This is why we Stop Losses.
Riding high on sequential wins, I continued to study ETHUSD and determined that there was probably one more action up before a big bear move. Ethereum has started forming a wedge on the daily and was at the bottom of a parallel channel on the hourly, so I figured I’d squeeze in one more 3-4% play before reassessing.
This did not go as planned. I set up a buy and $255 and a stop loss at $253 for the first buy. This morning, almost immediately after buying in, the candle wicked down and picked up my Stop Loss order.
But my analysis seemed to be holding, so I called that on overagressive SL order and bought back in again, this time at $252. It ended up that my trend lines were no longer valid and the price collapsed to $250 before I stop lossed out at $248. Oh well. All told I gave back a chunk of this week’s profits but still closed ahead.
Proof I Am Learning.
In the last major bull cycle, I allowed my ego to tell me the market was over by so many times that I ended up shorting early and losing huge amounts of profit. I remembered having read Mr. Anderson on Twitter having written that ego hero shorts the top instead of waiting for the market to showed it was time for a trend change. The Same is true when longing a clearly bearish moment. This time I shelved my ego, reread the charts and instead of sticking to objectively incorrect analyses and started looking for the next move.
That’s when I noticed that a major support had broken on ETHUSD, and that created a gap. Incidentially, the gap that opened up was around $230, which was also a Fibonacci level for the most recent bull move…