If your first trading and or investing experience is in a bull market you probably think you are a Big Fish. The reality is that you may be a Big fish in a small pond, but in the real world your most likely Chum. There is nothing wrong with being a Small Fish as long as you are a Strong Fish. Why?
Well it is more important that you understand where you are in the food chain and act appropriately. We all see those guys that act like “The Big Fish”. How do you tell? They put on Big Positions, and act like a whale, but do not have whale money. You know that guy with $1000 that sits down at the 5-10 table and acts big, but after getting knocked out has to walk over to the ATM and then sits down at the 1-2 table, two weeks later the repossess his car.
Whether it is trading, investing, poker, owning a business or relationships it is more important that you realize where you are in the food chain than trying to be a Big Fish. As Ponds get bigger it attracts the Bigger Fish. Bitcoin is no longer under the radar and is becoming more of an asset similar to gold. This has attracted the really Big Fish like the endowment funds of Yale, Harvard, and MIT’s. Why is this important? Ahhhhh they do not invest the same way fish do, they swim through the oceans of markets, just sucking in all the Big Fish from small ponds. If they are in the crypto ocean, I guarantee you there are others just lurking in the depths.
How Whales Buy:
They are not trading 5-10-100 bitcoin they are buyers of thousands for the long term. They do not walk to the ATM’, they reach in their pocket and reload. Understanding how they invest is more important than being a Fibonacci or chart expert. Whales need lots of fish to survive, one fish is just not enough. Since these markets are not very liquid, and there is no centralized exchange, Bitcoin is spread out among numerous exchanges. This means they have to be creative to accumulate.
Just look at the order book. Full of 0.0001 0.0002 0.001 orders and then an order for 150 at key levels. This is likely a sign that the exchanges are creating the action in between real orders not buyers and seller. Shallow trading, low liquidity someone has to create the action. The low liquidity requires a large buyer to school all the Big Fishes into the buffet zone so they can fill their orders.
Manipulation: (for lack of a better word)
How do they do this? Quite simple, manufacture trades. Killer whales generally have one whale which is visible while the others lay in hiding. This market is no different, they only show what they want you to see, such as a sell wall, not what they don’t want you to see, such as hidden buy orders. It is what is not visible that is most important. The school of fish see this whale and start shorting or selling which is no different than swimming right into the buffet zone. So how do we spot this?
Support has been solid between 5800 and 6000 regardless of what the herd has been posting. This is indicative of whales buying here not selling. They do not get scared they are willing to jump in. They are not buying or selling at Fibonacci levels, triangles, or Elliot Waves (EW), they are buying into weakness at a good price for the LONG TERM. They do not mind sitting on coins for years or even decades, this is what makes a strong hand. Goes lower, like a fat cat at the poker table they pull out a few more Benjamins and reload. A weak player walks over to the ATM.
Further evidence? Well there is further evidence as well, see if you can spot it. NOPE no sense in looking at Fibb, flying bats, triangles or EW.
Now we cannot play poker or the markets like whales, but we can play like strong fish, and in the end that is all that really matters. If you want to be a strong fish you have to play strong hands and not be worried about short term losses. In simple terms do not play the game with more money than you are willing to lose. Take the emotions out of trading and investing and moreover do not worry about the short term.
Do you think the Yale endowment fund cares if Bitcoin’ goes to 5k? As Marc mentioned in his article, you do not have to be smart or a chart expert to be a strong hand, you simply need to be able to invest money you do not mind losing. Just like that cat at the table who does not mind calling you with mid pair, what makes him a strong player, is he is NOT scared of losing!
You do not need to be a Fib expert or other type indicator expert to look at the chart and go “Yep 6000 is as good of as any place to buy some, let’s throw a few bones in here”. Putting a Buy Limit order in at 6100. The risk was set, and the emotions was taking out of the trade. One can still sleep at night even if the market falls to 4k. Meanwhile traders looking to make a killing see continued portfolio erosion from being in and out of the market constantly gambling. They show emotions during selloffs, get scared, sell out blame the whales. Whether it is 3 weeks 3 months or 3 years, this market tends to move higher, hence care less about paper losses. That is how money is really made in the long term, not trading daily for home runs.
Wild Bill Indicator:
If you believe the market moves higher in the long term, and have the discretionary money to play the game, what is wrong with buying here? I bought at 6100 and if it goes to 5800 5400 or 4k I do not care. I simply will hold for the long term. Actually I will buy into those levels. I want to see those levels, I hope all the FUD results in a further selloff. You think hedge funds are not hoping the herd sells into their hidden buy orders? I do too! I have money just itching to come into the market because I am not just trading to trade.
The next close and subsequent move of the next daily candle will provide further clues as to whether this was just a bear trap or we see a continuation move lower. Hesitating, going into panic mode, and feeding into the FUD is no different than a school of fish seeing a whale and swimming right into the buffet zone. In reality this was a 5% move lower. Wow! Panic the herd, and call the slaughter house. We still continue to trend sideways in consolidation, and though there is the potential to move lower, we can break out as well.
So in lieu of guessing, which is what everyone is doing here, I added, and will add if we go lower. Time is becoming a factor and the more time that passes where Bitcoin’ does not move lower, it is more likely to move higher. Case in point AMD’, look at the sideways action, the flush out of weak hands and the subsequent rally. Hmmmm How many wish they bought at 12 or even 15 let alone 8. If you threw a couple hundred bucks in at each of those levels, being a strong hand paid off. If you went all in at 12 and it dropped to 8 you likely cut out because you are weak and scared.
Be A Strong Fish:
As Marc mentioned, if your entire investment funds are 5k, putting 5k at risk makes you a weak hand. Putting $300 at risk makes you strong. You do not mind seeing $300 go to $200 in the near term, but 5k going to 3k you may have trouble sleeping. Ask yourself are you a Strong Fish or simply Chum? The way you sleep at night is the determining factor!
If you want to become a strong fish, play like the strong fish do, not like chum. Risk no more than you are willing to lose in its entirety, this makes you a strong fish, and it is more important to be a strong fish than act like a big one. Big fish, no matter how big they are become chum, strong fish no matter how small are the ones who make money. This is why we have maintained our Long Position in the Long Term.
By goldbug1 a full time bitcoin trader