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The Wolf Den #286 - Detach Your Emotions

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July 15 · Issue #286 · View online
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I wrote an article in 2019 for CoinTelegraph, highlighting 7 tips to detach your emotions from your portfolio. It still rings true today. Here are the ideas that I shared.
Humans are inherently emotional beings — we love, we hate, we feel fear, we experience greed and we question our decisions. All of these emotions are the enemy of a successful trader.
“The key to trading success is emotional discipline. If intelligence were the key, there would be a lot more people making money trading.”
— Victor Sperandeo
Knowing how to control emotions while trading Bitcoin - or any other asset — will likely be the difference between success and failure. Maintaining a calm and calculating demeanor is key to making money as a trader.
Emotional traders’ most common mistakes
Here are some common mistakes that emotional traders make: over trading, trading impulsively, revenge trading, missing trade after trade, hesitating, chasing the market, entering late, taking premature profits, moving stops too close to the market or too far away from the market, breaking their rules or blowing up their accounts. 
Do any of these sound familiar?
When I first started trading “professionally” I felt desperate to prove that I could make it without another source of income. I spent countless hours at the screen, studying price action and searching for the perfect entry for my next trade. 
Since I was “full time,” I felt the need to always be in the market, taking trades that did not fit my plan because it was my “job” and, in my mind, that meant I needed to always be “working.”
I took larger losses than I did when I was not a pro, moving stop losses down in fear of barely missing the next big move or taking a significant hit to my trading capital early in my career. I also took profit far too quickly, fearing that price would turn against me and I would miss the opportunity to make money. 
These were all emotional decisions that cost me money. Luckily, I reeled in my emotions quickly and was able to turn my bad habits into lessons.
Acknowledge fear vs. greed
Fear and greed are the two most common emotions that traders experience, and these account for most of the poor decisions that lose them money. 
Fear is often caused by trading with too much size, compounding the consequences of a bad decision. Traders often make mistakes when they are in too large of a position that they would not make otherwise. 
Fear is also common when you take a trade with little conviction — you know that you are in the “wrong” trade but are unsure how to escape. Fear is what makes us sell our winners too early and hold our losers too long.
In the movie Wall Street, Gordon Gekko famously stated that “greed is good.” A certain amount of greed is necessary because it’s required to make speculators want to trade in the first place. 
The downside to greed is that it causes traders to “chase the market,” or FOMO into bad positions. An example is buying after a large sudden move higher when the market is already overbought and demand is waning. 
Greed also causes traders to hold a position past their target, often failing to exit at the right moment, right before the price turns the other way. So how do we fight the pitfalls of trading with too much emotion?
Failing to plan is planning to fail 
Develop a system and stick to it. Have specific criteria for entering and exiting trades. Always trade your plan. Have your entry, stop loss and take profit levels mapped out in advance — don’t change them once you are in a trade. 
Be patient and wait for your entry. Entering into mediocre trades will yield mediocre results. If you only trade the best opportunities you will trade less but you will have greater success. Write down your rules. Do nothing unless every rule is satisfied. 
Treat trading like a business
If you are a full-time trader, then you need to approach trading like a business. Create a business plan and edit it monthly. Keep a trade journal and study your past mistakes. Have specific rules for taking profit to pay your bills and cover expenses. Set achievable goals and incorporate daily activities (studying markets, reading financial news, paper trading, etc.) to keep your emotions at bay. 
You will be less likely to force trades out of boredom or because you feel internal pressure to be productive. Without a plan, you are likely to wake up each morning and force bad trades with no real direction.
Never watch the scoreboard
The only score that matters is the score at the end of the game. Avoid checking your portfolio or trade status repeatedly — set it and forget it. The more often you check to see how your trade is doing, the more likely you are to make an emotional decision to either exit too early or move your stop loss.
Know when to trade
Staying away from suboptimal market conditions is prudent. The crypto market, and more specifically, the altcoin market, is rarely tradable. Wait for the right moment to execute. 
Only trade when you are in the proper mindset. Don’t look to the market to make you feel better; if you aren’t up to trading the simple solution may just be to step away.
Trade with the proper size
Nothing causes more fear than trading with too much size. Start small and scale up as your portfolio and comfort level grow with the market. Scale in and out of positions to minimize the emotional drain from exiting too early or too soon.
Have a life outside of trading
Spend time with your family and friends. Go to the gym regularly. Eat healthy food. Turn off your phone and don’t check your portfolio regularly. Keep specific trading hours, and do not trade during your leisure hours. Nobody can trade 24/7 — it causes mental fatigue and poor decisions. Get a life!
There are numerous steps and techniques that a trader can use to eliminate emotion from their decision making. Find what works for you and stick with it. Control your feelings and become a successful and profitable trader.
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In This Issue:
  1. Detach Your Emotions
  2. Bitcoin Thoughts And Analysis
  3. Altcoin Charts
  4. Legacy Markets
  5. Chart Requests
  6. Trading Should Be Boring
  7. Bitcoin SV May Be In Trouble
  8. Is Tesla Underwater On Bitcoin?
  9. The SEC Delays Another ETF
  10. Spike Lee Is Taking Us Mainstream
  11. The Wolf Of All Streets Podcast Ft. Stephen Stonberg
  12. My Recommended Platforms And Tools

Bitcoin Thoughts And Analysis
I continue to reiterate that Bitcoin is chopping sideways and should likely not be traded at all. Long term investors will benefit from buying at any level, because we all believe that eventually Bitcoin will trade much higher than the current price. If you are dollar cost averaging or buying with a decade long time horizon or more, I see no reason not to buy here with excitement. If you are trading or are impatient, I would not touch it at all. Price is ranging between 42K and 30K - anything in the middle is noise. That said, the trend turned clearly bearish below 42K, so there’s no real technical bullish case short term until price is back above that area. We had a major drop and then consolidation. That leans bearish for traders.
WEEKLY CHART
The last 8 weekly candles have managed to drop below the 34K level and then close back above, largely rising on Sunday to do so. This week looks the same so far, the question being whether it will bounce once again. There has been tremendous demand below the 50% retracement (around 34K) of the entire move from $3,800 to $65,000. It will be interesting to see if price can rally into the weekly close once again and hold this trend for a 9th candle. Pretty insane.
One thing we can be sure of - the longer price consolidates on low volume, the more explosive the eventual move will be. Let’s hope it is up. What we are seeing it not unexpected for summer price action. “Sell in May and go away.”
DAILY CHART
This is the 12th daily candle that has tested the ascending blue support that was the bottom of the symmetrical triangle that many traders were watching a few weeks ago. Many candles have wicked below and closed above, so it will be interesting if today’s candle manages to do the same. Either way, we have a very clear descending blue channel, which statistically should break to the upside. That said, it could still visit the bottom of the channel first, so there’s no reason to trade it until the breakout from the top occurs. This is an asset ranging sideways in a very tight pattern. Hard to glean much useful information.
4-HOUR CHART
Price has struggle mightily to break above 36K, the EQ of this trading range. The first sign of bullishness would be price reclaiming that level and trading in the top half of the range. The clear rejection at the end of June was a sign that the range lows were back in play, and we have been approaching that area since. That said, price is in a nice descending channel (dark red), which still requires another touch on the bottom to fully confirm. Perhaps we get that touch soon with a trip a bit lower. I have no idea if that will happen, this is still just low volume nonsense.
We have potential bullish divergence with RSI, but would be very hard to confirm. We need price to close below the black line, RSI to make a higher low and then RSI to turn up on the next candle to give a clear elbow. Still, I am always watching for this. 4-hour bullish divergences have historically been great bounce signals, although better when RSI is oversold.
Altcoin Charts
I still view the altcoin market as extremely risky and not worth trading. To be crystal clear, I would not trade any of these ideas, and they are simply potential setups. I do not provide signals. The goal is to show you what I am watching on a chart and what would qualify as a potential trade for me so that you can put it into your own system and decide if it works.
A huge part of trading is knowing when NOT to trade. That has been the case for crypto, in my opinion, for months. If you are looking for alt trades and are still making it work, then these are a few ideas.
AAVE/BTC
This is a really nice setup. Once again, this is not a signal and is not a “buy now” opportunity.
You can see that we had a beautiful breakout through the descending black line recently, which I posted a number of times. Price managed to break through the key resistance at .008295 and to retest it beautifully yesterday as support. Yesterday’s daily candle was a hammer, which is potentially bullish if confirmed by another grey candle today. That means it had a wick down with a nice grey body on top. Added bonus for the wick being below support and the close above.
All of this while forming a perfect bull flag, with alternating touches up and down above support.
The trade here is a break of the flag to the upside. Slightly riskier is to buy the red support at .008295.
Target is shown, based on the length of the flagpole. I would expect the .0107 area to be strong resistance on the way up, if it happens.
I have been tracking this trade for quite a while. You can see that entire thread here.
The Wolf Of All Streets
$AAVE

Looking for a clean breakout against $BTC.

Yesterday's attempt failed, today's looking good. https://t.co/AJtMhzTQT6
BNB/BTC
The Wolf Of All Streets
$BNB / $BTC

Broke descending blue resistance and went up. Presently consolidating below resistance in a bull flag.

ALT/BTC pairs do not look bad to me at the moment. https://t.co/blSnlarNJF
I posted this setup yesterday on Twitter, before the breakout. Unfortunately, I noticed it AFTER I had already sent the newsletter.
As you can see, we already had the breakout through the descending blue line, which I posted previously as a trade. This brought price to resistance at .00978. As often happens, price consolidated below resistance, making a perfect bull flag with 2 alternating touches up and down to confirm. Since I posted, price broke out on exceptional volume.
The last candle closed right at .00978 resistance, so we still want to see a clear break. I would NOT ENTER THIS before candles are closing above, personally. It’s rarely wise to buy resistance - the risk/reward is poor, even if it works out. A retest of that area as support after a clear close above would be the technically best entry. A retest of the top of the red flag as support would also be a nice place to bid.
A bull flag target is determined by taking the length of the flagpole and moving it to the point of breakout. You can see that this gives a target around .011, which coincides with the recent highs and a clear area of supply.
Legacy Markets
AAPL (APPLE)
I have been posting long trades on Apple for quite a while now, as it has smashed through each and every target. As you likely know, I am a long time Apple investor, and I rarely sell the stock - it’s a buy and hold forever asset, in my opinion. I occasionally dabble in trades in my separate trading portfolio, which I have done on this asset of late.
If you are trading it, it is presently in price discovery after breaking the all time high. Technically, a retest of that level as support would be a great entry, if it happens. That is $145.09. After that, assuming the market continues to rise, sky is really the limit.
Chart Requests
As always, I took your chart requests and looked at them on a Wednesday live stream. The coins I viewed are in alphabetical order. Enjoy!
WTF ARE BITCOIN AND ALTCOINS DOING - Live Charting Session
Trading Should Be Boring
“Investing should be more like watching paint dry or watching grass grow. If you want excitement, take $800 and go to Las Vegas.” - Paul Samuelson
Trading should be boring. Really boring. Watching snails cross the road levels of boring.
I have always loved the above quote because I think that 99% of traders would be better off gambling in Vegas - at least you get free drinks while you are losing your money.
This was a very hard lesson for me to learn. In my 20s, I played a ton of poker - in dingy card houses in New York City, in Atlantic City, and Vegas and online. I was a decent player, although I lacked the emotional discipline and risk management to be truly successful. I largely treaded water, made very little, and wasted a ton of valuable time and sleep.
I found at a certain point that it was becoming far too time-consuming. I would play out of boredom, in the middle of the night, first thing when I woke up and off to the side while I was doing other things. It became habitual to fill my free time (and not so free time) with a few hands at the poker table. One night at around 4 AM, I had just returned home from work (DJing) and a friend called and said that he had hired a limo to head to Atlantic City to play poker. The two of us caught a nap in the car and headed to the Taj Mahal.
We were both exhausted, in limbo between intoxicated and hungover, and really not up for it by the time we arrived. We cashed in for some chips, went to the tables, and did what was inevitable - we lost all of our money. A few times. So much so that we were no longer able to withdraw cash from the ATM. Further, the limo was a company car and went back to NYC hours before. 
So what happened? We got on a New Jersey Transit bus at 11 AM to head back to NYC. It was absolutely miserable and took about 3 hours to get us to the city. We were in terrible shape, exhausted, broke, and nauseous. What’s worse? I was wearing a brand new pair of underwear, which gave me contact dermatitis in all the wrong places. I was unable to sit comfortably for a week, and was in serious pain on the bus ride home.
Good times.
Lesson learned. I was a gambler and needed to stop before I developed a problem. So I stopped playing poker, easy.
This translated to my trading as well. I turned everything around when I realized that trading should be a completely unemotional pursuit, that I should not be trading until it gave me little joy and absolutely no unhappiness. 
It’s not easy to get to that point, but when you do you are ready to be a successful (and very bored) trader.
Bitcoin SV May Be In Trouble
Is Bitcoin SV 'collapsing in real-time' right now? - AMBCrypto
One of main reasons for blockchains and cryptocurrencies to exist is their ability to solve the double-spend problem. Major payment providers spend millions on centralized security systems to prevent double spending, something that blockchains do on their own. That being said, not all are projects are successful at making sure a double-spend is avoided and as of late, BSV (Bitcoin Satoshi Vision) has been failing at one of its most important jobs. 
Starting in July, BSV was suspended from major exchanges when routine checkups alerted them to the fact that the coin was being double-spent due to a 51% attack. This happens when wealthy entities spend large sums of money to gain control of the hash power and reorganize the chain, giving them a temporary window to double spend the asset as the rest of the world is unaware of the attack. Popular coins with low security become a desirable network to hack because they have enough activity and size to churn a profit after the money is spent to gain hash power.
BSV has become a prime target. The recent halving event was expected to draw in newcomers and drive up price, but the opposite occurred. The hash rate dropped about 50% due to low interest, resulting in fewer miners securing the network and fending off an attack. Huobi Global was the first to suspend BSV, followed by OKEex and Bittrex. Coinbase has delisted it entirely. As for now, it isn’t clear what exchanges’ long-term plans are with the asset, but holding onto BSV can be risky, especially with 51% attacks occurring. 
Is Tesla Underwater On Bitcoin?
By The Numbers: How Much Is Tesla 's Bitcoin Worth Now? | Bitcoinist.com
Is Tesla underwater on their Bitcoin purchase? It is possible - the odds are seemingly 50-50. When the news was first announced and more information circulated, I ran the calculations with my best guess on the average purchase price and made the following assumptions: “A very conservative upper estimate on Elon’s average price is $35,000. It is also possible that Tesla accumulated Bitcoin back in December for much more favorable prices - sub $30,000. A month-old post on Reddit from a Tesla insider claimed that the average purchase price was $33,142.” Therefore, it is reasonable to believe the average purchase price was between $30,000 and $35,000 per Bitcoin.
As confluence to this idea, the article linked above quoted a purchase price of about $30,000. Regardless of the purchase price, a difference of a few thousand-dollar is irrelevant in the long run. Whether Tesla holds or sells, Bitcoin will continue on the path to global domination. Musk is volatile, but his power continues to wane. Max Keiser, a podcast guest, and popular Bitcoin maximalist had a quote in the article I really liked, which I added below. 
When a great mind accompanied by a big ego encounters Bitcoin, it immediately gravitates towards trying to fix it. Elon is not the first and will not be the last. Every great Bitcoin thinker out there had an Altcoin phase. They all thought that maybe a new idea had come along that made Bitcoin obsolete.  
Eventually, they all realize that Bitcoin is more of a miracle than a technology. That the economic incentives are right where they belong, and that it’s a machine with the potential of improving the world for everyone.
Whether Tesla has diamond hands or not will not affect my opinion on the asset and it shouldn’t affect yours. Yes, idolizing the “greats” like Michael Saylor and Elon Musk opens the potential for cracks in the system, but at the end of the day, their investment decisions shouldn’t impact yours.
The SEC Delays Another ETF
US SEC Pushes WisdomTree Bitcoin ETF Decision to Fall - BeInCrypto
There are now over a dozen ETF applications on the SEC’s desk, as they continue to kick the can down the road and refuse to make a decision. We have seen a number of applications pushed back, asking the public to comment on the filings, including Valkyrie, a company that I am invested in.
It is clear that the SEC is unprepared to make a decision. Some would view it as a positive that they have not denied the applications outright. Others view it as negative that an ETF has not been approved.
Regardless, we all know that an ETF is inevitable, whether in the fall or in 3 years. This will be the key to unlocking a wall of institutional money.
Spike Lee Is Taking Us Mainstream
The Currency of Currency - Directed by Spike Lee
“Our currency is not current, old money as rich as it looks, is flat out broke.” - Spike Lee.
The legend Spike Lee appeared in a crypto commercial for CoinCloud where he explained why our old systems aren’t cutting it for our modern needs. He takes the stance that new money (referring to cryptocurrency) is, “positive, inclusive, fluid, strong, and culturally rich.” Although the commercial fails to mention any specific coin, I’ll give him the benefit of the doubt and assume he is describing a meaningful project *cough,cough Bitcoin.* 
The Wolf Of All Streets Podcast Ft. Stephen Stonberg
Podcast - The Wolf of All Streets
Bitcoin To Be As Big As The Internet | Stephen Stonberg, CEO Of Bittrex Global
Exchanges are the engines that make the crypto space run. Behind the scenes of almost every crypto transaction, countless exchange employees are working tirelessly to provide an optimal experience for users while staying on the cutting edge of technology. Stephen Stonberg has been tasked with one of the most challenging jobs in crypto - CEO of Bittrex Global. His job is focused on scaling rapidly in advance of institutional and mainstream adoption. Stonberg believes that, like the internet, blockchain is an unstoppable force that will drastically disrupt the modern financial system.
  • Intro
  • Bittrex vs. Bittrex Global
  • Navigating regulation
  • Why does FUD perpetuate?
  • Current exchange metrics
  • Tokenize everything
  • The Grayscale unlock
  • Scaling for institutional adoption
  • The arrival of institutional money
  • What is Bitcoin’s narrative
  • Working with the trend
  • Thoughts on the market correction
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My Recommended Platforms And Tools
This is where I trade with leverage and can also trade spot with no fees.
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Mining for everyone! You can buy an ASIC and have it set up at a destination of your choice by them, and you only pay the electricity cost. Absolutely awesome.
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.
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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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