Markets changed forever ?
Not in the sense that main principles have been shattered or macro cycle theory questioned… We dare to say that recent impacts and those we foresee to come, will have major implications on trading systems. Typically we deal with a brief impact like a bubble or an event and markets recover from such resulting crashes in a foreseeable future. Not this time. In our humble opinion more downturns in the percentage magnitude we have just experienced, will follow. Once the bottom is reached it is likely that a bottom building phase could take as long as one to three decades. What does that mean. Markets changed forever ?
Let us give an example. While typically long term investing i.e. retirement savings survive temporary draw downs since they trend and compound, this new market might not provide much opportunity for long term directional market bets. We can also expect a massive inflow of ill educated market participants. Typically such speculators only join the game at the end of a bull run. Greed being the main motivating force, and professionals sell into this crowd. Now, due to expected devaluations of currencies literally everybody is addressed to be a market speculator, to protect their cash. The list of examples like these is long. Markets for a long time have been mismanaged and a domino effect tumbles now many of these card houses. Recovery could be quite lengthy.
We assume that both the macro and micro side of typical trading system behavior will be influenced on a massive scale.
Bitcoin Monthly Chart, Markets Compressed:
BTCUSDT monthly chart as of March 23rd, 2020
Prices touched support (bottom white line) for the third time now on the monthly time frame. This has weakened that support. We might be in for one or two more emotional waves through the world markets. Most likely even the safe haven instruments like Bitcoin and precious metals will temporarily get another one or two legs down. These down legs could be as severe in percentage as what we have seen in recent weeks.
Litecoin Daily Chart, Abnormality-Opportunity:
LTCUSD daily chart as of March 23rd, 2020
Another phenomenon that can be taken advantage of is rewards proportionally being larger to risk in this unusual volatility. Typical single events have a quick peak of fear and than emotions settle down. The brief phase of volatility and fear can not easily be taken advantage of. In this special case of a pandemic worries continue for a long period of time. Consequently the market speculator seeks for security within the markets as his or her main goal. The result is simple technical analysis working very well since markets reflect mass intention. In typical quickly declining markets volatility is only manageable with wider stops. in our case stops can be tighter while profit targets are still more generous. Consequently risk reward ratios expand.
We were already able to take advantage of this “abnormality”. The daily chart above shows the trade of Litecoin that we just closed out. Our final target generated a profit of 46.89%. We post all our trades live in our telegram channel.
CureCoin Daily Chart, Percentage Move Change:
CUREBTC daily chart as of March 23rd, 2020
The daily chart above depicts CureCoin. We just closed out the runner of this trade (see our Quad exit strategy) with a 246.94% profit. Unfortunately the principle we would like to illustrate can go both ways though.
Assume most markets declining on a high percentage figure. What this represents is that percentage moves between two smallest price figure increment rise. This warrants for careful money management adjustments as well as technical analysis tool re-calibration. Especially for trading vehicles that are trading heavy (highly liquid).
Markets changed forever ?
It is nothing new that trading systems have expiration dates. What is noteworthy is that change will be so rapid that the adoption rate needs to be quick. Bull markets ended when we came into the twentieth century (dot com bubble). Many professionals who were for over thirty years used to mainly bull market behavior, got wiped. We are at a comparable spot right now. Just more severe in its development phase. We would like to make the point that anybody who has been successfully participating in the market up until now should not assume that market movement will stay the same. Market behavior is a reflection of human behavior. While there are basic behavior models deeply ingrained within us that shall not change, the world as we know it has. It changes into a new era now. These changes are multifaceted and will reflect in technical analysis and its probabilities as a whole, both in micro and macro cycles.
Join our free Telegram Group :https://t.me/joinchat/HGe22hDDEEl0LvFGAgEZ9g
All published information represents the opinion and analysis of Mr Korbinian Koller & his partners, based on data available to him, at the time of writing. Mr. Koller’s opinions are his own and are not a recommendation or an offer to buy or sell securities. Mr. Koller is an independent analyst who receives no compensation of any kind from any groups, individuals or corporations. As trading and investing in any financial markets may involve serious risk of loss, Mr. Koller recommends that you consult with a qualified investment advisor, one licensed by appropriate regulatory agencies in your legal jurisdiction and do your own due diligence and research when making any kind of a transaction with financial ramifications.
Although a qualified and experienced stock market analyst, Korbinian Koller is not a Registered Securities Advisor. Therefore Mr. Koller’s opinions on the market and stocks can only be construed as a solicitation to buy and sell securities when they are subject to the prior approval and endorsement of a Registered Securities Advisor operating in accordance with the appropriate regulations in your area of jurisdiction. Past results are not necessarily indicative of future results. The passing on and reproduction of this report, analysis or information within the membership area is only legal with a written permission of the author.
RISK DISCLAIMER: All forms of trading carry a high level of risk so you should only speculate with money you can afford to lose. You can lose more than your initial deposit and stake. Please ensure your chosen method matches your investment objectives, familiarize yourself with the risks involved and if necessary seek independent advice.
U.S. Government Required Disclaimer - Commodity Futures Trading Commission. Trading financial instruments of any kind including options, futures and securities have large potential rewards, but also large potential risk. You must be aware of the risks and be willing to accept them in order to invest in the options, futures and stock markets. Don't trade with money you can't afford to lose.
NFA and CTFC Required Disclaimers: Trading in the Foreign Exchange market is a challenging opportunity where above average returns are available for educated and experienced investors who are willing to take above average risk. However, before deciding to participate in Foreign Exchange (FX) trading, you should carefully consider your investment objectives, level of experience and risk appetite. Do not invest money you cannot afford to lose.
EARNINGS DISCLAIMER: EVERY EFFORT HAS BEEN MADE TO ACCURATELY REPRESENT THIS PRODUCT AND ITS POTENTIAL. THERE IS NO GUARANTEE THAT YOU WILL EARN ANY MONEY USING THE TECHNIQUES, IDEAS OR PRODUCTS PRESENTED. EXAMPLES PRESENTED ARE NOT TO BE INTERPRETED AS A PROMISE OR GUARANTEE OF EARNINGS.
CFTC RULE 4.41 - HYPOTHETICAL OR SIMULATED PERFORMANCE RESULTS HAVE CERTAIN LIMITATIONS. UNLIKE AN ACTUAL PERFORMANCE RECORD, SIMULATED RESULTS DO NOT REPRESENT ACTUAL TRADING. ALSO, SINCE THE TRADES HAVE NOT BEEN EXECUTED, THE RESULTS MAY HAVE UNDER-OR-OVER COMPENSATED FOR THE IMPACT, IF ANY, OF CERTAIN MARKET FACTORS, SUCH AS LACK OF LIQUIDITY. SIMULATED TRADING PROGRAMS IN GENERAL ARE ALSO SUBJECT TO THE FACT THAT THEY ARE DESIGNED WITH THE BENEFIT OF HINDSIGHT. NO REPRESENTATION IS BEING MADE THAN ANY ACCOUNT WILL OR IS LIKELY TO ACHIEVE PROFIT OR LOSSES SIMILAR TO THOSE SHOWN.
All information presented or any product purchased from this website is for educational and research purposes only and is not intended to provide financial advice. Any statement about profits or income, expressed or implied, does not represent a guarantee. This presentation is neither a solicitation nor an offer to Buy/Sell options, futures stocks or securities. No representation is being made that any information you receive will or is likely to achieve profits or losses similar to those discussed on this website. The past performance of any trading system or methodology is not necessarily indicative of future results. Please use common sense. Get the advice of a competent financial advisor before investing your money in any financial instrument.