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The Wolf Den #226 - Plan Your Losses

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April 22 · Issue #226 · View online
The Wolf Den Crypto Newsletter
This newsletter is always sponsored by PHEMEX, the best spot and leverage trading platform on the planet. Sign up with this link and get some free Bitcoin. I really encourage you to check them out. I have also loaded funds into their new “Earn Crypto” program to test it out and will be sharing the progress of interest earned. https://phemex.com/a/ScottMelker
The one thing that you can always control in trading is how much money you lose.
This is the most important, indisputable fact that you must accept if you are going to be a successful trader.
You CANNOT control how much money you are going to make. A trade may never be in the green - you may never have the opportunity to take profit. What you can be sure of is where you set your stop loss and how much of a loss you intend to take when you do so. 
The only small argument against this is slippage or a failed stop loss - but those should be minor issues when planning a trade and are not major issues on any liquid asset or exchange.
People give numerous reasons for their stubbornness in not wanting to cut their losses. Cutting your loss is often more painful for your ego than for your wallet. People are narcissists. Trading is one of the only activities where we face the consequences of our choices in real-time. To be a trader is to constantly face a mirror which reflects what we really are. There is no escape.
In psychoanalysis, personal identity consists of 3 things: the Id (simply our unconscious), the Ego / Me (what we really are at one moment in time and the Superego (the limits that society imposes on us, our education, etc.). And to add spice to this delicate balance of contradictory forces which make up our personality, you need to add the ideal Me, which is what we would like to be. This is the idea of comparing yourself to the perfect outcome that I have discussed in the past. 
Trading reflects back at us, sometimes brutally, what we really are. With each position, we test the reality of the trader that we are, we test how our ideal Self compares to our true Self. Because of this, many traders will lose everything by not yielding, remaining inflexible faced with the markets because cutting their losses would be wrong and being wrong would damage their self-image. This would shatter their ideal Self and their Ego.
It is for this reason that we sometimes find people who have been ruined in the financial markets but still can’t stop telling you that they were right, that their analysis was good, and that the market was either totally manipulated or that only idiots trade. It is simply a defensive reaction to protect their injured Ego. They do not want to look reality in the face, they avoid the mirror and so they need to find a scapegoat: the broker, the method used, the market itself, twitter influencer or the whale that dumped.
It is a great accomplishment to be wrong and to accept it. I have rarely met people who are capable of saying: “I was wrong.” Usually, the prevailing opinion is that they were right but lost money because of an external factor. A person who can live off his trading is statistically exceptional - they are among only 5% of traders. They have accepted the reality that they are not perfect, they never will be, they will still be wrong hundreds, maybe thousands of times… and that being wrong is of absolutely no importance.
You must be totally uninhibited with regards to failure. Doing this makes your management and abiding by your stops much easier. Far too many people combine their social status, their profession, and their trading results with who they are. Most traders take a big loss and fall to pieces. Their psychological structure collapses. We are more than our jobs and what we earn at the end of the month is not our identity. I am not a better person or intelligent because I made $10,000 on the financial markets in the month, nor am I pathetic and stupid because I lost that amount.
You have to stop identifying with it.
You will know that you have made tremendous progress the day that a loss is no more than information like any other which doesn’t change how you think about yourself. The same goes for a gain. A trader must strive toward psychological strength without weaknesses and for this there is no magic bullet - you have to work on yourself. Trading can be the path to becoming a more balanced, more accomplished person, more than the path to just becoming “rich.” It can make you a better person, more capable of accepting and admitting when you are “wrong.”
It’s all in your head.
Plan your losses, accept them and move on. It’s the only thing you can control in trading.
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In This Issue:
  1. Plan Your Losses
  2. Bitcoin Thoughts And Analysis
  3. Altcoin Charts
  4. Chart Requests
  5. U.S. House Passes Bill Favoring Crypto Regulation
  6. Brian Brooks Hired As CEO Of Binance.US
  7. Mina Protocol - The World’s Lightest Blockchain
  8. AIOZ - Revolutionizing Entertainment With Blockchain
  9. The Wolf Of All Streets Podcast Ft. Ari Paul
  10. My Recommended Platforms And Tools

Bitcoin Thoughts And Analysis
I am still unsure about Bitcoin at the moment, and believe that it could go either way. My preference would be for it to remain sideways so that altcoins can thrive. I can present to you both short term bullish and bearish cases, so I am staying away until we have more clarity. On larger time frames, everything still looks exceptionally bullish, so I am speaking just as a trader. As an investor, buy dips and hodl.
DAILY CHART
The daily does not look bad - it still potentially has higher lows and highs unless the green demand zone is broken and a lower low is confirmed. That said, I was bullish on the three previous daily candles that had nice long wicks down. Yesterday’s candle pushed back down to where we saw demand on those wicks and closed there, meaning those orders were largely cleared out and bears were able to advance a bit. Not a big deal, but worth noting that the bullishness of those candles is canceled. We also have 3 consecutive closes below the 50 MA, if that is meaningful for your system. We have not seen price close a single candle below that line since October, 2020. So it’s worthy of note as well.
I have circled the last time it traded below the 50 MA. You can see that it did not drop far below, but it did remain there and sideways for quite a while. We could potentially range here and see something similar, but certainly no guarantees. Just interesting to look at what happened last time.
4-HOUR CHART
Nothing has really changed here. We still have price trading in the bottom half of the larger blue range. We have moved to the top half of the red range, which is encouraging. Still, this is all chop and not tradable for me.
Coinbase made a second low exactly at the same level as the first one on the other drop. That puts a double bottom in play, although it would require a break of the swing high between them to confirm. That would coincide with a flip of the EQ (center) of the blue range back to support. The problem? Other exchanges did not drop as far, so the potential double bottom is less in play. Either way, a double bottom is just an idea until that high between the two bottoms is broken.
As always, I look for a bullish divergence after RSI reaches oversold, especially on the 4- hour chart. These have historically been good reversal signals. I drew the idea a few days ago and shared it. Well, good news and bad news. We had confirmed hidden bearish divergence in red, which was replaced by bullish divergence in blue. That cancels the hidden bear div. Cool.
But… I was looking for the larger bullish divergence, the idea shown in black. Price dropped far enough on a wick but close above the recent lows, meaning no divergence. Higher low on price, higher low on RSI. That is the div I would view as meaningful.
The blue divergence counts, it could be a bottom signal. But it’s less compelling for me since it does not start in the oversold region.
Altcoin Charts
Yesterday I shared DOT and LINK setups, both of which are progressing nicely and in profit. SOL, FTT and others I have shared are still absolutely flying, and I LOVE ETH, LTC and TRX still, which I have shared countless times. If the altcoin market bounces here, we can expect good price movement across the board.
BITCOIN DOMINANCE
Notably, Bitcoin Dominance could potentially drop below 50% for the first time in years. This is a function of both more alts being added to the market and the strength of larger caps over the past few weeks. But a continued drop in Dominance should lead to some fun in the altcoin market.
Doing TA on a Dominance chart is a bit of a meme - there is no asset being traded, therefore no support and resistance, supply and demand, caused by traders placing orders. But if it’s your thing, you can see the chart above.
More importantly than TA, you can see what the massive alt seasons in the past looked like on Bitcoin Dominance. Huge and steep drops that led to epic gains on alts. We are starting to see something very similar here. According to the chart, if Dominance loses the 50% level, it could free fall to the next level of “demand.” That would make for an epic continuation of the alt party we have been seeing.
ATOM/BTC
This was a request on the livestream yesterday. I shared the idea of the inverse head and shoulders, which was not yet confirmed. Now we have confirmation with a small spike in volume on the breakout that I consider valid. Price has also just retested the neckline of the IHS as support.
Zooming in, you can see the target, based on the depth of the pattern. You measure that depth and then pull the same difference to the breakout. This also coincides with the cluster of price action that I circled on the left, which you would expect to be major resistance.
If I was trading this, I would put my stops comfortably below the bottom of the right shoulder in case of a wick.
ETH/USD AND ETH/BTC
I have shared a number of newsletters and videos about this setup, which has a target of $3,600. More immediately, price is making a new all time high and heading into price discovery, assuming we see a daily close above $2,546. That would be further confirmation of ETH bullishness.
As a trader, I am FAR more interested in ETH right now than Bitcoin (different as long term investor, perhaps) and have been for quite a while. I think that ETH still has not made it’s big move after breaking the all time high. We saw BTC pull a quick 3X on the same concept.
I have already shared ETH/BTC this week, which looks even better. Here is the update on that.
Inverse head and shoulders confirmed, breakout of resistance since all time high confirmed, new local high confirmed. What else do we need?
LUNA/BTC
This got away from me before I could share, although I was pretty passionate about this in the live stream yesterday, which you can watch below. You can see that this bounced beautifully out of the demand zone and break through the descending resistance. It is currently at the 50 MA, which could act as resistance. To be clear, the best entry was in demand on the breakout, so now I would wait for either a drop to that area, or to break resistance and above and retest as support. The idea is drawn, but it’s not related to the actual time frame it is drawn on - just a general kind of path for it to take it if continues up. Play each level as a resistance to support flip. If you are an MA trader, you could trade the break of the 50 with a confirmation of a close above.
Wish I had been able to get this out a bit sooner!
Chart Requests
Here is the chart request live stream from yesterday. A lot of coins seem to be reversing and showing signs of strength today, which was not the case when we reviewed. Still, this should give you a good idea of what is going on.
Next week we will be CHANGING THE WAY YOU MAKE REQUESTS, using a google form. The email method is unsustainable with how many requests are coming in, so PLEASE DO NOT EMAIL ANY MORE CHART REQUESTS.
$AAPX $ADA $ALGO $AR $ARPA $ATOM $AVAX $BAND $BNB $BQX $CAKE $COTI $COV $DIA $ETH $FET $GLM $HBAR $HXRO $ICX $KIN $KSM $LSCC $LTC $LUNA $MIR $NANO $OMI $ONT $PRQ $POND $QTUM $RAMP $RAY $REN $RLC $ROOK $ROT $RUNE $SC $SCRT $SNOW $SNTVT $SXP $VRA $VYGVF $WAVES $YFI $YFII
Bitcoin And Altcoin Chartapalooza - 50+ Live Charts In 90 Minutes!
U.S. House Passes Bill Favoring Crypto Regulation
House Passes Bipartisan Financial Services Bills | Financial Services Committee Republicans
The Eliminate Barriers to Innovation Act is long overdue legislation designed to initiate collaboration between the CFTC and SEC. Right now, these two governing bodies are doing their best to define digital assets within their own limited frameworks and are individually failing to capture the nature of cryptocurrencies. While the act sounds vague in that it only mentions “innovation,” it was intentionally designed with digital assets in mind.
A working group would be established between the two agencies to legislate on digital assets. The group would be given one year to answer fundamental questions needed to move the space forward, including: regulations around markets, fairness in markets, effectiveness of U.S. laws and security standards. Still needing approval from the Senate and then the President, this legislation will hopefully prevent impractical blanket labeling of cryptocurrencies as either being entirely securities or commodities.
Brian Brooks Hired As CEO Of Binance.US
Binance.US Hires Former Bank Regulator Brian Brooks as CEO, Former Head Coley to Depart - CoinDesk
Brian Brooks, former head of the OCC under President Trump, is joining Binance.US as CEO. Brooks did a phenomenal job publishing interpretive letters for banks to interact with crypto, assisted in stable coin regulations, and approved the first federal bank charter to go to a crypto-native company.
Brooks will be replacing Catherine Coley, a guest I have featured twice on the podcast. Coley has done a phenomenal job establishing Binance’s U.S presence and I count her as a friend and am personally very sad to see her go. According to Brooks, not only will Binance be giving Coinbase a run for its money, it will also be searching for new licenses to expand the services offered by the platform.
Mina Protocol - The World's Lightest Blockchain
MinaProtocol – Medium
Mina Protocol have been amazing supporters of the Wolf Of All Streets podcast and the newsletter, so I wanted to take the opportunity to more properly explain why the project is so exciting.
Mina is the world’s lightest blockchain — weighing in at a consistent 22kb thanks to advanced cryptography and recursive zk-SNARKs. It is powered by participants. Every user is a full node and can connect peer-to-peer without the need for intermediaries.  Mina’s application layer is home to a new kind of decentralized SNARK-powered app — called Snapps. 
Mina solves (at least) three problems: 
Blockchains are heavy.  Mina is light. 
Blockchains don’t interact with the internet.  Mina privately interacts with any website. 
Powerful players demand user data. Mina keeps users in control of their data. 
These three features make Mina a powerful tool — but what are they building with it? 
A Private Gateway between the Real World and Crypto: 
Mina is focusing on use cases that will help us build a private gateway between the real world and crypto — and the secure, democratic future we all deserve. 
Examples:
End-to-End Data Privacy: From Online to Onchain
Users can access critical on-chain services without sharing their personal data. Instead, they use Mina to prove that they meet the requirements. No need for a trusted enclave that can be compromised. See Teller’s Snapp Demo here. 
Permissionless Web Oracles. 
With Mina’s Snapps, developers can leverage private, verified, real world data from any website to build decentralized apps. They can input any information that is publicly available on the web (without needing that website’s permission). And they can access, use and protect sensitive data by only sharing the relevant proofs. No need for trusted oracles or custom website integrations.
Mina Community
Mina is powered by participants, with an uncapped number of block producers. Their inclusive community unites people from more than 100 countries around the world with a passion for decentralized blockchain and user-centered technology. 
Official links
Here is my recent podcast interview with Evan Shapiro, CEO of Mina.
How Bitcoin Will Change Your Life
AIOZ - Revolutionizing Entertainment With Blockchain
AIOZ brings in a revolutionary CDN | by AIOZ Admin | AIOZ Network | Feb, 2021 | Medium
AIOZ Network is a Layer-1 blockchain-based content delivery network that revolutionizes the entertainment industry. AIOZ Network utilizes blockchain and decentralization to improve upon traditional methods of content distribution. A distributed Content Delivery Network (dCDN) uses nodes for storing, streaming, and transferring data instead of traditional data centers operating on a P2P model.
Nodes in the AIOZ Network are the community members that give the company access to their redundant storage, computing power, and bandwidth. Advantages of AIOZ Network includes faster streaming, an incentivization model for content creators and community members, and is much cheaper than traditional CDNs. Read more about AIOZ Network from the link provided. 
Read more about the cost saving of uploading content like a video on AIOZ Network as compared to Youtube:
Highlights of AIOZ Network in the Media:
The Wolf Of All Streets Podcast Ft. Ari Paul
Podcast - The Wolf of All Streets
Bitcoin is better than Gold
One of crypto’s most trusted voices of reason, Ari Paul, is gifted with the ability to stay neutral and logical while many others swing wildly between euphoria and depression. Although Paul remains optimistic towards Bitcoin, he understands that it fundamentally, and existentially, still has some growing to do as it morphs into the ultra-secure network many believe it will become. Furthermore, he knows that if grandma can’t easily navigate and trust the system, it isn’t truly ready for the masses. The truth isn’t always easy to hear, but in this episode, Paul offers one of the most holistic and logical views regarding Bitcoin and the crypto space.
In this episode, we discuss a range of topics including:
  • The Coinbase listing breakdown
  • Exposure to exchange tokens
  • Bitcoin’s existential risk
  • Billion-dollar slippage
  • Bull market phenomena
  • Trusting grandma with crypto
  • Coordinated Bitcoin attacks
  • Fragmented crypto liquidity
  • Uniswap rug pulls
  • The natural trend towards consolidation
  • Ledgers in a safety deposit box
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My Recommended Platforms And Tools
This is where I trade with leverage and can also trade spot with no fees.
This is where I spend my days teaching and learning! Our Discord group is a one stop shop for everything you need to learn to trade and control your emotions. Feel free to DM me on Twitter or respond to this email for questions. Code Wolfsden50%off for a 50% discount on the first month.
This is where I invest, commission-free. They now let you earn interest on your Bitcoin held in Voyager, so you can compound while trading. Not only that, you’ll get $25 in free BTC when you download & fund.
Rewards Code: WOLF25
I use RoundlyX to buy small amounts of Bitcoin every single day. They automatically round up my credit card purchases (with 10x multiplier) and invest them in crypto. Absolutely brilliant. Passively invest money you don’t need without a thought. Further, they have integrated with Voyager (see above) to offer commission-free purchases.
Rewards Code: WOLF
Concierge Phone Service for Americans that protects your from SIM Swaps and other phone related hacks. I cannot stress enough how amazing this service is.
Follow me on Twitter at @scottmelker. This is where I am constantly updating my trades and sharing ideas.
On-chain and fundamental analysis, research, predictions and indicators, all in one place. Highly recommend.
The views and opinions expressed here are solely my own and should in no way be interpreted as financial advice. Every investment and trading move involves risk. You should conduct your own research when making a decision. I am not a financial advisor. Nothing contained in this e-mail constitutes or shall be construed as an offering of financial instruments or as investment advice or recommendations of an investment strategy or whether or not to “Buy,” “Sell,” or “Hold” an investment.
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