BTCUSDT - Shakeouts, Stop Hunt & Algo's🤖

22 Ağu 2022

Hi Traders, Investors and Speculators 📉📈

Ev here. Why follow me ? Been trading crypto since 2017 and later got into stocks. I have 3 board exams on financial markets and studied economics from a top tier university for a year. Daytime job - Math Teacher.

Let's talk about stop hunt, algorithm trading and why these tow topics are relevant to understand what is currently happening with the price of BTCUSDT.
First, let's explain stop hunting : Stop hunting is a strategy that attempts to force traders out of their positions by driving the price of an asset to a level where many people have chosen to set stop-loss orders. The triggering of many stop losses at once typically creates high volatility and this is often very obvious during the accumulation phase of the Wyckoff Method. In earlier posts, we have established that we are currently trading in the accumulation phase so this is no surprise. The final moments of this phase will attract algorithm trading driven stop hunting , often observed near downtrend lows, where price drops just underneath key support and then triggers a sell-off. This is followed by a recovery wave that lifts the price back above support.

The accumulation phase is where you really get to see fowl play of the big money / institutional money. With today's computing power, a new way of trading has emerged that needs no human oversight - algorithmic trading. This involves creating a strategy/program in code (computer langue) and then the program automatically buys / sells if certain conditions on indicators or charts are met. Stop hunts can also be referred to as shakeouts. Most traders lose money by trading leverage during accumulation phases where algo's are very active.
The good news, is that a bottom for BTCUSD is close and we know that we are moving towards the final stages of the bearish market when the above is observed.

All of the above causes trading in a range, where the price will remain until a market reversal happens / a clear bottom is established. What we look for in terms of a bottom, is covered here:

Final Thoughts 💭
Why am I bullish / long ?
👉 I do not practice leveraged trading during accumulation phase. This means I can't get rect.
👉 Thus, if I buy spot, I have bought close to the bottom. If the price goes down more, I still sleep soundly at night because I didn't loan money or use money that I would have otherwise needed.
👉 Don't be like Bob - Bob waits for the bottom. Then the price starts going up. Bob thinks nah, it'll pullback soon, I'll buy then. Price x2. Bob buys. Price corrects. Bob sells. Price x3 from original position. And so on. It's pointless to try and catch the exact bottom. Instead, dollar cost average if you are not sure about your entry. This means save some of your cash just incase the price goes lower. And ALWAYS use "free" money.



👀A little bit more on the Wyckoff Method and a potential bottom for Bitcoin here:

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(Just drag the chart down if the muted technical indicator at the bottom is taking up empty space.)