Keep it simple stupid.

Trading with the trend is one of the simplest things you can do to help ensure you make money, but most people have an issue with this. Why is this? I think it has to do with psychology. I call it the “smartest man in the room” syndrome. Most traders always want to be right, and they would rather try to pick a top or bottom for clout than catch the majority of the trend. That is why, unlike crypto twitter where everyone wins, 90 percent of traders eventually lose. They cannot handle their own emotions. It is completely normal to experience fear and greed, the two emotions that mostly run the crypto markets. It might be different in more mature market where there a lot of bots and algos doing the trading, but there is still a lot of emotion in the crypto markets, especially with alt coins. That is why we have these crazy swings.

People see BTC has gone up 10x and the greed pulls them in. They end up buying the top thinking they are going to get rich. Then they puke up their position when the market drops 60 percent. You can see this by looking at the volume spikes a big inflection points.  

One of the easiest ways to notice a trend change in a bull direction is to look for a higher low and higher high on a longer time frame, such as the weekly chart. For a trend change in the bear direction, look for a lower high and lower low. This will take a while to play out, but once it does you will get a great trend to ride most often. It sounds very simple, but most don’t follow this. They always try to pick tops or bottoms and get destroyed.

For example, let’s take a look at BTCUSD this year. It is pretty much undisputed that it was in a bear market earlier this year and throughout 2018. We had five or so lower highs on the weekly chart. And a roughly 50% drop from 6k to 3.2k. Nearly everyone was calling for 1k at this point. We ended up find some support at the 3.2k level with a higher low at 3.4k at the end of January. Although this was a positive development. It still did not signal the end of the bear market. BTCUSD had continually found resistance at 4.2k and was unable to break. I did see pressure building there, however. I knew if we broke that level, we would most likely see a strong impulse move up to 6k because that had been the higher low and higher high on larger time frames that I had been looking for. Sure enough, once 4.2k was breached we had a quick impulse move and 6k hit only 39 days later.  

Some might argue that 6.5k needed to be taken out to create a higher high and signal the end of the bear (which I can understand the argument). Even if you agree with this and bought when 6.5k was breached you would still have seen a 2.3x return.

As most of you know BTCUSD recently hit 13.8k. That is a 3.2x on your money in less than 3 months if you bought the 4.2k higher high breakout. That is why I love trading this market. Most thought 6k was going to significant resistance on the chart because had built a base there for nearly 12 months. Because of this, most people tried to either sell or short at that level. This created a significant short squeeze once cash buys were pushing up the price over 6k.

Do yourself a favor and don’t play yourself trying to be one of the “smartest guys in the room” and pick tops or bottoms once a trend has been confirmed. Just ride the trend and Keep It Simple Stupid.