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The Wolf Den #316 - Control Your Losses... And Your Mind

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August 26 · Issue #316 · View online
The Wolf Den Crypto Newsletter
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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, so 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 a significant concern on any liquid asset or exchange.
People give numerous reasons for refusing to take losses. Cutting your loss is damaging for your ego - often more-so than for your wallet. People are narcissistic and trading is an activity where we face the consequences of our most immediate decisions in real-time. Trading is a constant reminder of who we are, and the truth is unescapable.
Everybody knows Freud’s approach to psychoanalysis, identifying three parts of the personality : the Id (unconscious), the Ego / Me (what we are at a given moment in time and the Superego (the limits that society imposes on us,). You can also add to this the ideal Me, which is what we desire to be. This is the idea of comparing yourself to the perfect outcome that I have discussed in the past. You will always lose money if you gauge your performance on the best possible scenario.
Trading reflects back at us what we really are, and the results are often brutal. Many traders will lose everything by not yielding because they fear being “wrong,” and being wrong is damaging to their self-image, shattering their ideal Self and their Ego. That’s why they move their stop losses in the middle of a trade.
This is why we all know people who have been ruined in financial markets but still insist that they were right, that their analysis was solid, that the market was either totally manipulated or that only idiots trade. We hear this in Bitcoin all the time. It is simply a defensive mechanism to avoid accepting responsibility for their losses. They need to find a scapegoat: the broker, the indicator, the market itself, Twitter influencer or the whale that dumped.
Few people I know can simply say “I was wrong.” Especially in markets. Usually a trader believes they were right, but an external force caused the loss. A person who can live off his trading is statistically exceptional - they are among only 5% of traders. They accept that they are imperfect, and will be wrong thousands of times. More importantly, they know that being wrong does not matter. What matters is following their plan and losing small.
You must be totally uninhibited with no fear of failing. This makes trade management easier. You will stop moving your stop losses for fear of being wrong. You cannot combine your self worth, social status, profession and trading results with who you are. Most traders take a big loss and fall to pieces. Their psychological structure completely collapses. You are not your job, and your earnings are not your identity. I am not a better person because I made $100,000 this month, nor am I pathetic and stupid because I lost that amount.
You have to stop identifying with it. It is not who you are.
You will know that you have made it the day that a loss is no more than information like any other, which has no bearing on how you think about yourself. The same goes for a gain. A trader must strive toward psychological strength. Trading can be the path to becoming a more balanced, more accomplished person, and 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.  Control Your Losses… And Your Mind
  2. Bitcoin Thoughts And Analysis
  3. Altcoin Charts
  4. Chart Requests
  5. Microsoft Moving Into Blockchain
  6. Protect Your Assets, NFTs Included
  7. Morgan Stanley Heavily Exposed To GBTC
  8. News Video
  9. Star Atlas
  10. The Wolf Of All Streets Podcast Ft. Dan Held
  11. My Recommended Platforms And Tools

Bitcoin Thoughts And Analysis
WEEKLY CHART
We just completed 5 green weeks in a row. No surprises that the move is running out of steam for the moment and that we are seeing a bit of action to the downside. The 42K area is still screaming for a bullish retest as support, but no guarantees we get that. Either way, price has found resistance just above 50K at the 23.6% retracement level of the move up from $3,800 to $65,000. Again, no surprises.
I believe we are in a fresh bull run and that dips are for buying. If we see strong price action back in the 30,000s, my bias could change. For now, dips look like an opportunity.
DAILY CHART
This setup played out as anticipated, much like December of last year. As you can see though, the bands are once again tightening and have ceased to rise, a sign that the current move could be exhausted. Bollinger himself tweeted about this, although he openly said it just means to be cautious. For now, we want to see the midline of the BBANDS hold as support, which is being tested at the moment. If that fails, we would likely see a trip to the lower band before the next move, which lines up well with the idea that seemingly everyone shares about a dip to 40-43K.
We have seen persistent bearish divergence with RSI on the daily, but each instance has been eventually followed by hidden bullish divergence, which effectively cancels the bear div. We could once again see hidden bullish divergence if price make a higher low and RSI makes a lower low. This is just an idea, and would only confirm with RSI closing the lower low and then making a clear “elbow” up. I will be watching.
4-HOUR CHART
The demand zone in blue continues to hold, but has been pierced and is therefore exhausted. Bids that were set here have been filled, so now we need to see follow through the upside or the next demand area below will likely be tapped. For now, we have a potential bullish hammer candle forming but still 2 more hours until it closes. If this prints and is followed by another green candle, the small correction would likely be over.
We have a fresh descending resistance line that is confirmed with three touches. A break of this line would signal an end to the correction as well.
Altcoin Charts
In this section, I generally share altcoin charts and setups (not signals). I am careful to only do so when the market is looking bullish for alts. With Bitcoin correcting today, altcoins are looking a bit shaky. We have had epic trades over the past month, but now seems like a good time to watch and wait to see if alt season is going to continue. That said, some coins that are dropping could offer a great opportunity to buy the dip, if the dip continues.
AVAX/BTC
I posted setups on both videos and in newsletter ahead of the large AVAX move. We potentially have a fresh opportunity here on the BTC pair, which largely depends on what BTC does next. AVAX is currently testing a key resistance as support at .0008951. This trade has a high risk reward, because you can set a tight stop or exit if candles close below that level. That does NOT MEAN this is definitely going up, it means you can take a trade where you lose very little if you are wrong, which is what you generally look for. The target is the top line at .0013369. Above that would be price discovery for new all time highs.
ETHEREUM
Remi Tetot
#Ethereum will cross $15k in the next 6 months...

The network effect in action! https://t.co/zdHBajYmuM
Not only is Ethereum forming a massive multi-year channel similar to Bitcoin, but it’s movement is eerily similar to Bitcoin’s historical price path. When you superimpose the history of Ethereum’s price action from 2016 to today over Bitcoin’s historical chart, you will notice a freakishly similar path of price appreciation. From 2016 until now, they each have had nearly identical price levels at both highs and lows. The only difference is that Ethereum is almost exactly 4 years behind Bitcoin. Assuming this trend continues as shown in the linked chart (we CANNOT ASSUME THIS), Ethereum could go as high as $19,000, roughly where Bitcoin peaked in 2017. If it does, this would provide strong evidence for a deep correction after, since the trend is mirroring Bitcoin. If you aren’t a fan of fractal analysis, here is a cool chart that shows Ethereum in a major 2-year channel, headed straight for the same price level.
SOL/USDT
Solana went into price discovery when it broke $58.38. The Bitcoin pair also went into price discovery (not shown) and retested the previous all time high as support. The USDT pair never went down for this retest. If this continues to drop, I will be watching $58.38 for a potential entry. This is one of the best setups you can generally fine - a long time all time high is broken and tested as support for the first time. That has not happened here, so I will be setting bids in case.
Chart Requests
Every Wednesday I take chart requests from paid subscribers and look at the charts on a livestream. Here is yesterday’s look!
WHICH ALTCOINS ARE THE NEXT GEMS?
Microsoft Moving Into Blockchain
Microsoft Is Awarded US Patent for Crypto Token-Creation Service - CoinDesk
Huge news. Microsoft was awarded a patent for a platform that allows users to easily create their own blockchains and manage their own crypto tokens. Imagine a world where creating your own chain or token is as easy as a few clicks on a simple to use platform. It’s coming.
Protect Your Assets, NFTs Included
Sohrob Farudi 🍌 on Twitter: "I was scammed / socially manipulated / hacked on @Discord and @OpenSea
Some scams are obvious. Some you can see coming from a mile away and the attempt is laughable. Unfortunately, not all scams are this easy to spot. With the NFT market booming and a lot of n00bs making a ridiculous amount of money for the first time, the market is primed for thieves to try and steal your NFTs. Linked above is a real example of how a smart and diligent person can be manipulated into losing everything they own. This NFT owner was tricked into screen sharing, ultimately revealing their private keys in a quick moment that seemed harmless. Hackers were patiently waiting for this window. The hackers even had the same name as reputable people, social engineering an identical identity.
Long story short, be extremely careful who you befriend and ask for help. Had these scammers been the real people they were posing as, the exposed private key wouldn’t have been an issue. We are all new to the NFT market. If you own NFTs, take the time to store them as safely as you store your crypto. We have all worked so hard to make it this far, only you can look out for yourself to prevent scams like these from happening. 
Morgan Stanley Heavily Exposed To GBTC
Morgan Stanley Increases its Crypto Exposure With Large Investments in the Grayscale Bitcoin Trust
Morgan Stanley has been quietly adding huge tranches of GBTC to multiple funds. This has been done quietly, but is a clear sign that they are bullish on crypto and looking for creative ways to gain exposure. Many institutions are unable to buy and hold physical Bitcoin due to pre-established rules and risk managers. GBTC, for now, is the easiest instrument for them to use, even though it has high fees and swings wildly from high premiums to debilitating discounts.
Watch what they do, not what they say. Institutions are here.
News Video
Every morning at 8:30 AM EDT, I livestream my market thoughts and review the news. Here is today’s video.
THE BEST STRATEGY FOR BITCOIN | AMERICANS ARE BULLISH ON CRYPTO
Star Atlas
Your InterstellarAdventure Awaits
We are nearing the arrival of a true 3D gaming experience powered by the blockchain. Star Atlas is a next-gen gaming metaverse emerging from the confluence of state-of-the-art blockchain, real-time graphics, multiplayer video games, and decentralized financial technologies.
Current games today have their own closed economies. Some are robust, others fail, but none have taken a step further into the real world. For example, Fortnite’s popular in-game store allows players to purchase collectible skins, but the extent of their existence lies only in the game. The player experiences limited interaction with assets they do not actually own. 
Star Atlas has recognized that NFTs are the perfect gateway to provide ownership, authenticity, and a real-life connection to the long hours logged playing a video game. The ethos of Star Atlas is to encourage the monetization of the time spent exploring this huge galaxy and emphasize the ability for monetization to transcend the metaverse to the real world. In Star Atlas, digital assets owned always belong to the holder, and crypto assets earned can be converted into fiat currencies without friction. We believe this is the model for the future of gaming.
To achieve their vision of a metaverse gaming experience mixed with blockchain, the Star Atlas team has selected Solana as the protocol to build out its blockchain-driven massive multiplayer metaverse. According to the team, Solana was an obvious choice due to its processing capabilities of 50,000+ transactions per second at sub-second finality and average transaction costs of only $0.00001. The early iterations of the game are already live, and you can join in on some of the action at the link below. It will be a breakthrough in both the gaming and crypto industry when it is entirely released, and I can’t wait.
More info:
I did an impromptu live stream with Michael Wagner, CEO of Star Atlas yesterday! You can watch that here.
Star Atlas: First Look | Honest Conversation w/ CEO Michael Wagner
The Wolf Of All Streets Podcast Ft. Dan Held
Podcast - The Wolf of All Streets
YOUTUBE VERSION GOES LIVE AT 1:30 PM EDT!
Dan Held, growth lead at Kraken, is well known for his Bitcoin supercycle thesis, the belief that price will continue to rise exponentially with increasingly smaller corrections. In addition to Bitcoin’s price action, the fundamentals are looking stronger than ever as institutions enter the space, worldwide adoption accelerates, and infrastructure is solidified. If Dan is right, we could possibly see Bitcoin reach a billion users and be worth hundreds of thousands of dollars in the near future.
Dan Held and I discussed:
  • Exploring the supercycle
  • The money printer go brrrrrr
  • One billion Bitcoin users
  • DeFi on Bitcoin
  • What about Taproot?
  • NFT insanity
  • HODL philosophy
  • The story of Doge
  • Working during a bull run
  • Crypto banking
  • Bitcoin’s ascent
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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
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.
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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