Hello dear traders, it's Petko Aleksandrov and I will update the course now with the short example that 1
we are having with the Bitcoin. 2
Many students asked me to show an example how we draw the counter trend lines, 3
if the price is going down, if we are in a short trend. So, I have decided to update the course with such 4
an example and let's have a look first on the daily chart. 5
Clearly we have a very bearish trend. 6
You can see that the price formed these lower lows and lower highs. 7
So, we are having downtrend since February and actually since the end of January. And since this time 8
the price is very bearish, very negative and as well the lowest point that reached was during February right 9
over here. 10
If you see this bar and I have placed an important level where I am expecting the price to bounce again 11
or probably to stop there again. Anyway, it could break down. 12
As you know I'm using these important levels just to have an idea where the price might stop or reverse. 13
And let's go to the hourly chart and see the current trade that I'm having. 14
So, when we are having downtrend and we are looking to sell the Bitcoin, we are drawing the counter trend 15
line in the opposite direction. 16
Let me just fit it into the screen right over here. So, you see the price is going down and then forms 17
a higher low. 18
So, I'm connecting it from the low to the next one. 19
And then this counter trend line actually turned out to be very sustainable because after that few times 20
the price couldn't break it. 21
OK? Over here you see exactly the price touched few times 1 candle broke it. 22
But I didn't enter into the trade because let me zoom more and I will show you where was my pending 23
order initially. 24
It was right over here. 25
OK? 26
It was right over here because I was expecting the price to break this level down and it didn't. 27
And then it continued higher. 28
So, what I did? I was just moving my pending order, my Sell Stop higher, and higher, and higher, and 29
then it came to this level where is my current trade at 6650. 30
And you see what happened the price just went sideways a little bit, it brought the counter trend line and then 31
aggressively at 4:00 in the morning with me it enter into the trade. 32
So, what I have done? I have placed a Buy Stop on the opposite direction. 33
And very important here 34
the spread with the Bitcoin is nearly $50, around $50. 35
Let me just find it exactly where is it. 36
It's right over here, you can see $57 at the moment because of the volatility that we are having the recent 37
hours. 38
So, what I have done? I have increased a little bit the mid zone and not a little bit but exactly with 39
the size of the spread. 40
And as you know with the formula I'm having normally mid zone of $70. 41
So, when I'm having on average base with my broker $50 I have increased the mid zone with $50, with the 42
size of the spread. 43
And it became $120. So, my mid zone is $120 at the moment. 44
And since I am keeping the ratio 1 to 3, mid zone to Take Profit, my Take Profit is 360. 45
OK? Let me repeat it one more time. 46
So, the mid zone normally is $70. 47
But I have increased it with the size of the spread. 48
So, now it is 120, 1 to 3 ratio mid zone to Take Profit. 49
So, my Take Profit is 360. 50
And as you can see what I am having entry price 6650 minus 360, my 51
Take Profit is at 6290. 52
All right? 53
And my mid zone is 6650 plus 120, 54
I'm having a Buy Stop at 6770 and my Take Profit there another 55
$360 higher. 56
But however today the price just dropped dramatically and it didn`t went into the mid zone. 57
Anyway, I'm keeping always the Buy Stop till the last moment. 58
Hopefully, the trade will be closed and I will not need to use the Never losing formula in this case. 59
So, why I have increased the mid zone with the size of the spread? 60
This is because if we use 70 and our Take Profit is 50 and as you can see sometimes even a little bit 61
higher. 62
What will happen, is you will leave only a distance of $20 the price to move before you go 63
into the formula. 64
OK? Because if you enter into the Sell and you place a Buy Stop $70 higher the ask price will need to 65
move only $20 higher and it will be into the formula. So, this way you will get into the formula 66
much more often. 67
That's why I am increasing the size of the mid zone with the spread. 68
And normally it is about 50 when the market has no such volatility like the moment but it goes to 49, 69
48, average to 50. 70
OK? So, this is how we are drawing the counter trend line when we are selling it. 71
Very same thing just on the opposite direction. 72
And of course if I have the chance to draw a nice aggressive counter trend line I would use it but till 73
the moment I didn't have actually this counter trend line as you see was very, very important and even 74
I didn't have an impulsive break 75
what I am looking for always, I still had a good break and you see the price is very, very close to my 76
Take Profit. 77
So, I will continue with the example 78
once the price goes down to the Take Profit or if it reverses which actually you should expect at any 79
moment and you should not be surprised, if such a thing happens, 80
I will continue with the example when the Buy Stop is hit. 81
OK? 82
Thank you for watching. 83
And let me know if you have any questions how we are trading the system on the short side. 84
But this example actually provides a very good view and an idea how I am using the counter trend line on 85
the short side for the Bitcoin. 86
Thank you for watching. 87
And I will continue with the example.