How to build your crypto position in a falling market

Buy low, sell high, is not just a catch phrase.

To those that day trade or are building up their position, this post is for you.

If the market fluctuates you can make money on it. That’s a no brainer right? But picking the right time to buy and sell is an art – as you are fighting against your own human nature. I will provide some insights on this shortly.

When the market is down and our portfolio has suffered a loss, we’re in pain and it’s only natural to want to end the pain by exiting the trades we still have open. Our human nature’s main directive is to move away from pain and to seek a state of equilibrium and pleasure.

However, just when most of the market is in pain and down, that’s when the “Big Boys” (e.g. the market makers, expert traders, hedge funds etc…) come to build their positions. While the smaller players are running for the hills poorer, angrier, tired, resentful and afraid. They are fully aware of how the human nature works.

“Buy low, sell high” is not just a nice phrase, it is the key to profitability.

We cannot always be up to date with the news that has just been released, or what shadow entities, whales and market makers are planning behind the scenes, but what we can rely on is what the chart is telling us. The chart and the candle price action is a second by second exact and truthful feedback, and it provides a global consensus of what the buyers and sellers around the world believes.

Traders that cannot master their own emotions and trade purely based on instinctual reactions are usually the ones who leave their money on the table for the big boys to collect and enjoy.

A remedy to this is to play the long term game, which has been covered many times, especially in the Crypto course where I share 10+ strategies.

So many long term investors, buy and forget, while others just focus on buy at the bottom of the bear market and sell at the top of the 4 year cycle.

Keep in mind that there will be some variance within each 4 year cycle. The 2017 Bull Run ended 18 months after the halving. But the 2013 Bull Run ended 12 months after the halving. So be cautious, and use the chart and the price movement for your guide not a calendar prediction.

So, what if you want to trade or buy low and sell high in a shorter timeframe?

What if you want to be in and out in an hour, day or week?

Well, the key to my short term strategy is to make the Big Boys’ trickeries work in my favor to play my trades.

The “Big Boys” or what Richard Whckoff calls the “Composite Man”, like to push the market to where there is the most amount of liquidity to capture more profits and enter at better profitable levels.

A liquidity pool is where a large amount of funds are present in the form of stop losses and/or buy orders. For many big players, capturing these liquidity pools, by manipulating the market is the main game, is what they do week in and week out.  This has been happening since the eighteen hundreds (probably since the beginning of money), as the Wyckoff composite man showcases.

So how do we make money on this?

Find the liquidity pool or areas of major support and put long orders in.

So the goal of these “Big Boys” is to push the market just below this level, because they know that below a level of support, there are going to be many stop losses. All the “Big Boys/Composite Man” need to do is to push the market below the main support level, low enough to capture those stop losses and release the liquidity pools at that level. When the stop losses are triggered, the price is pushed lower, which allows them to buy at even lower levels.

As this occurs, the price of the targeted financial instrument spring back up forming a wick in the candle. You can see these wicks below major support levels all the time.

You can see this happening on any chart at key areas of support,

On the top level, the same thing has been happening at the top of the upper resistance level to capture buy orders. When these buy orders are triggered, it pushes the price higher. The Big Boys then start to sell the market above this upper liquidity pool. This pushes the market down, trapping the new buy orders to lower levels. As the buyers that have entered at a higher level get scared, they start selling, helping the “Big Boys” push the price lower, and increasing their profits.

These patterns and behaviors play in all financial instruments in many timeframes. You have probably been a victim of this play.

So when I have a confirmation, that after touching a lower support level, the market is going up, I buy in. If I have a confirmation that the market has reached a resistance level and is going down, I sell the market (short sell). I always try to ensure that there is a confirmation in the chart before I place a trade. Per usual, please know that this entire post is just what I am doing and not a financial advice.

In this way, instead of getting frustrated by the big boys, I can join in the fun! If the market is going lower, I look for areas of support as it is likely that it will go lower to trigger the stop losses of most traders, and for the big boys to enter the market. Then I put my buy order there.

If you want to try this strategy, please back test with very small amount of fund first. Study it and see if this will work for you until you have found consistency in your trading success and profits before scaling up. It’s not 100% accurate but it is what has been working for me. There is more to this, but what I have shared with you today is the main reason why my portfolio still grows in a downtrend and highly volatile crypto market.

Short term day trading is understanding the complexities of price movement on short term timeframes. With this information, it does not matter if bitcoin is dropping or rising.  Whether in a bull or bear market, look at the chart and observe what the market is telling us.  Look for key notable areas that we can recognize and understand, and most importantly, can exploit. Take a position, get paid, rinse and repeat… To do this, please have no bias to market direction, just look at what the chart is telling you. 

This strategy is helping me greatly, I hope will bring hope and abundance to your bottom line and trading life.

Much Light

Paolo Tiberi