So, you see BTC hit $100,000, and you’re considering buying some?
Here’s what I’d do:
- Risk a fixed amount, say $100.
- Look at the 1D chart: the 2-week low is $90,700. Let’s use $90,000 as the stop-loss for easier calculations:
$100 / ($100,000 - $90,000) = 0.01.
- So, I’d buy 0.01 BTC.
My reasoning for this trade:
- If BTC drops to $90,000, I lose $100.
- If BTC rises to $110,000, I make $100.
- At $120,000, I make $200, and so on.
Happy case:
BTC keeps going up, reaching $1,000,000 and to the moon. It never hits $90,000.
When would I close this trade? The 2-week low would also move up over time.
Let’s say BTC starts declining and hits a new 2-week low, at $700,000. That’s when I’d sell.
This simple method is called trend following, first developed by Richard Donchian.
Will I get rich with this method?
Probably, but not overnight. However, I’m confident I won’t get rekt either.
Some historical price movements:
- When BTC first went over $1,000 in December 2013, it dropped to under $300 in 2015 before reaching $1,000 again in 2017.
- It kept going up to $20,000 in December 2017 but dropped to under $3,500 in 2018.
- The $1,000 level has never been seen again since 2017.
- The same cycle continued, with BTC reaching $67,000 in 2021 and dropping to $16,000 in 2022.
Here’s what I’d do:
- Risk a fixed amount, say $100.
- Look at the 1D chart: the 2-week low is $90,700. Let’s use $90,000 as the stop-loss for easier calculations:
$100 / ($100,000 - $90,000) = 0.01.
- So, I’d buy 0.01 BTC.
My reasoning for this trade:
- If BTC drops to $90,000, I lose $100.
- If BTC rises to $110,000, I make $100.
- At $120,000, I make $200, and so on.
Happy case:
BTC keeps going up, reaching $1,000,000 and to the moon. It never hits $90,000.
When would I close this trade? The 2-week low would also move up over time.
Let’s say BTC starts declining and hits a new 2-week low, at $700,000. That’s when I’d sell.
This simple method is called trend following, first developed by Richard Donchian.
Will I get rich with this method?
Probably, but not overnight. However, I’m confident I won’t get rekt either.
Some historical price movements:
- When BTC first went over $1,000 in December 2013, it dropped to under $300 in 2015 before reaching $1,000 again in 2017.
- It kept going up to $20,000 in December 2017 but dropped to under $3,500 in 2018.
- The $1,000 level has never been seen again since 2017.
- The same cycle continued, with BTC reaching $67,000 in 2021 and dropping to $16,000 in 2022.