Today was a pretty quiet day for most of the coins.  So if you will indulge me, I will take a look at ethereum’s daily chart and wax a little philosophical.

I am not new to publishing my thoughts and forecasts.  I ran an email-based advisory service for a couple years, and have written in magazine formats like this in the past as well.  It is a challenging position because one’s thoughts are open to the world to see, and it is nigh impossible to be right more than a few times in a row.  One’s mistakes are exposed.   Professionals will never mock your mistakes, because they well understand that perfection is impossible.  But amateurs are a different story.  One has to develop a thick skin.

But there’s more to being wrong in this position than just being embarrassed by one’s mistakes.  There’s also the awareness that you might hurt someone who took a losing position based on your failed forecast.  Maybe they did not exercise good money management.  Maybe they had no stop loss, or the stop was too big.  Or maybe they took on too large a position based on their account size….

I received an email from a subscriber to my service a couple years ago.  I had made a couple bad calls in a row.  I wasn’t worried about it.  The losses were small, and I understand that it happens.  The next win was coming.  It always is, if you save your trading account and thus stay in the game.  But this subscriber was distraught and told me he had taken a bath.  My immediate thought was: “How???”  But it occurred to me that he had likely made one or more of the mistakes listed above. Until that moment I had not been acutely aware of the fact that some of my subscribers might lose big if my forecast was wrong.  I felt bad, even though I knew it was ultimately his own fault.

The words of warning I put at the end of each article are not there just because some law requires it.  I put the words there to remind readers to be careful and think before they exercise a trade.  I don’t want to re-live my feeling when I read that email.

In my humble opinion, the art of technical analysis is a bit like counting cards at blackjack.  Even the best card-counters never know for sure if the next card is a face card.  They just know when the odds are in their favor, and bet accordingly.  Likewise, we usually don’t know if the next candle is going up or down.  But we can determine where change is likely to take place, and bet accordingly.

One of the greatest traders of all time was Jesse Livermore.  He made and lost a huge fortune three different times.  He was legendary for his wins and his losses.  The losses wiped him out in the end, because despite his genius he MUST not have ever learned proper money management.  Helost everything three separate times, and finally committed suicide I understand.  If Mr Livermore, for all his obvious excellence could make such a mistake, so can we. We must learn and practice good money management. It is an imperative part of this business if we want to trade for a long time.

Here is ethereum’s daily chart:

10_25aNote the 3 candle bull setup is being respected by pricetime.  The arrows all indicate how price is respecting the arcs, the top of the square, and the 1×1 angle.

As I type these words, price has cleared the 2nd arc pair, but has dropped a bit to an interesting point.  It is now sitting on support of both the top of the square, and the 1×2 Gann angle.  There is likely strong support here.  Again, we are like card-counters here.  Will support hold here? We don’t know.  What we do know is that the odds are in our favor if we take a long position here.  Also, we know that if price breaks below the current price even just a little, the support will be broken. So we should place a VERY tight stop, just a few cents, below our buy.  Doing so, we know that if we are wrong we lose just a few cents, and thus, we can sleep well at night…

Happy trading!

Remember:  The author is a trader who is subject to all manner of error in judgement.  Do your own research, and be prepared to take full responsibility for your own trades.

Image from Shutterstock.