Trading styles. Part 1/5. The 4 different kinds of bottoms.

2019年4月15日

I see 4 types of bottoms. Most retail try to buy at the bottom and lose, this might indicate that it is a fool's game and best avoided, but if it is used intelligently, within the correct bias, or going with the higher timeframe trend, or just to put it generally, inside of a smart positive expectancy strategy, THEN it can be a powerful tool. I still think this is dangerous and requires plenty of experience and understanding markets in general, as well as the specific market very well.


Type A: The rock solid bottom.
The price hit a wall and buyers stopped sellers, that are unable to push the price to new lows, even thought they are trying.



What looks exactly the same but is not it:


I enter inside of the consolidation, more in the middle, once it is perfectly clear.
Trying to buy at the bottom of it is plain stupid. 100% of those that try lose.

Type B: A bis. Less clear, quicker one.
The buyers have stopped the sellers (and vice versa) for a few candles, and then manage to reverse the price!



What looks exactly the same but is not it:


Here I think it is more interesting to enter at the low. Or once we break above the high of the consolidation.
And better have strong reasons to think this is a reversal point.

Type C: Opposite forces started showing themselves.
Also know as "the divergence bottom". I assume 90% of the time or more there is going to be RSI / MACD divergence here, but it does not bring any info we don't already know.


Here is that copper trade I posted 2 months ago:

There also was a hammer candle on the daily chart.

What looks exactly the same but is not it (oh my there are plenty. Biggest trap ever):


Really important to let these continue and not enter too early. How far well that depends, it's not an exact science anyway.

Type D: The V shape recovery. Or the idiot's game.
Buy the dip!
Now I'm sure some people are letting every one know how they make money being lucky - er I mean catching falling knives at the bottom, and there might be very very few that get lucky over long periods - eeer I mean manage to consitently make profit for a certain amount of time.
I did try this myself because I wanted to try every thing, I stayed really small. The kind of people that try this 99% of the time have a few things in common. Little experience (newbs), do not understand odds risk to reward, do not understand risk, have no idea how to make money, think you have to be right all the time and "buy cheap" and follow the idiots calling them super legends or some dumb names. They also all always have a completely flawed logic that leaves no doubt as to how smart they are.
I estimate the average IQ of people that "buy dips" is around 60.

Just going to show a few examples here:


Here is how I would trade those: not. Let fools take one for the team and create an A B C. Let them not miss out on all the juicy losers tell you what an idiot you are for missing out, and in 6-12 months go check their profile on tv (or any other similar site) and notice how they have been inactive for the past 3+ months :D
If you have insider info or are value investing and have big bags to fill, then this is the best I would say. Just soak up all the tremendous momentum miam miam miam goble goble goble.

A personal favorite:



I must admit, that Helios & Matheson situation makes me soooo happy. I am so glad they got their faces smashed to the ground. Crushed. I just want to lick their tears à la Cartman. A harsh but important lesson was learned.
I really really would love to see the cocky absolute morons - that think they're smarter than every one why is this a recurring theme among idiots? - of Tesla and Bitcoin get DESTROYED.
Not just down 90%. Noooooo I want to see them down HMNY% *cruel evil laugh*

Ye don't catch falling knives, especially blindly, and use stop losses that make sense.