Topic: How BTC/ALTs are correlated and one trading system (Read 77 times)

Hey guys,

Shortly about myself, you can skip it if you want to the next text below:

I'm 22, trading for 7 years. Currently, i work for biggest bank in my country as a trader (mostly stocks), also, my interests cover: Fixed income and EM products, ETF's  and it's been 1 week since cryptos were added to the list.
Currently, i'm profitably trading for few weeks on poloniex - just getting feel of the market and trying to find how it works.

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My investment approach so far:

1. I only invest in alts that are comparably reliable;
2. I do not invest more than 10% in one alt;
3. I do not invest all 10% at the same time, instead, I invest 10%-20% of 10% per trade;
4. I am long term long;
5. I close 40-70% of my position at resistance, 40% - weak resistance, 70% - strong resistance.


Why my approach is the way it is:

From my point point of view, profitable crypto trading is in between investing and trading.
Difference between investing and trading is, that the investor looks for the long term value gain, when the trader is trying to get the best out of short term situation. In our case, best thing one can do, is to mix this two: Invest, and meanwhile maximize profits intraday.


1. I only invest in alts that are comparably reliable:
- Because i hope, that at least 1/2 of my "altlist" members have a potential to gain 1,000% + within next year - which means, even if the half will disappear, i will gain 1,000% from remaining half, which is acceptable for me.

2. I do not invest more than 10% in one alt:
- Because if alt coin will vanish, i will loose only 10% of my total balance, which is acceptable for me.

3. I do not invest all 10% at the same time, instead, I invest 10%-20% of 10% per trade:
- Because to leave myself a margin to buy more alts if market is bleeding.

4. I am long term long:
- As mentioned above, i believe, that most of my "altlist" - have a potential to gain 1,000% for upcoming year, that's the reason i am long term buyer and i do feel comfortable buying more when market is bleeding.

5.  I close 40-70% of my position at resistance, 40% - weak resistance, 70% - strong resistance:
- Whenever i see resistance, i evaluate it with my own scale of strength;
-- After i will close certain % of position, i'. waiting new High/Low to be formed;
--- After H/L is formed, i place limit orders on: breakout of to., support and next closest support;
---- I keep 60% or 30% in case if price will break resistance without spikes in strong rally not to miss momentum.


Observations so far:

What i've noticed, i'm not claiming that it is true, just my two cents, is that most of the altcoins are lagging reflection of bitcoin. let me explain:

Technically:
1. When bitcoin is going up, alts are going down and then follow bitcoin up.
2. When bitcoin is going down, alts are going up and then follow bitcoin down.

Logically:
1. People are buying BTC and selling alts, when BTC's price is going up, people slowly start to reinvest their BTC's in alts and alt's price follows BTC.
2. When BTC is starting do decrease, panic begins and last sellers are moving their funds from BTC to alts - which works as a fuel for alts to keep rising.
3. BTC has lowered, so it's a good time to buy it again, thus alts selloff begins and funds are moved back in BTC - which causes accumulative flat for BTC and bloody market for alts.


I would love to hear what you guys think about all that i have written above, especially about the observation of the BTC/ALT correlation - I believe, vast majority of you are way more experienced in crypto world, so feel free to write if i am wrong, i'll be happy to get off from the broken rails till it's too late.

Green markets to you!

Regards,

Nika,