Trading Short – Beating A Bitcoin Bear Market

Support the stream: It’s easy to make money when the market takes off but have you got the skill set to profit when the market heads lower? In 2018 there were a number of great trades, we had just as much downside in 2018 as we did upside in 2017. Traders did well, HODLers did not. Let me show you what I look for!

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By Trader Cobb -

G’day guys. Just a quick sound check, make sure you can all hear me. We’ll get a few more people in here. If you can just let me know if you can hear me loud and clear, please. All right, thanks very much. All right. G’day everybody. Hello from Perth. Cool. All right, lots of people jumpin’ in. And give me a heads up you can hear me. Thank you very much, looks like we are good to go.

Today, or tonight I should say, I wanted to talk to you about, basically, shorting. So what the things that I look for, and how I do it. Not going to show it, like, not going to show you into the platforms and show you exactly all that sort of stuff. That’s not really what this is about. It’s about giving you ideas. If you’re trading and using margin, because the only way you can go short, really, is to use margin, okay? So something like, the accounts that offer you leverage.

Okay, that’s the sort of thing that I’m suggesting here and talking to. Of course, one of the things that’s really, really important is really to, you only make money when the market goes up or down. Now, 2018, obviously, was pretty bearish, right? There wasn’t much activity for the bulls. Now, that doesn’t mean you need to hemorrhage money. It doesn’t mean that you need to, you know, not have a good period. Now obviously, a lot of the trading platforms, you can trade still into dollars, or you can trade into Bitcoin.

I trade, when I trade, I get my profits into Bitcoin because I do believe that Bitcoin will have another solid run. I truly believe that. So for me, you know, when I’m trading, oh, I haven’t got myself there, there we go. For me, when I’m trading, I am converting it back into Bitcoin. Of course, if I did want to take any profits out, which I tend not to do, I can do that whenever I like, sell out into whatever currency I wish to. So it’s about being able to really have a, I mean, when I used to trade traditional markets, I sort of called it a recession-proof tool.

Because whether the market goes up or down, if you know how to trade and you know what to look for and how to trade with margin, then you can be trading and making, you know, an income whilst the market falls. And that’s the real benefit to being, you know, somebody who’s operating by the long and short. Now of course, it does require a level of skill, because you know, just buying a Bitcoin or buying something, right, whatever that token may be, it’s a lot easier. You don’t think about stock losses, you don’t think about your risk on the trade, all these sorts of things. It’s fairly easy compared to the level of precision and skill that a trader requires to actually act within the market consistently and be profitable consistently.

So I wanted to go through and show a few things to you, because right now, with Bitcoin, we have the high and low here, we pushed on. Then when we saw this red candle, I said it on the podcast, I think it might not have been live, but I definitely spoke to a lot of people about that candle, suggesting that that could potentially be a downfall. Now, on Saturday this was the, so this was the Friday account, which closed Saturday morning for me. When this was a bullish candle, I saw this as a very, very important candle. Now, when we break the high of that candle and continue to push on up, therefore creating a higher low here, higher low one, higher low in the micro.

And would we see it push on to new highs. Now of course, it went down and broke the lows. I didn’t have an order to trade that either. But it broke the low, and that point, I was kind of like, ooh, okay, this doesn’t look great. Then of course, we saw on Sunday, this candle, a very decent-sized sell account, 10%. That to me suggested we might actually see further declines. So back to the weekly. Just a reminder, I’ve done this, I’ve told many people this on many different videos, but the pullbacks that we had in 2017, 32%, 40%, 39%, 32%. Average those out, it’s 35 point, I think, .25%.

The good thing is is that the upside from that low point to the highs, it averaged out at 207.75%. So the pullback on the weekly is really needed. And it pulls back into that cradle zone. It pulls back into the cradle, back into the cradle, every single time, pull back into the cradle area, right? Which is the place that I trade from. Now, we haven’t had a decent pullback for the entire run up that we’ve had, which is a big one. 340%. So more upside than we’d normally, you know, had in a lot of these runs, apart from, you know, this one from here to here. But we also have a little pullback there. So very, very little, actually, pullback at all. Now that we’ve got these big candles up here, and it’s starting to get a bit funky, and the daily now has that lower high, potentially lower high. If we break down three here, we’ll actually have a lower high and a lower low. In that case, I think we could see a pullback.

Where could that pullback come back to? Well, it could back to $8800, it could come back to $9000, it could go deeper. Why? Because look, it could get all the way back in to even $8000, really back into this cradle zone. But that doesn’t worry me, because I really want to see a pullback, because it makes my trading decisions so much easier when I’m going long again. Now, I’m not here to talk to you about going long, I’m here to talk to you about going short. So we’ve got some downside here. I much prefer to ‘scuse me. To trade when the daily is in the same direction. Now, we haven’t got a daily downturn, but we have got a four hour, which I use a lot as my middle timeframe. Lower high, lower low, all right? So with this trend in motion, I can look for opportunities to short. Now usually, cradles aren’t a lot. If you see here, the four hour hasn’t given a signal.

But I can also go lower, if I deem it necessary, a little opportunity there, possibly one coming up here on this particular two hour candle as well. So the real issue that I think a lot of people in crypto at the moment have, is they think that using BitMEX, which is this chart that you see in front of you right now, it’s got margin, and it’s therefore very risky, and people get wrecked in all these horrible stories of, you know, people going long with margin or going short and basically getting stopped out. So what bankroll am I dealing with on a weekly basis? I’ve got a few Bitcoin in each account that I can use for margin trading, but I’ll keep that personal. But yeah, look. Ultimately, you’ve got to have the ability to profit on these downruns.

Because look, if we are going to see this market do that big pullback, right, and get into, say $8000, even $9000, then why on earth would we not want to be building a Bitcoin stack? Now, I know people hold their alts and wait for the pump, and then that’s what they’re trying to achieve, is to get more Bitcoin. But we can do that through margin trading, through trading with leverage, through actually pinpointing the areas for which we go long and short. And it’s not just on Bitcoin. Why don’t we have a look at here. This two hour candle. Now, if you look through here at the $280 level, $279, $280, through here, right? Actually, if I just throw this on the daily, you’ll see it better. Now, it’s not an exact precise point.

Resistance here, here, here. Support one, two, three, four, five, and then we broke down. Very, very strong support and resistance. Now, resistance, when it breaks out becomes support, if you read this, which it did here and here and here and here. When it goes down through that, it becomes resistance. So the old resistance, and this support therefore, becomes resistance. Now, it did exactly what I was hoping for it to do. And I’ll be honest, this wasn’t a textbook cradle trade, not at all. But it was kind of like the short that I took, what was it, November last year, at $5700ish, right? Very tight stop-loss. I took small risk, lower percentage risk on that particular trade, for one simple reason. I’ve got a real tight stop-loss. It’s not a hail Mary, it’s a hedge. And if it was to continue to collapse, then it was a great hedge on the portfolio, and it could have been very good. And it was very good.

The same thing here happened at eight o’clock on Friday night. I was not there, I was just not at the charts trading. But that short, you look at this multiple, right? Let’s have a look at the multiple of risk. From there to there, $3.80, 1.36%. Let’s see how far it fell. ‘Bout 10 to one. Now if I was risking, say, 0.1 of a Bitcoin, or yeah, we’ll just 0.1, make it simple. Then the profit on this at a 10 to one, if you didn’t scale that, you got out down at the very bottom, which you don’t expect to do. But you’d still be in short here, right? So you could be looking for a trail stop if it was to continue. That means that your 0.1 of a Bitcoin would now be one full Bitcoin. Now, you can get these multiples of 10, 20, 30, 100, by trading.

You don’t need to just jump in and buy a token, hoping it goes up to build your Bitcoin. Because I mean, look, the Bitcoin, look at the 150 here. If I pull up any chart, they’re just about all in massive downtrends on the daily. Look. Down. Down. They’re all down. So it’s really difficult to build your Bitcoin total amount without trading at the moment. Because Bitcoin is more powerful than all these alts at the moment. Very few are actually moving. And when they are moving, they’re not moving very far. So it does make really, really, really good sense, to, if you want to have more Bitcoin, to work the charts that allow you to do it. And they are trending charts. So for me, Ethereum‘s a really good one at the moment.

Why? Well, because look. The daily is in a downtrend. Lower high, lower low. So too are the mid timeframes. The four hour is in a downtrend. Then, okay, lower, two hour. Coming back into the 61.8, in that cradle zone. Could be a short opportunity there. It’s about understanding what you’re looking for, and then, and here’s the big thing, you have to be able to manage your risk. You can’t, I say this when I teach in everything, you’ve got to understand how much you’re risking on a trade. How to raise the orders, what type of orders you need to do certain things. You’ve got to be safe at all times.

It’s not the easiest thing to do, but I tell you what, it’s not that hard either if you work from solid structure strategy. Some questions. The thing is, I don’t want to put my long-term hold positions on an exchange. The amount I feel comfortable chucking on BitMEX is not going to offset my long-term hold when we head into a downturn if I do get some good short trades. Yeah Daniel, look, I fully agree with you on that one. I don’t have all mine sitting on exchanges either. The thing I do do is I do have some. Now sometimes, what you’ve got to do, especially on BitMEX, you’ve got to see where, the size of your position and the liquidation price.

Your liquidation price is always got to be above where your stop or below where your stop, depending on direction, is. Because that way, otherwise your stop’s, you know, it’s not really valid, right? Because it, you can have your stop whilst up above the high of this candle, but if your liquidation point is here, then you need it to move straight away, right? Straight away. Sorry, I’ve got a funny throat. So yeah, it’s always wise to have some. As a trader, for me, I’ve always got to have some on the exchange. That’s what I’ve got to do, okay? That’s what I’ve got to do. But don’t forget, you can have your, you know, you can have your crypto sitting in a safe place. When you see a trade is setting up, you can send it over.

When the trade is done, you can send it back, if that’s how nervous you are about it. And because the level of margin that you have available on these different accounts, you don’t need to have all that much to be able to trade it well and to get a position on. Now, you don’t have to hedge your portfolio exactly 100%. It’s very hard to do that because the whole market kind of, it’s kind of all linked, so it’s very difficult to get a perfect hedge on that. But it’s an option that you can actually be trading and building your Bitcoin stack, converting it into your dollars if you wish to and then getting it off. I tend to have a certain amount in the account, then when I go over a certain amount, I pull it out. So on and so forth.

Or I re-balance it across my portfolio so that I’ve got the projects that I wish to hold there to hold. Do I use cross leverage? I’m not quite sure what that is. Do you just convert Bitcoin to US dollars to start the trade? No, you can, on most of the accounts, just, you can sit your Bitcoin on that platform. That’s your margin, that’s your leverage that you work from, that’s what you’ve got there. So it can be Bitcoin on other platforms that have leverage and spot, you can just sit it in there and that will be your amount to trade with, as your margin, so to speak. How do you determine which timeframe to use a Fib booster on? Can’t move straight past a two hour Fib booster and set up on 12. For me, on the booster, I don’t trade on anything, I don’t trade really on four hour either. I prefer, if it’s on the four hour, I’ll wait for the cradle to pull into that area, and I’ll wait for the opportunity.

On the lowers, I tend to like boosters on the one hour, the 30 minute, and also the 15 minute. They’re the timeframes that I trade the booster on. The booster’s there for one simple reason, for when markets do move really fast and they bang and bounce quickly. That’s why I like them on the lower timeframes. They’re really great for the, when we see the market go, shoom, down and straight back up, and then bang, straight back down. I use the Fibonacci points as well, though, as I say, to combine that with my cradle trades. So it’s a mix of using the different strategies sometimes to find, to back up a trade, essentially. So who here, by the way, that’s watching, actually does use margin in their trading? Just so I can get an idea. How many of you are using margin? Okay. Couple of people. No worries, Mitch. No, it’s not pure gambling at all.

It’s, it’s about having a skillset. Really, it’s that straightforward. If you know what you’re looking for, you’ve got a probability, then you work the probability, that’s what you do. Cross leverage or cross margin is a method used by BitMEX traders to avoid liquidation. In short, cross leverage does this by spending the entirety of your account’s balance. Oh, okay. No, I don’t tend to do that. Yes, but not well. On IG markets, yes, they were options as well. Used margin but only low margin currently. That’s fine. Don’t know enough yet, that’s fair enough. On BitMEX, I think cross margins go up to 100X, however, it will use your full account balance to determine your liquidation point instead of just a, yeah, that’s fair.

Look, I don’t use that. It’s an option for those that don’t really want to have too much in there. I suppose your downside is the trade itself. But I prefer to use stop-losses for myself, personally. Don’t know how, so, it’s really, really important to, from my point of view, all right. You know, I’ve got people that I’ve been working with since October last year, for example, that are up well over 100% on their accounts. Now, that’s not everybody of course. These are the people that are really puttin’ the work in, and I don’t know everybody’s results. But I can tell you that during a bear market, which of course, we all know we saw. We had a doozy in 2018. Whoops. Where am I? That’s the wrong one. In 2018, obviously we had a very bearish market. Now, I built my Bitcoin stack quite well throughout last year, simply because I was able to short.

Now, if I hadn’t have been able to short, I would’ve been like many of the people out there that were just sittin’ there going, oh, when can it go up again please? So it’s a really, really important skillset to have. And if you’re not, and look, you don’t have to start with much either. You really don’t. You don’t need to have a big account, you don’t need to have lots of money. You can trade really, really small amounts until you get the hang of it, and then you can build with it. Because look, to have a trade that does, you know, a 20 to one reward-risk on your actual position. So like I say, you know, if you got a little two hour cradle here, let’s say, to use it as an example.

And you’re getting out down here, as example. You might get a five to one. So whatever you risked on that trade, you’re going to get five times the multiple. Now, if you do scale out, so you minimize your risk. So when it hits one to one, so if the risk on this is the high, $11463, so call it a $200 stop. When it moves $200 in your favor, let’s say you got a $50000 position, close $25000, now your stop’s in the right place but you’ve got no risk any more. You can let it run and trail your stop based on the lower highs.

Now, if this trade does continue to fall, then you continue to see larger gains. So if you get a 20 to one trade and you scale it out, you’re going to end up with about 10.5% if you’re risking 1% of your trading account portfolio. I know it might seem a little bit like, wow, too much to consider and think about. But you got into crypto. There was quite a bit to think about and quite a bit to consider when you got in. Trading is just another thing you can learn to do. It’s another skillset that is available for you to do. It really is that simple, guys. It’s not the most difficult thing.

It’s very difficult if you do it all by yourself. I’m not tryin’ to get you to do anything with me, I’m just suggesting that it’s much better if you’ve got a structured approach so you can measure that, take your screenshots. And you’ve got to run it like a business. That’s the thing that I think many people fail to do is run their trading like a business. If that was true, I would dominate, even if you get 51% of trades successful you’d beat the market. That’s correct. And I’m sure there’s lots of bots out there that do do very well. I decide first what amount I’m willing to lose then decide my leverage amount to increase my possible reward. Yep. Yes, but I only like testing a small account because I’m way too emotional.

That’s a very, very important thing to consider, your emotions, very, very important. You know, you can be FOMO’d into things. You should not be emotional. That’s why a checklist works really, really, really well, because you just go through it and tick things off. It’s a much, well, that’s the way that I’ve taught myself to trade. Not taught myself, that’s the way I’ve traded myself, and that’s what I suggest to everybody out there. So guys, we’re going to be doing a webinar at some point. Or sorry, Thursday night I’ll be running a webinar. You can check that out. To get the access to that, get on the free newsletter that we’ve got on the website. Real easy to find. And simply, we’ll get you in there. I’ll take you through what we do.

Show you a lot more about it. Guys, I appreciate your time. I just wanted to bring that up because as we do some of this market pullback, I see it as an opportunity, I really do. If we’re going to see a decent sort of pullback into that weekly zone, why, and I, you know, and we’re going to see further push to the outside at some point, then why not be looking to build your Bitcoin stack whilst the market falls? It makes perfect sense to me. That’s what I operate and how I do it. I hope you have a fantastic day, and I’ll speak to you again very, very soon. Get across and register for the free webinar, and we’ll speak to you soon. Cheers guys, bye. Yes, we’ll talk to emotions. To short, always do have to. Good night.

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