Cryptocurrency Trader Blog, Day 3
Our average short price of about 4375 (25 USD at 4280, another 25 USD at 4450) puts our trade in the green for about 7% which is great start for our hypo folio!
The important thing now is NOT to get emotional.
There are two types of emotions people usually feel in these situations. One is that we've made some profit so we should take it before we lose it again (fear of losing). Another is that we've made profit, we made a good decision and now we want to make even more profit so we hold longer (greed).
However, emotional traders aren't known for their proficiency!
Instead, as traders we need to stay as unbiased and rational as possible.
In the rather long 21 minute video (sorry not sorry!) I made today I look at the risk reward ratios of a potential new short position at current levels and determine that while it may not be an ideal short entry point (the bulls are defending the golden ratio zone on the daily time frame for this first bounce, long lower wicks on smaller time frames), the odds are still slightly in our favor so we are going to hold onto our short. We calculate that the odds are still in our favor by looking at some likely levels of resistance and support in the short term as well as some R/S levels should the market break our short term levels. Both of them lead to a RR (risk to reward) slightly favoring the bulls.
Had we have shorted a much larger amount, we may consider taking profit. I think however that we are quite comfortable with 5% of our hypofolio in a short position now.
Below is the video detailing the analysis.