from money using the pyramid method - your foundation of the pyramid is knowledge and experience.
One of the main features of this method is minimal risks with high rates of income.
In let's look at an example on the chart. LTC is a strong uptrend. Entering a transaction is not from the bottom of the price itself, but when the trend is confirmed. Trading only according to the trend, exit of the price for trend aisles - means exit from the position. Stop loss is always 5% below the uptrend line that you are trading. As the price rises, the stop loss pulls up. This is very similar to positional trading. But unlike position trading, you buy an asset as the trend develops, thereby increasing the position.
From the example, we see that $ 20,000 is allocated for the coin. They are broken into at least 3 parts. 1 entry is the largest at the beginning of the trend-$ 10,000. The next 2 entries as the uptrend develops for $ 5,000. Risk is absolutely always observed 5% of the position. Breaking the uptrend line means a complete exit from the long market position. If you are not sure that the trend has finally reversed, you can exit part of the position.
In this example, the profit was $ 52,000 + $ 32,000 net. I also want to emphasize, we did not buy at the very lowest prices and did not sell at the very peak of the price, 2 transactions were done quite already at an expensive price. The main thing is to follow the plan, understand what you are doing and what is happening. It is necessary to kill the “herd instinct” in oneself, try to buy the cheaper, sell the more expensive, buy for good luck, work without a strategy and plan. You work like everyone else - it will be like everyone else - nothing!
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Pyramid mechanics in numbers.
The amount allocated for this coin is $ 20,000. Broken into 3 parts $ 10,000, $ 5,000, $ 5,000.
Profit from purchase №1 of $ 10,000 + 225% = $ 32,500 (net $ 22,500).
Profit from purchase №2 5000 $ + 145% = $ 12,250 (net $ 7250).
Profit from purchase No. 3 of $ 5000 + 45% = $ 7250 (net $ 2250).
Total profit for all 3 purchases $ 52,000
Net profit $ 52,000-$ 20,000 = $ 32,000
The risk has always been 5%
Next, I will describe in more detail this method and all the nuances.
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Money management by pyramiding or scaling.
The pyramiding method of money management (scaling) today is very popular among traders with experience. The essence of this method is the sequential opening of several transactions on the trend. We increase our position as profit grows, not loss.
Pyramiding method of money management is perfectly combined with a positional trading strategy. Also, this method increases the deposit well when a trader trades in upward (long work) and downward channels (short work).
Pyramid trading is a strategy that involves adding a new position to an existing profitable position. In other words, these are purchases or sales in order to add to an existing position, after the market has developed movement in a profitable direction for you. You are increasing your position. At the same time, the size of each next transaction may change taking into account the result of the previous one, that is, the position increases when you make a profit in the previous transaction to increase the deposit at a faster pace or after receiving a loss to accelerate the exit from the drawdown.
This is the main advantage of using pyramiding in trading. If you did everything right, then do not expose your trading capital to additional risk. In fact, you reduce risk as the market moves in a profitable direction for you. The main thing is to correctly determine the trend and "sit" on it. The most difficult moment is to determine the beginning of a trend.
On a bull trend it is better to always work on the bull side; on a bearish trend, on a bearish side. Always follow the trend!
However, just as pyramiding can be profitable, it can also be dangerous if used improperly. The main thing is to determine the trend correctly.
Many experienced traders consider this method the only possible way to quickly disperse the "deposit". One well-defined trend lasting only 1-2 weeks can double, triple the deposit with the right approach. Moreover, the risk is only 2% -5%.
It is very important, do not confuse averaging and pyramiding, since these two approaches are completely different. Averaging occurs when the price goes against our position. And pyramiding is the other way around when the price is in your favor.
Pyramiding allows you to achieve a super effective profit / risk ratio by transferring stop loss as the trend moves in your favor.
______________________________________________________
How to carry out a set of positions according to the trend, when to enter.
Another important issue in pyramiding is: when do you actually enter a deal, gain a position more? The answer to this question can be divided into several approaches. Each of them has its pros and cons and in different situations will give different results. Just who is comfortable and who is more used to what they trade.
Entrance to the transaction during the construction of the "pyramid":
1) On kickbacks.
2) On signs of continued movement. For example, it can be a powerful volume entry or a hammer candlestick pattern.
3) During the breakdown of important levels.
___________________________________________
How to use stop loss when building a "pyramid".
Naturally, with pyramiding, stop loss is used. It is recommended to use a separate stop for each entry (to buy the position). As the trend develops, it should be pulled up.
For example, I use 2 stop loss. Regardless of how much I had as the trend of inputs on kickbacks grew. The first is the top, which is about 30% of the entire position. As a rule, it is equivalent to the stop loss level of the last entry (buy by trend). The second is 70% of the position, this is when the trend breaks. Both stop losses are tightened as the trend grows.
It is logical to use stop loss outside of some important levels. The trader as a whole should decide on the overall risk that he is ready to bear. For example, it is 3% -5%. Therefore, it is necessary to calculate the following positions in such a way that, taking into account the profit of the previous steps, compensate for the loss of the subsequent ones and keep within 3% -5%.
You need to understand that with the correct determination of the trend, and the correct scaling of the pyramid, a loss of 3-5% is purely arbitrary, as long as you have a stop knocked out, you can already double or triple the total profit. The main thing with the price increase is not to forget to tighten the stop loss. And so put so that they are not knocked ahead of time. As a rule, I go out when stop loss is touched, just two, as the first one can knock out, and the price can go up further.
It is also worth adding that sometimes on some coins due to their volatility, their feet are knocked out by 5%, so that this does not happen, the size of the stop is not so important as the moment of entry.
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Profit taking.
How to take profit when managing money using the pyramid method? There are several different methods of closing positions:
1) According to the planned profit. For example, you planned to take profit + 100% from this tool. You have reached your take profit. We left the position, took profit and forgot about this tool.
2) With a slowdown in profit growth . For example, you have already doubled the profit on this trend and this is quite enough for you. The trend has moved in a lateral movement, profit is not growing, or growing slowly. It is more advisable for you to close this profitable deal and transfer the profit to the trend that is emerging, thereby building a new "pyramid" on a more rapidly growing trend.
3) At the first sign of a trend reversal. Not breaking through important resistance levels, reversal patterns, breaking the trend line.
4) By tightening stop loss. Knocked out stop loss . Depending on which stop loss ordering technique you use, either single or fractional for each entry separately. Stopped, took profits and forgot about this trading tool. They began to search for a new instrument with a good entry point at the stage of trend emergence. Started the construction of a new "pyramid".
In my opinion, a reasonable solution is to partially take profit at some maximum levels with the trend growing. I am also part of the position about 30% aggressively trading increasing the asset. An important point at local maximums I sell these 30% almost completely, I already shop a large amount of assets from the support if I trade in an uptrend. As the trend progresses, I constantly pull up the lower stop loss (main position). 70% of the position is exited when the trend unfolds completely.
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Benefits of money management by pyramiding or scaling.
Pyramiding works well with strong steady trend movements.
The advantages of pyramiding:
1) the bistro is increasing the deposit.
2) minimal risks, and with the development of a trend, there are no risks.
3) psychologically comfortable trading due to the absence of great risks.
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Disadvantages of money management by pyramiding or scaling.
As you already understood, pyramiding works well in the trending market. If the market turns into a flat or a trend movement is accompanied by deep pullbacks, then the pyramid can be destroyed very quickly. On few liquid, weak instruments, this method does not work! On cryptocurrencies, this method only works on TOP. Coins such as BTC, LTC, ETH.
This method does not work:
1) In lateral flat movement.
2) With a weak trend.
3) In a trend with deep pullbacks, in which there will be uncertainty about further movement and they will knock out stops.
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To be continued...
ETC long positionI have been following ETC for a while and decided to open a new idea that follows my trade. I decided to enter a long position after seeing and following a descending wedge. This, coupled with the news of a hardfork made me feel comfortable with opening a long position. I opened at .013 with a stop loss of .0008. I felt that this was the margin of loss I was willing to work with.
Since the trade opened, ETC has hit TP 1 twice and has fallen below to near purchase price. Using capital management at the TP and since we are still above s/l price, I am keeping the trade active.
