Peter Brandt is known as a legendary trader with 43 years of experience in trading the financial markets using classical models. For Bitcoin in particular and the cryptocurrency market in general, he also pays special attention, he often gives crypto technical comments on his personal twitter page. Here are some extremely valuable experiences he shared when participating in the crypto market.
first. Loss limit is a factor Trading most important. Capital is a trader’s inventory. If you lose your goods, you can’t do business at all.
2. When a trader analyzes “Wrong”, it is called a learned prediction. When the trader goes “Wrong”, it is called a loss. Very big difference.
3. There are two important factors of any trade: trend and timing. Just wrong 1 of 2, the command will be wrong. I want to focus mostly on timing so that if I’m wrong about the trend, my losses will be minimal.
4. I was old enough to see the banks closed in 1929 (the Great Depression). There will come a day when banks (crypto exchanges) will be closed when the trader wants to withdraw Tether. Short tether at any price near $1 is a good trade.
5. If BTC price reaching the $100,000 level the traders using the moving averages will outnumber the traders using the confusing tools (Bollinger Bands, RSI, Fibs, histograms, trendlines,…) to shitcoins.
6. There is a serious mistake in the thinking of many novice traders that if enough traders see the same price pattern, the pattern will turn out to be true. Actually the opposite is true. Chart patterns discovered and traded by too many traders will fail.
7. If you feel the need to trade, the desire to get in, and the urge to get into the market all the time, then go to Las Vegas to gamble. At least you get a cheap steak and a free drink after losing your money.
8. Not bearish does not mean bullish.
9. The following 4 things negatively affect the performance of the chart trade:
- The feeling of having to guess right
- The obsession with win rate
- Obsession with the likelihood that a model will succeed (if success means anything)
- Rejection of previous peaks
ten. Most of the really good traders I’ve met get a net profit from just 15% of their trades. One of the hardest parts of trading is surviving 85% of the remaining trades (with small losses and small to medium profits) to get to the other 15%.
11. If your goal is to become a pro trader, the question you should be asking is not “How much profit are you making this year?”. The question you should be asking is “How to survive in the market for the next 30 years?”.
twelfth. A beginner trader must first learn how to lose, before learning how to win. Loss is a fundamental function of capital preservation.
13. A trader should be aware of the different timeframes of a market. If the timeframes are moving in the same direction then it’s time to trade, if not, stay out of the game.
14. It is a fact of trading – a trader always places too large a volume when the prediction is wrong, and too small when the prediction is correct.
15. During my 43 years of derivatives trading, the good trades found me naturally and were very “confident” in themselves. It makes no sense to study chart patterns to find a trade.
16. All novice technical analysts seem to be obsessed with the reliability of the pattern. As for myself, I am only interested in a price pattern that gives me a draw. (meaning that the price pattern just needs to bring a draw trade is good enough, don’t expect too much that the pattern will be successful and profitable)
17. USDTRY is a great example where the chart is variable and offers different possibilities. An isosceles triangle is defined as a “pattern of indecision and confusion”. I only trade when there is a breakout and always stay away from sideways markets.
18. The formula of trading disaster:
- FOMO (fear of missing out) + FOL (fear of losing) = Account Fire
19. I fully believe that fundamentals guide prices, but like Bloomberg and CNBC I can only tell what fundamentals mean a year after the trend has long since ended.
20. There are many pitfalls that new traders entering the market often follow, a few of them:
- Win rate – the obsession with having to guess right
- Look for the 2nd order with the same setup as the first (meaning the market is always changing, the 2nd setup is the same as the 1st setup, not sure if it will succeed)
- % of the time a pattern will succeed
- Catch a falling knife
- Look for a trade (meaning don’t look for trades, good trades will automatically appear and find you)
21. Are you willing to wait weeks without trading just for a good trade to appear? Patience will pay your monthly bills.
22. Traders are not looking for good trades – good trades are looking for traders. The best trades will appear on their own.
23. There is a huge difference between guessing right and winning. Traders obsessed with having to guess “right” often lose money in the long run.
24. If you were to ask me how much money I expect to make in the next trade or series of trades, next week, next month or next year I have to answer: “I don’t know.” I can’t control the outcome of my trades, I can only control my own trading process.
25. People often ask me about the success rate of price patterns. THIS IS THE WRONG QUESTION! I ask myself the following: What is the probability of:
- Can I quickly move my stop loss to breakeven?
- A target that can be reached without being stopped?
- The success rate of a pattern is undetermined.
26. Correctly detected classical patterns represent the strength of buying and selling forces in the market. The price pattern represents the energetic geometry of supply and demand and the asset being analyzed.
27. Distribution is not the final stage of a trend – distribution will be followed by panic when the bulls say “I don’t care where the price is going, I need to get out of my position just to stop the pain.”
28. Have you ever had the feeling you can’t even get a winning trade? I’m an old friend of this feeling, although fortunately it hasn’t visited me this year.
29. Never chase a signal. There will always be another day, another market. What if you miss a price step? The market is still there, the question is whether you survive long enough to trade it or not.
30. Bitcoin is to trade, not to worship. Beware crypto-fans, so you don’t have to worship the wrong god.
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