How much can a novice investor earn from trading? Part seven. Trading (continued)

We continue the series of publications about trading in order to understand in practice how much a novice investor can earn using only the forecasts published on our website. To understand how useful they are, we decided to conduct an experiment and simulate a situation in which a person who only knows about trading that he needs to “buy cheaper and sell more expensive” tries to earn additional income in his free time from work by investing part of his funds in cryptocurrency trading

After we fixed profit at the level of 7200.00 USD in the last trading, the price of Bitcoin on Friday, July 20, consolidated in a narrowing range near the level of 7444.00 USD. 

I really wanted to try to make money on the impulse when leaving the triangle. According to the classics of the genre, the exit should be in the direction of continuing the upward trend. But in the morning review attention was drawn to the reading of the stochastic, which gave a signal to continue the corrective decline. Therefore, it was dangerous to enter the market.We decided to firmly adhere to discipline! 

Watching the dynamics of the BTC/USD pair, it was very interesting to see how the price, having stopped at the upper border of the triangle, froze for a long time, made several small steps upward, and then again descended to the upper border. On the one hand, we understood that if the stochastic signal turned out to be false, and we did not have time to enter with a purchase, then we could again miss a good opportunity to make money. The article stated that with a bearish breakout, the price could reach the 23.6% fib level (7768.76 USD). 

We figured that if we bought Bitcoin at 7500 with all the money we had and closed the position at 7750, then we could earn about 25 dollars.  However, if it broke against the trend, the price would fall to seven thousand dollars. In this case, we would lose $50. The risks are very high and therefore, in order not to succumb to the temptation to buy on highs, we decided not to even open the EXMO trading terminal, but to watch the progress of events on the TradingView chart. 

When the price had been tempting buyers for four hours, pretending that it would now begin to rise, suddenly, within three minutes, it jumped to 7580.00 USD, and after another three minutes it reached a maximum at around 7696.00 USD. 

Just as quickly, the price began to decline, and an hour after the breakout, it reached a minimum at 7212.00 USD. 

To be honest, the fact that five minutes later the price crawled down, leaving a long wick of a false breakout candle on the chart, made my soul feel better. Because it would be very difficult to resist the temptation to buy on emotions, without a sober analysis.

If the breakthrough were not false, but real, then catching the runaway price by the tail is also very difficult at such moments. As soon as doubts creep into your consciousness, you begin to hesitate, and now opening a long position at a rising price can turn into a hamster purchase on the highs.

Therefore, you always need to enter the market carefully, comparing losses and possible profits.