Author: Dragon Trader

The boring market report April 7th 2021

The so-called pandemic continues to weigh on some parts of the world (e.g Europe) while some countries like US or Russia seem to see the light at the end of the tunnel! We will therefore continue to be driven by good news but also possibly by new lock-downs as politicians find it is convenient to keep people under control … until people awaken!

Bitcoin is still floating at high levels. Many expect a sharp correction to 40k or even lower, which is not impossible as can be seen in the short history of Bitcoin. Others still point at even higher targets.

I have been a bit too optimistic as can be seen from chart below:

After going through reaction line, there was just no resistance but the problem is volumes did not pick up immediately, resulting in this range bound market. As long as Bitcoin hovers over green average, no worries, I am not changing my position.

Tezos reached my objective almost on time, landing me a cool 40% profit! Nothing to be proud about that. Trade is not over, the volumes, as opposite to Bitcoin, are picking up and reactions lines will most likely be broken for further up move.

Nasdaq has resumed its uptrend in strong volumes. The new objective is 14130 points. A divergence with MACD histogram tends to confirm new all time highs are coming. Before going full speed, just spend some time a weekly chart below: no major correction since early 2020, plus a MACD with stratospheric value and a divergence with MACD histogram indicates some trend change in the future (remember it can be down or just an horizontal wandering)

I was kicked out of the Moderna trade for a small loss. What happened?

MRNA had made a bottom on orange reaction line (blue circle)and started an up move after down slopping the blue reaction line. Volume was low but I thought divergence MACD and its histogram would support me. Market thought otherwise, volumes did not pick up and MRNA even crashed the orange reaction line, which told me to get out even before my stop was triggered! See you on next reaction line, maybe…

That’s it for today. Until next time, trade safely!

Tezos – new departure to the moon?

I possibly mentioned Tezos earlier. Maybe I had not drawn the action and reaction lines. As can be seen from graph below, the trend is still up, Tezos has been taking some leisure time around the reaction line and seems to be going up again. You can draw triangles if you wish, but note there is no special scientific theory backing up such figures!

On the downtrend from 5$ to 3$, of course volume was big, it has decreased a lot but stays at high level. This is why we want to stay with the major trend which is up! Divergence between MACD and its histogram also points to same conclusion. The next reaction line is quite far away, objective could be reached by end of March if we are lucky and market is strong enough!

How do I play it?

I already have a position that I bought at 2$ (green arrow) and I halved it at 5$ (objective was 4.57$). New objective is 6.23$, 40% on top of current price with a stop at 3.70$. So I am buying half a position to restore one full line, half a line invested for as long as long term trend is up, the over half is trading to increase profits. The stop applies only to half my position.

That’s it. This is no recommendation of course. Until next time, trade safely.

Moderna – could the vaccine make your money?

Whether you are anti-VAX or not does not matter, money does not smell! Let’s look quickly at Moderna chart.

My system rings the bell, saying there might be an opportunity today. The 9-day average is point up, as well as the 48 which is still bullish. Only the blue 18-day is still showing negative slope.

The objective (drunkard theory) is 200$ and as can be seen from reaction line, there is zero resistance in the near future. Nothing seems to prevent reaching the objective. Stop of course at 126$

But wait? MRNA is down 7% today… it it? That’s good because distance to stop was big at close yesterday, meaning your position should be small, whereas today we can have either a bigger line or stay with small line but with a better risk/reward ratio!

This is no advice of course. This is how trading goes, we take the bet, and if we are stopped out, then it’s life, we cut the line and forget about MRNA.

That’s it. Until next time, trade safely!

Bitcoin: when is the story going to end?

Sorry I have been away for a few weeks to attend other businesses. I was also working on the future eBook which is not as easy as writing for a blog. There must balanced information, not too much to avoid overwhelm reader but enough anyway to kick curiosity and critical thinking! So should I write about inverted Laplace transform? Well answer is yes, but I need to make it simple for casual reader out there!

For this return I am going to talk only about Bitcoin, which has gone again over the roof. You may see everywhere Bitcoin is a gigantic bubble that will explode maybe tomorrow morning, leaving all of those with fortunes in Bitcoins … broke! Nothing can be further from truth, because as long as some countries tolerate Bitcoin as a concurrent to local currency somehow, those who forbid are also getting late on its technology and all the improvements it can bring in terms of security, cryptography, …

The ‘problem’ with Bitcoin lays probably with the price paid to miners which is halved every 4 years, and so Bitcoin price has to go up or the mining can not be profitable over the long term. That being said, price has only one direction over the long term: it is UP! Until it is pushed out forcefully by a better bitcoin….

Let’s look at the chart:

I have drawn the action-reaction lines, which is the only way to predict when and where the next top might take place. There is hidden symmetry in the market which you can see clearly, Bitcoin has been stopped by down slopping reaction line then wen through when many weak hands thought Bitcoin was going down back to 10k$.

There is almost zero resistance now until beginning of April. I expect the trend will be a bit slower. From exponential, coming back to parabolic more sustainable move is all we want!

That’s it! From now on, I will post some trading opportunities on some selected Nasdaq stocks with action-reactions line for your reading pleasure.

Until next time, trade safely!

The boring market report Feb 15th 2021

For bull traders, life is easy as I will show again in the next few graphs. Our random walk tells us tells us when to step in, then get out. Two options to get out:

  1. Partially on first price objective and then wait for the stop
  2. In case of time out (the observation period), try to exit on multiples of risks (the dotted lines)

Case in point with SOX. Price objective is recalculated each day, but the flat sections above major troughs are the ones we target. SOX is above the green belt, even making new highs. Just hold for now.

Tesla: you should start raising an eyebrow or two! See that divergence with MACD? Worth securing some profits…

Bitcoin is back up again after the January consolidation. Getting above the green belt was a good buy signal. It has already passed through the first objective (not shown) and it adheres to the second dotted line. Your stop should be bottom of the green belt for longer term, and top of belt for short term trading. Next objectives are 53700$ and 58200$. 50k$ might be a short term psychological blocking point but random walk says not to care!

Etherum is wonderful. No need to do anything.

That’s it. Until next time, trade safely!

Static versus dynamic, investing versus trading

In many of previous posts, I highlighted the necessity of asymmetric trading ie. a reward/ risk ratio that is as big as possible. Even in today’s very complicated markets, with millions of news per minutes, the random static trading model that I have shared is working beautifully. It is is static because it only based on an ‘observation’ period. The dynamic counterpart is about analyzing how a stock or index behave over an observation period with respect to a specific moving average, here we enter the realm of Laplacian distributions, too complicated to explain on a blog but the news is that I am progressing on my eBook writing and I plan to release it by end of the year! It will be extremely expensive but definitely worth it! Will prevent you being on the wrong side of markets!

Asymmetric investment is a totally different job. You don’t rely only on mathematics to make your decisions. You need to have a vision, anticipate what may happen, … Very few services are capable to do it! And you can see it through the performance of investments funds, most of them never beat index performance. Investing on index fund (what I call static) for next five ten years is probably the worst idea you may have these days. Economic crisis has barely started, though you already know for sure some good businesses that are now worth zero because they can not open to customers. So what should you do for long term? I can not help you too much here except recommend NoHypeInvest (click on picture!). I get no commission!

They share a lot of advice for free and if your portfolio is big enough, it is worth subscribing to their premium service. It is not for tender at heart, they are looking for 3 digits gains over a few years, even if they are true only 25% of the time. As explained earlier, this means you can have a long series of loosing trades, don’t blame them, you are warned! They are however capable to explain the key elements sustaining their reasoning.

Speaking of of vision, take a look at Chris’s forecasts for the coming years. Don’t say he is conspiracy theorist, and look at all laws being voted in your country and you will see he is right… unless we, folks, do something!

OK, man, but what are we doing? It is the same subject I called for you to think multiple times on this blog. Open your brains and don’t take every bit of news for granted. When you have a Facebook account, FB knows everything about you, even things you don’t know yet. Same for Google. They have started to decide what you can say, what you can not say, …. and they sell the data you have given for free for huge profits. So it is time to either leave or scramble their data and make it worthless: change you GPS positioning, address, name, encrypt data, … In Google database, I am weed and alcohol addict, looking at pink elephants in Sahara desert right now, which of courses gets me some hilarious advertisement!

Those looking for alternatives software or websites can look here for instance

That’s it. Until next time, trade safely!

The boring market report, Feb 3rd 2021

We talked about the short squeezes, which if coordinated, can lead to strong bull markets. This is usually the case when prices reach an area around the one year high, which is seen as resistance, and so many are shorting to benefit from a price reversal. This works from time to time, but the back testing does not validate it on markets, all stocks, … so be careful!

Coming back to our random market model, it is easier to pick up a trend when it starts, and drive it until it wears out. That is what I am doing with Bitcoin and Etherum. Bitcoin has walked back from its recent top to the random walk path (RWP) and is ready to pick up again. MACD is still largely positive, no reason to exit for now. A partial profit was of course welcome in January.

Etherum is even stronger. The RWP has not even pointed south one day! I don’t know if it will go to 100k$, but 1800$ is surely next target in the short term!

Tezos might be a candidate for near future. MACD is in positive area after a divergence, so just monitor!

There are two crypto-like stocks (in terms of performance). One is of course Tesla and the other one is …. surprise…. Ford!

In spite of never ending pandemic, a looming economic crisis, everything is bull, except maybe dollar and gold. Strange, isn’t it?

That’s it! Until next time, trade safely!

Game stonks and other pratical tricks

Sorry for silence other the last two weeks, urgent business to attend. Anyway, while Bitcoin and stock markets have been more or less flat, then emerge the stories of Robin Hood young traders who want to bring down selected Wallstreet funds because they have huge short positions on their specific stocks. Let’s take a look!

While it is absolutely ok to use same tools as big funds, playing against the big boys in frontal MMA fight will definitely end badly. Why? Because the big boys are making the rules! If you are making insane profits and they are making insane losses, one will claim you are working against the highest interests of the nation (or any bullshit like that) and deserve spending 120 years in jail. We already see the central banks being very unhappy about usual folks making money (and not that much actually) and planning to ban the use. See example of India here. I am still bullish on Bitcoin, Etherum, and many others but the situation must be monitored very closely.

We can make lots of profits by using the methodologies already explained on this blog. Don’t follow blindly the Reddit forums. If you are ever asked why you have Gamestop in your portfolio, then just show the chart:

The random walk path was bullish, the prices objectives were some good distance, … a no brainer case! Of course, don’t forget to exit while you have huge profits waiting.

When does the WallstreetBets game stop? I will tell you. As long as they disturb only a few selected funds and push some stocks up, they can survive. But if suddenly, Robin Hood decides to short BlackRock, then it will be a different story!

That’s it for now. I will come back later. Until then, trade SAFELY!

Being in Bitcoin awesome bull market!

As written a few times, social network are stealing your time, your data, your ideas, and everything else they can. As of now, they tell who can tweet or put message on Facebook, they can remove any content they don’t like, … No surprise either when some say “Bitcoin is a worldwide scam”. It may be somehow, Bitcoin have no greater reality than fiat moneys, as their names indicate, but for traders in the short term, Bitcoin exists and the risk is just a bit bigger because of volatility. So it is worth having a strategy to enter at low volatility levels and decrease exposure when volatility is too high to your taste. If you don’t have or don’t want to spend too much time with custom indicators, just draw the infamous Bollinger bands and a long term MACD (parameter 48 and 64 for instance) on any financial web site as below:

MACD is positive, so the long term trend is up. No further question to be asked.

You can also see areas where those bands are getting closer to each other. Change the Bollinger moving average to 5 or 7 days if not visible enough.

Then if you compare where we are compared to previous bull run, as indicated with green smileys, we are barely at the beginning of ‘second phase’ of Bollinger bands, indicating the strong bull market will continue, albeit most likely on a quieter pace.

To get a peace of mind, consider the difference between last price and green moving average. That is your risk! If too far away (consider how many $ or € you could loose), just decrease the position size, thereby also securing some of the profits!

That’s it! Until next time, trade safely!

Happy new year! Wake up your brain!

Started this blog just a year ago, but really got it up to speed with containment in order to stay active and fight boredom.

2021 is the year when people should start using again their brains in a normal way if we want to get out this crisis sooner than later. For this, let’s turn to neuroscience!

The brain, pretty much like any computer, stores information and can retrieve it with filters or criteria or whatever way to sort out things. Brain relies primarily on vision to distinguish one thing from an other one. One is blue, big and moving while the other one is red, tiny and static. Then other pieces of information are used, like when when you saw that big blue moving box, if it was hot or cold, if it was smelling funny or not. The brain can NOT negate differences, one can try to negate then from language and it will end up with neurosis sooner or later, so this will fail!

Conspiracy theories are also an other subject that has kept many busy in 2020 to appear as the greatest theorist in this or that area, virus and vaccines attracting most candidates. What is happening exactly? Brain, again, stores the information it perceives mostly from vision or hearing. Now numbers, dates, … are meaningless as standalone information. So the brain has a way to memorize these information, which is different from computer science, which is to build stories, consciously or not. Your brain is very good at identifying coincidences, these are events happening at the same time, but are typically the work of a random process. By putting coincidences together and building a story, your brain builds the memory of events. Now the media have peppered lots of numbers every day since the beginning of pandemic, so it is now wonder that many stories have emerged in conscious level and people are writing them down all over the social networks. Then, the media are shocked by the big number of conspiracy theories aka fake news, and they fall to the same fallacy: their brains are making a story about the numbers reported in ‘fake’ news… we are in a matrix of conspiracy theories!

The best wish I have for 2021, is that everyone focuses on what they do best. If you are no expert in pandemics, vaccine technology, statistical long tails,.. then avoid being just an other fool on internet. Be patient, think correctly your brain with its strengths and weakness, learn and seek the truth via scientific approach!

That’s it. Stay with me for trading. Until next time, trade safely!

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