Weekly Update October 24th

Welcome to our Weekly newsletter!

Crab over this week?

Needless to say, the crab is real… and painfully boring but could we finally see an end to this type of PA this week? I hope so

Technicals

BTC – Still stuck in a painful consolidation range attempting a breakout overnight that’s currently being reversed. I’ve also outlined the key levels for call walls / Put walls this week with the max pain at 19000 for the weekly open. A move above 19700 we could see 20000 then 21000

Really what we want to do here is monitor the options activity today/tomorrow and Wednesday – IF we see call walls move higher then this is bullish. The same goes for Put levels – if they are brought higher then this is another bullish sign.

SPX – While above 3700 bulls have the edge and I’ll be keeping an eye on a potential bullish inverse H+S that’s in play on some of the indexes. But really we want to still stay focussed on the mechanics here as that’s currently the driving force behind markets right now.

Mechanics

SPX – Last week we had ‘’put decay’’ – essentially puts rolling off throughout the week and on Friday and that helped boost markets. Now the OPEX is over and puts were reduced drastically throughout the week that important ‘’Fuel’’ needed to send us higher isn’t there anymore.

Currently, the case for lower is stronger UNLESS we see calls coming in at higher prices and we see a shift up in levels as explained with BTC above.

I get these levels updates daily so we can closely monitor the situation.

Fundamentals

No shift here, the outlook remains bleak and the base case here is more pain.

Social

Reviewing some content this morning the influencer community seems a bit split – 5050 type chatter and non-committal in either direction. This also tells us once we get a ‘’confirmation’’ FOMO will kick in quite quickly and unless our options data shows bullish flow this will be a fakeout move so we need to be careful and ensure the stars align in order to take a position.

Summary

While SPX remains above 3700 we give the bulls an edge but this can easily be negated. We really need a session or two to prove the market rally can be sustained in SPX… and crypto.

Will shout if this develops.

Side note

On-chain flows for BTC – Looks pretty good with outflows increasing while inflows are reducing.

We also have a heavy week of BIG ERs so I expect this to help drive the market in either direction this week. 

Much of the news coming out of crypto in the last week seems to be centred around more adoption, client services and access to crypto. In a time gone by, each of these types of announcements would have given us a glorious 20% pump as the market speculated wildly. With the current macroeconomic climate, and the insufferable bear market they barely make headlines. Is crypto slowly integrating into the mainstream or have we just stopped betting on speculative headlines? Interesting nonetheless.

Fidelity to allow institutional trading for Ethereum on October 28

Fidelity Digital Assets has informed customers that “Investors will be able to buy, sell, and transfer ether, accessing the same operational excellence, robust security, and dedicated client service model provided for bitcoin investments today”.

Fidelity Investments, the parent company of Fidelity Digital Assets is a 76-year-old asset management fund with over $4.5 Trillion in assets under management. Fidelity even cited the Ethereum Merge as being a contributing factor to allow investors to look at Ethereum through a ‘new lens’ - assumedly referring to the protocols now much more efficient energy consumption. As more and more institutions move into offering crypto services, Fidelity is one of the largest.

France wants to become the European crypto hub

France’s Minister of Economy and Finance has recently detailed his vision to outline France as “the European hub of the crypto-asset ecosystem”. Citing the need to not be afraid of innovation, competition or decentralisation in the space and to prevent the country from suffocating the ecosystem. Sounds very smart to me. The minister has outlined the need to accurately define protection and expansion, regulation and attractiveness to crypto companies. Recent months have seen Binance and Crypto.com strengthen their position in France

Mastercard launching program to let financial institutions offer crypto to their clients

Mastercard is looking to help banks offer cryptocurrency trading through their new program. The payments giant will act as a bridge between Paxos (crypto trading platform) which is already used by PayPal. The program from Mastercard will handle regulatory compliance and security - which are two of the main reasons banks currently avoid the assets class.

Mastercards' Chief Digital Officer said, “There’s a lot of consumers out there that are really interested in this and intrigued by crypto, but would feel a lot more confident if those services were offered by their financial institutions”. With increased regulation and oversight in the asset class, we will also see more confidence and availability to the non-degens of the world.

Hong Kong is considering allowing retail investors to directly invest in crypto

Hong Kong officials have promised their stance on crypto is separate from that of mainland China, which has repeatedly banned and created barriers for the crypto industry. Some of the largest crypto businesses have originated from Hong Kong in years gone by, with the likes of Binance (the world's leading exchange), Alameda Research (VC), Animoca Brands (VC) and others all originating out of Hong Kong. The move is seeking to assure businesses that the city is still friendly and receptive to such business growth in the sector. The move would allow such businesses to sell crypto assets directly to retail consumers as it seeks to bring back Fintech businesses to the region. Currently, investors in Hong Kong must be professional, which is defined as individuals with a portfolio of at least HK$8 Million ($1 Million US)

Walmart CTO: “Crypto will become an important part of how customers transact”

Walmart CTO, Suresh Kumar had recently said “Crypto will become an important part of how customers transact [in the future]” and that “We want to make sure that we make it as friction-free for customers …so that they can drive value out of it.”

The news follows on from the company filing for several trademarks last year which signalled their intent to sell virtual goods in the Metaverse. It seems the company is exploring blockchain technology as payment methods, supply chain and through NFTs and the Metaverse with their recent positioning. They are not the only company doing so, and slowly but surely we are seeing more traditional companies getting some exposure to the space in one way or another.

Avoiding trading mistakes

Last week I talked about the most common mistakes in trading, see the content here for context. If you saw yourself on some of them, don't worry! Today we are going to talk about different ways to avoid them in the future.

Are you ready? Let’s go!

Prepare yourself

The same as a Doctor studies for several years before treating a patient, or a professional Chess player starts by reading the game rules and movements before getting into any competition, the Professional Traders should start their financial education before coming to participate in the markets. Do not worry, though. You don’t need a degree to start trading. In the end, it’s logical, to show good results you need to understand what you are doing.

Find time to dive into the charts, learn about technical and fundamental analysis, and read some news about the economy, but more importantly, do it with perseverance. PRO TIP: Only recommendation I have for you here is to mind your sources, if you are in doubt I invite you to come to our Discord and ask for it. We will welcome you and point you in the right direction. Join HERE

Plan a trade and trade a plan

When you are analyzing the markets, make different plans, define your course of action in case the price does A, B, C or D, and plan even for the most unlikely scenario. Then when the price has done it, reassess and execute. Being prepared is key to being successful.

Nowadays it’s possible to test your strategies before putting your money in it, the use of paper trading or demo accounts is advised to understand the dynamic before risking your money. In other words, a thorough plan prepares you not to fall into the clutches of panic in case the market situation changes and helps you react with conviction avoiding hesitancy. So, work out a plan and stick to it.

Manage risks

Risk management is the core of your defence against the attacks of the markets. Make a positive and strategic approach to risk management. In short, always use Stop Loss and place it where your trade is invalidated, involving R:R and win/loss ratios. Calculate the correct size and only risk 1-5% of your portfolio worth at a time. Diversify and manage your portfolio, protect your wallets, and upgrade and manage your cybersecurity to reduce risks.Once you are committed to your risk management, many different strategies will come to you, choose the one that suits you better.

Mind economic news and events

To be abreast of the latest possible changes, check out fresh news and economic events, and get ready to make moves. Create a strategy that factors volatility.

Not to miss the crucial moments that might affect your trading, monitor the Economic Calendar, and world events.

Follow trends

The first step is to identify a trend to be able to benefit from it. Spotting a trend isn’t hard; just look at the chart and see if the market goes up or down. Compare what you do in your analysis to how others use trends and see if you can add something to your toolset. Remember to zoom out to see the predominant high timeframe trend, then zoom in to have a clear vision of the process and look for execution. 

Let yourself go with the flow.

Record your mistakes

A trading journal is good for seeing the whole picture of your execution and thought process. Is not fun and quite tedious, but once you try it out and see how helpful it is, it will become part of the mechanics. Is the only tool that gives insight into your strengths and weaknesses as a trader. Recording your failures and wins and reviewing them as a whole is the only way to improve and find your edge.

Trade with your head, not with your heart

Never let your emotions overrule the mind. As a trader, you are an endless fighter, there is a constant battle inside you, especially when you see that the plan does not work out the way you expected.

Learn to harness your emotions, because all of them are driving you to failure. Stay focused on the big picture and set realistic goals. Execute the plan no matter what.  

PRO TIP: A common source of being emotional in trading is using the wrong risk. Play with yours in the safe range of 1-5% and see how are your feelings when you risk different amounts. Risking too little is as dangerous as risking too much, find your balance to be as neutral as possible when it comes to making trading decisions.

Think of trading as a business

If you have already entered the Trading world, you are ready to make carefully weighed decisions to go to the top. Set up your mind for success and overcome all the obstacles.

Work in your discipline to achieve all your goals.

Conclusion

The process of learning (anything) involves making mistakes. Trading is a craft, and traders need to polish their skills and knowledge in overcoming obstacles.

I hope this serves you to avoid and correct some mistakes, if you liked subscribe and share!

See you at the next one!