You’ve surely had times like this, when you feel at a loss about the position you’ve entered!
Usually, you trade with small positions,
and things seem to go pretty well,
with wins and losses alike not affecting your mood.
But then suddenly, one day,
you feel that an opportunity has come,
so you go in with a large position,
but the market doesn’t move in the direction you expected,
and yet you’re deeply attached to the direction you bet on,
so you start breaking your own trading rules,
and watch your position get eaten away little by little,
watching your losses grow larger and larger,
but you can’t bring yourself to cut your losses,
You can’t bring yourself to reduce your position,
you still hold out hope for the direction you’ve committed to,
so you go to X or the public discussion boards to look for data, analytical angles, and indicators that support your view.
In the end, you usually either capitulate at a loss or exit after taking a big hit.
Take my recent positions, for example:
1. Recently, I thought Bitcoin had swept the stop-loss orders below $80,000 and then recovered all the way to $82,500 in one move. I saw that as a signal of a major push upward, so I added sizable positions across my other accounts too. I thought BTC was likely to break through several key levels in one go, such as $85,000, $87,000, and even $90,000. But after Friday’s pullback, Bitcoin didn’t move in the direction I’d expected. In fact, it had already started looking weak on Friday night, yet I still didn’t exit. And even now, I’ve barely closed anything. I’ve only added a few short positions as a hedge, but I don’t think that was the right move either, because I know I’ve never made money by hedging before.
2. My current average entry price for Bitcoin is around $82,140. I’m talking about my recent positions. I also had positions at $81,300, but I’d closed those earlier. So I essentially opened large positions again around $82,140—and I went in heavily.
Reasons for going short:
1. The overall market environment is really bad right now. The Nasdaq and S&P 500 keep making new lows.
2. Funds are also gradually flowing out of Bitcoin ETFs.
3. Technically, on the 4-hour chart, Bitcoin is making both higher lows and lower lows, so the outlook is still bearish.
Reasons for going long:
1. Bitcoin dipped below $80,000 once and quickly recovered, showing that $80,000 is still strong support. I’ve set my stop-loss near $80,000.
2. Liquidity is poor over the weekend, and the past two days have only seen a narrow trading range, so I don’t think this will trigger my stop-loss. But if the price gives me a chance to get out at my entry price, I’ll most likely close the position for now.
3. The Nasdaq hit a new low on Friday, but Bitcoin didn’t. And relatively speaking, it didn’t fall much, which shows that Bitcoin is holding up fairly well given the market conditions.
4. Gold has always had some correlation with BTC. But over the past few days, Bitcoin’s correlation with gold has weakened. Gold has been relatively resilient lately and has even risen a little, while Bitcoin has fallen sharply. Still, there’s no denying that Bitcoin will gradually return to moving in tandem with gold. This may partly explain why Bitcoin has started to hold up better. If gold continues to climb, I believe Bitcoin will rise along with it.
Over the coming week, I’m expecting the market to trade sideways, probably between $80,000 and $84,000. I don’t think it will fall below $80,000 that easily. That’s why I’ve decided to keep holding these positions.
The above is just my personal opinion and does not constitute investment advice.
