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!

The skeptic bull mindset … or how to look at stock tips

I will attempt in this post to make the bridge between statistics and probabilities in the lightest possible way! This will position us with the right mindset when trading!

All what I have written so seems to be fine with you, and therefore if you want to convince me to follow you on a trade idea on ‘Thin Air Company’ (TAC), you need to give me the following information:

  • When to enter? At which price?
  • What is price objective?
  • What is the exit strategy?
  • What is the probability of success?

Last question might seem very puzzling to you because of one of the following reasons:

  • you don’t have statistics about your trading methodology because you can not program back testing, and no clue how to derive probabilities from statistics on past data (very good point, it is indeed too complicated to explain in a blog post!)
  • You are very bullish on TAC because you got advice from Sure Winner Top Notch Wall Street Analyst (SWTNWSA)
  • You got a tip from that Famous Marabout Who Can Also Repair PC Hardware Failures Remotely (FMWCAPHFR)
  • You are using Extra Sensory Perception To Forecast Market Movements (ESPTFMM), it usually fails miserably but this time it looks like perfect setup
  • You Won’t Tell Me!

Do not worry, we are going to play a little game with little bit of money to spice it up. The rules are pretty simple:

  1. If your trade idea is profitable, I give you 10$
  1. If your trade idea is a looser, you give me any amount. Let your brain decide the amount! Since you are so bullish, and for this example, I assume you will play 500$

If you think I am too impressive to play against, imagine you are playing with Warren Buffet!

Now we are all set up for a probability calculation from your perspective! You need to solve the little equation system below:

Probability(Winning)/Probability(Loosing) = 500 / 10 = 50

Probability(Winning) + Probability(Loosing) = 1

Easy? So you (your brain) estimate the probability to win to be about 98%!

Let me be honest! Even with this huge asymmetrical setup, I will take the bet!


Let’s look at the expected value from my perspective, which takes into account what I know!

Best stock pickers score 85% winning trades and even with this value and this particular set up (500$ vs 10$), I have a positive expected value! I might not win this time, but if we play together a few times, I am almost sure to get those 500$ notes fly into my pocket!

Now think about it the other way around: if I have positive expected value, you have not! One way to overcome that is to significantly reduce the bet size, which in turn will also give you a better idea of the probability of success!

In summary, it is perfectly right to be bullish (in the sense of opinionated whatever market direction) and we need the bull force to enter trades. At the same time, you need to be skeptical about what your are being told and evaluate correctly the probabilities of winning, even with simple methodology as above!

And remember the following conclusions:

Sure winners ideas are sure to make you a looser over time!

Loosing risk consciousness makes you a sure winner over time!

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