Quotations by Glen Goodman
At the time of writing, the most popular exchanges are quite new, lightly regulated at best and cannot be considered safe places to keep your money. I mitigate this risk in two main ways. Firstly, I use several different exchanges, so if one of them went bust, I’d only lose a small chunk of my capital rather than all of it. Secondly, I try to keep only as much trading capital in each exchange as strictly necessary. If I have surplus cryptocurrency, I withdraw it to a safe wallet or transfer it back into pounds. [2019] - Glen Goodman
I like to trade on the largest, most popular exchanges because they have greater liquidity. More liquid markets tend to have much tighter spreads, which greatly reduces your overall costs of trading. Founded in China, Binance (www.binance.com) is the largest cryptocurrency exchange in the world and allows you to trade a vast array of cryptocurrencies. It now has a base in Europe too. It charges relatively low fees compared to some of the other popular exchanges. Liquidity is high for the most popular cryptos, so spreads are relatively narrow. [2019] - Glen Goodman
Chasing a breakout is not a great idea. For every successful breakout, there’s a false breakout. Staying solvent means protecting yourself from false breakouts. The best way to do that is to buy at the breakout point and set a stop-loss to make sure if the price falls much below the breakout point, you get out with no more than a small loss. A good rule of thumb many professional traders use is to only buy within 5% of the breakout point. If the price has risen further than that by the time I’m at my trading screen, then I usually disregard the breakout and wait for the next opportunity. [2019] - Glen Goodman
In trading, a right-angled triangle is simply a triangle pattern with a horizontal top or bottom edge. Statistically, these horizontal edges tend to be more reliable as trading signals than triangles with diagonal support or resistance lines. This is probably due to human psychology. Traders’ eyes are drawn to horizontal lines that appear to contain the price movement, while diagonal lines don’t have such a definite solid quality about them. Horizontal lines feel like they have more meaning as support and resistance levels, therefore they do. [2019] - Glen Goodman
Head-and-shoulders (H&S) is just a nice shorthand way of describing a relatively complex pattern. Empirically, it’s one of the most reliable patterns with extensive academic evidence supporting its use to improve trading profitability. [2019] - Glen Goodman
Apart from price itself, the most useful indicator is volume. Volume tends to peak on days when there is a major price reversal, it tells you there is probably a major changing of the guard going on: if the bulls (the positive crowd) were dominant, then the bears (the negative people) are now in charge, and vice-versa. Volume can also be useful in other situations. For example, when a chart has been quietly trending sideways for some time, a sudden breakout is usually accompanied by a large increase in trading volume. But if the volume doesn’t increase, the breakout will often not follow through and will turn out to be a false breakout. [2019] - Glen Goodman
Lots of companies are busy developing their own ‘social sentiment indicator’ for Bitcoin and other cryptos. One of the first to launch was the Bitcoin Social Sentiment Indicator from the Finatext team developing the Pipster trading app. The financial research company MarketPsych is another pioneer in this area. Its team developed a sentiment metric they call the MarketRisk Index, which quantifies the characteristics of speech on media and news sites, as well as social media. Sentiment really does often start changing before the price changes direction. These tools are very new, experimental and not yet widely used. Once they do become widely used, they may in fact lose some of their predictive power because the potential gains will be arbitraged away. [2019] - Glen Goodman
Spread betting is a lovely thing because you can trade all kinds of financial instruments with no tax on your profits at all! Unfortunately, at the time of writing, most of the spread betting platforms only offer a few different cryptos to trade, which is why I spend most of my time on unregulated exchanges instead. However, most of my trading in Bitcoin has been on spread betting platforms, I’ve made a lot of money out of it and don’t have to pay a penny of tax. [2019] - Glen Goodman
In some cases I traded cryptos against Bitcoin (e.g. SAN/BTC), rather than against the dollar, but the most accurate technical analysis is still done using the dollar cryptocurrency pair, as that’s where most of the liquidity is. [2019] - Glen Goodman
A trader who likes to follow long-term trends might use the 200-day moving average as a trailing stop, a stop-loss line that follows the price line at a distance. They might have a rule that they will not sell as long as the price remains above the 200-day moving average. If the price dips down below the 200-day MA, then the trailing stop has been triggered. [2019] - Glen Goodman
I’m using a 30-day ATR, and in order to keep the ATR trailing stop line comfortably far away from the price line, traders often subtract a multiple of the ATR from the highest price reached in recent days, so I’m subtracting five times the ATR. ATR trailing stop = Highest price in the last 30 days – (5 × ATR) [2019] - Glen Goodman
It’s much easier to view the long-term trends using a logarithmic chart. Log charts allow us to see percentage changes in price rather than absolute prices. For example, the vertical distance between $20 and $60 is the same as the distance between $200 and $600 and is the same as the distance between $2,000 and $6,000. [2019] - Glen Goodman
As a rough rule of thumb, many successful traders choose not to risk more than 0.5 to 1% of their trading capital on a single trade. This may seem pathetically low if you’re a big-betting novice trader, but keep betting big and some day soon you won’t be able to bet at all. [2019] - Glen Goodman
A strategy I often employ after a sharp rise is to take profits on part of my position and leave the rest open. It’s a particularly useful strategy after a really sharp rise, because quite often a sharp rise is followed by a sharp fall, so it can make sense to hedge your bets by taking profits on a portion of your trade. [2019] - Glen Goodman
I like to buy on breakouts because it gives the crypto that extra oomf at the start of the trade and therefore makes it less likely that I will quickly hit my stop-loss. But this is not a key consideration. You could buy at any random point in the early stages of a trend and still make good money as long as you learn to sit patiently during an upward trend and then sell at the end in a disciplined way. [2019] - Glen Goodman
When you’ve selected a crypto you want to buy, you can work out an appropriate position size using ATR, according to your own appetite for risk. [2019] - Glen Goodman
Your profit is equivalent to the percentage change in price. When you go short, the maximum possible gain is only 100%, while the maximum possible loss is infinite. Now you can see why I’m not particularly keen on shorting! It is also much harder to stay in a short trade for weeks or months than in a long trade because the upward corrections during a downtrend can be breathtakingly sharp. [2019] - Glen Goodman
HODLing through bear markets is not a great idea. Well, HODLing through long sideways markets is also not a great idea, because of the opportunity cost involved. [2019] - Glen Goodman
Follow the rules: •grow your profits •cut your losses •trade the trend until it bends •keep your trade sizes small enough to sleep at night •do your research on a crypto and read the white paper •don’t fall in love with your crypto •diversify and spread your risk •keep your charting clear and simple •winnings are real money, not gambling chips •never chase missed breakouts •never chase losses by throwing good money after bad •never try to catch a falling knife •run away from tips, rumours and opinions •control your inner voices and psychological biases •avoid scams; if it sounds too good to be true, it usually is. [2019] - Glen Goodman