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The Wolf Den #483 - Good Vs. Bad Trades

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April 21 · Issue #483 · View online
The Wolf Den Crypto Newsletter
This newsletter is sponsored by Bitget! Bitget is the best crypto exchange for both spot and leverage, world’s largest crypto copy trading platform, and the official partner of Juventus Football Club. They are offering my subscribers up to a $3,000 bonus for signing up. They are also offering 100 BGB to any Wolf Den reader who opens their first trade on Bitget until April 30th, as well as a 15% discount on trading fees!
I have talked many times about the definition of a good and bad trade, but once again want to hammer this point home.
The RESULT of a trade is irrelevant. Most beginning traders believe that a good trade is defined by the amount of profit secured. They view a bad trade as any trade where they take a loss.
This is dangerous thinking for a trader.
Remember, nobody can control what happens after a trade is entered - your money is in the hands of the market. The only thing you can control in the market is how much money you LOSE. Therefore, you must plan your losses on every single trade.
A good trade is one where you execute your plan to perfection, regardless of the result. A bad trade is one where you violate your plan - even if it makes you money!
Some of the best trades that I have ever taken were losses. How so? Because they were small losses on a trade that could have been catastrophic if I had stuck with it. There’s no better feeling than stopping out of a trade right before price tanks for multiples of your realized loss. I’m sure this has happened to you. In the moment you are upset that you lost money, but then you see price continue down endlessly - this would have led to liquidation or years of bag holding. You saved your bankroll by taking a small loss according to plan. That’s a GOOD TRADE.
The success of a trader is determined over thousands of trades. You cannot judge your system on a few trades. All you can do is protect your capital with small losses over and over again to keep you in the game.
Trade your plan and over time you will be rewarded.
In This Issue:
  1. Good Vs. Bad Trades
  2. Is Bitcoin A Correlated Asset? IntoTheBlock
  3. Bitcoin Thoughts And Analysis
  4. Coinbase Launches NFTs
  5. Netflix Kicked In The Nuts
  6. The Wolf Of All Streets Podcast Ft. Pierre Rochard
  7. My Recommended Platforms And Tools
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Is Bitcoin A Correlated Asset? IntoTheBlock
In this report, we bring to you the latest in on-chain cryptocurrency analysis. We look at the blockchain directly and analyze balances, transactions, and the overall activity of market participants. This gives us a unique insight into the future of the market.
This section is written in conjunction with IntoTheBlock (ITB).  ITB is an intelligence company that leverages machine learning and advanced statistics to extract intelligent signals tailored to crypto-assets. IntoTheBlock tackles one of the hardest problems in crypto: to provide investors with a view of a crypto asset that goes beyond price and volume data. 
The Wolf Den research team uses IntoTheBlock to dig deeper and get the most important insights about the crypto market.
Is Bitcoin an uncorrelated asset? Or a high beta sentiment asset?
The Bitcoin market has been highly correlated with macro conditions, moving in tandem with traditional assets like equities and bonds.
The proposition of Bitcoin as a global hedge to uncertainty remains unclear, though it is promising that throughout one of the toughest quarters it outperformed. Back in the middle of the Covid-induced recession, IntoTheBlock’s CEO wrote a piece proposing the idea of Bitcoin being a high sentiment beta asset. The concept comes from a research paper arguing a subset of assets considered as high sentiment beta based on the premise of “stocks of low capitalization, younger, unprofitable, high-volatility, non–dividend paying, growth companies … are likely to be disproportionately sensitive to broad waves of investor sentiment.”
  • Correlations between Bitcoin and the tech-heavy index reached yearly highs of 0.96, indicating a very strong relationship between the two.
  • As the crypto markets have not been an effective safe heaven in 2022, investors have moved to gold and other commodities, where the correlation with Bitcoin is almost non-existent,
  • In other words, Bitcoin has been acting almost like a levered long exposure to broader markets
In a nutshell, when investors are bullish on stocks they tend to be overly bullish on Bitcoin, and when the market sentiment turns bearish Bitcoin positions are rapidly liquidated.
Bitcoin Thoughts And Analysis
DAILY CHART
Bitcoin is once again attempting to push through local resistance at $41,557 and looking strong in the process. Price is currently trading over $42,000. A close above both of these lines should send price to test the major resistance area around $45,500.
12-HOUR CHART
Just a quick reminder that this entire move up started with oversold bullish divergence on every time frame below the 12 hour chart. Beautiful, predictable. It fails occasionally, but this is as strong of a top and bottom signal as you will ever find.
4-HOUR CHART
Beautiful channel breakout, with price coming back down to almost retest it as support. There’s a lot to like on the Bitcoin chart in the short term, but tons of major resistance ahead on larger time frames.
Tip: Take A 3% Profit On Every Trade For A Month
I’ve shared this lesson many newsletters ago, but I think it is REALLY important! I did this for a while and it made a huge difference in my trading. You need to learn to SELL - it’s far harder than figuring out when to buy.
Taking losses is difficult. One of the hardest things to learn as a trader is how to set a stop loss and accept the hit to their portfolio when it fires. We have all experienced it.
What few traders talk about is how difficult it is to SELL. I would argue that taking profit is far more difficult than taking a loss. How many times have you watched an asset’s price rise, failed to take profit, and then been paralyzed as the price dropped and turned into a realized loss? Should you have sold before your target and locked in profit? Should you have moved your stop loss up to breakeven? And how many times have you seen price reach your target – but you decide that price can go even higher and choose not to sell, only to see the price drop once again.
Selling is hard. My mentor Christopher Inks once taught me a valuable tactic – he told me to take profit at a 3% gain on every trade (when possible) for an entire month, no matter what. I thought he was absolutely crazy considering the opportunities in the crypto market at the time. However, I vowed to test it myself and found it to be an extremely valuable exercise. First, consistent small gains compound very quickly and can result in tremendous profit over a relatively short period of time. More importantly, this exercise teaches traders the value and importance of taking profit, regardless of FUTURE PRICE ACTION. It kills FOMO (fear of missing out) and eliminates the greed that is inherent in the human psyche – the urge to squeeze a bit more profit out of an already successful trade.
Try it and let me know how it goes!
Coinbase Launches NFTs
Coinbase's NFT marketplace challenges OpenSea's dominance — Quartz
OpenSea may now have a serious rival. Coinbase has always made it their mission to make access to crypto as easy as possible, and they are now executing this philosophy with NFTs. Beyond just developing a typical NFT marketplace, Coinbase is attempting to build a social media platform around NFTs for users to,“create profiles, comment, upvote, downvote, and explore a news feed.
Along with this unique social twist, Coinbase has made it clear they want everyone to have access to NFTs, meaning any wallet can connect to the platform. For now, the product is in beta and will only offer Ethereum NFTs, but the long-term plan is to integrate with other blockchains.
NFT users, sellers, and buyers need more options, more interaction, and more awareness in general. I’m excited to see how integrating a social aspect will unfold, although there appears to be a lot of uncertainty around the concept. Please note that the Coinbase NFT launch is currently only available to limited users from the waitlist.
Netflix Kicked In The Nuts
The Wolf Of All Streets
You average Netflix investor (recently Facebook) saw 25% of their position erased in a matter of minutes, after hours when the market was closed and they were unable to react.

Bitcoin has basically never dropped 25% in a few minutes, and retail ALWAYS has access to the market.
I talked about Netflix yesterday, but feel there is more to be said about the company, as it is quite the case study for big tech. In the blink of an eye (after hours) on Tuesday, $45B in Netflix market cap was erased while investors were left to sit and watch. For the first time in company history, Netflix reported a quarterly loss of subscribers.
There’s a lot of conjecture around Netflix’s drop in subscribers, but here are the facts. Subscription prices were raised, competition is ramping up, COVID mandates are subsiding, and Russia is out of the picture. Netflix forfeiting Russia’s viewership alone came at a cost of 700,000 subscribers.
On top of the increasingly difficult macro backdrop, there’s been a lot of commentary on politics playing a part in the decline. The crazy part is that Netflix was expecting to add 2.5M subscribers and instead shed 200,000 overall in Q1. It will be interesting to see where this goes, but it is clear that the market does not react favorably to “bad news” from big tech.
The Wolf Of All Streets Podcast Ft. Pierre Rochard
Podcast - The Wolf of All Streets
Our guest today brings a refreshing utopian vision to the show: fix the money, fix the world. How do we fix it? With Bitcoin. Pierre Rochard (@pierre_rochard), Bitcoin Product Manager at Kraken, joined host Scott Melker at Bitcoin Miami to discuss why CBDC is contrary to America’s core beliefs, the capital gains tax issue, FUD cycles, and how Bitcoin will fix our money headaches for good.
In this episode with Pierre Rochard, we discussed:
  • What to expect with our guest Pierre Rochard
  • Pierre’s background
  • The Biggest Geopolitical Moment of the 21st Century
  • Polarized countries and El Salvador’s future
  • Reducing crypto friction
  • Central bank digital currency: contrary to America’s beliefs
  • Immigration freedom
  • Kraken Bank and the Bitcoin adoption curve
  • The Lightning Network
  • Utility-based tokens
  • Why we need more crypto speculation
  • The Capital Gains Tax Issue
  • Pierre’s personal Bitcoin journey
  • The Bitcoin Going to Zero Narrative is dead
  • FUD Cycles and the energy use mix
  • The overblown bipartisan issue
  • Monetary Policy and inflation predictions
  • Bitcoin will demonetize all other assets
This episode is sponsored by: ARCULUS and BULLISH.
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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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