How I’m Trading ETH / DAO / BTC NOW

eth chart 6 18

Saturday June 18, 2016  6:00 AM

What’s the truth about The DAO and ETH? How should I trade it? What’s going to happen next?

The only truth right now is that NO ONE KNOWS.

However, by watching patterns, probabilities can be assessed.

Before I go any further with patterns, let me make one point perfectly clear — reality matters and current events surrounding ETH and The DAO can nullify even the strongest of patterns.

The nightmares with The DAO could easily drag the price of ETH back down towards zero–it wasn’t far from there just a few short months ago! Or, while it’s less likely, it’s possible some brilliant mind might solve the DAO dilemma in ways no one has currently thought of sending both the DAO and ETH skyrocketing. The highest probability is some reality between those two extremes.

Anyone trading ETH must factor in reality and enter positions accordingly. This can be done in 2 ways:

  1. Only invest amounts you are prepared to lose 100%
  2. Trade with a clearly defined stop in place.

#2 is questionable give the difficulty traders must have in trusting exchanges. I have had trouble on multiple exchanges getting a buy or sell fill for even 100 ETH due to the lack of liquidity in these markets. Exchanges are halting trading on a moment’s notice leaving traders stranded.

Hard to sleep at night thinking they will execute a stop loss flawlessly.

I’m in the #1 camp above — only investing what I am prepared to lose 100%.

As for my trades and trading strategy:

Yesterday, I reduced my ETH core position by a little more than 5% leaving me with an ETH position just under 25%

I wanted to sell around $15 but wound up getting out at $14.50 on this latest trade which represented a gain of approximately 45%.

This morning ETH has sold below $7 USD. Wow. I’d like to believe I would have increased my position around at $7.50 as I see that as a major line in the sand – but I wasn’t there and needed to see how that pattern set up in the moment so I can’t say for sure.

The rebound in price from the current lows is impressive and, to me, shows the importance of that $7.50 price range. ETH is now trading in the $12-13 range just 1/2 hour later. Is $7 the bottom?  Time to buy more ETH? DAO? And what about BTC?  Will it be a winner or loser in this current saga?

I would not buy The DAO. Again, it’s just too new to assess. However, I am keeping an open mind to the possibility it could survive and even skyrocket.

As for ETH and BTC I don’t see an edge here so I’m just watching — I missed the buy bus for ETH at the $7.50 range and I have to be okay with that–for now anyhow–Volatility is incredibly high which means so is uncertainty.

There’s no question you can make (or lose) a lot of money in very short term trades right now — You can win if you guess right and if you can get in and out of your positions on time!   Very short term trading is extremely difficult even in a high liquidity market – the cryptocurrency market is definitely not liquid. I don’t have confidence everything will go just right for me to dive in and out right now, as tempting as that may be.

No confidence = no trade.

In the near term, lows are often retested and we’ve got major panic and volatility happening. The short term patterns show more upside but longer term patterns are still all over the place. We are still very early in this current correction which makes it very easy to state the highest probability bet at the moment:


Anyone who says otherwise should be ignored until more time passes and more clear patterns develop–or reality becomes crystal clear.

To be clear: Of course, anything can happen at any time. However, many times, there is a higher probability of one outcome over another–A trader’s edge. This is not one of those times. So:

How much are you willing to lose on the bet that “Anything can happen”?

I’m reasonably comfortable holding my 25ish% position in ETH. ETH showed a whole lot of bullish signs for long term growth over the last several months and a huge spike down over two days doesn’t make all of those invalid — yet.



Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )


Connecting to %s