About two weeks ago, I executed the first deal in BTCUSD on bybit based on a bullish signal from a technical analysis perspective. Read on to see how things went down.

Position sizing

As mentioned here, I will be risking a max of 2% of my account balance on any given trade. That is exactly what I did in this case. As my account balance was at its starting point of 0.3 BTC (as mentioned here), I would be risking 0.006 BTC, meaning if my stop loss would be triggered, 0.006 BTC would be the total loss. Take profit would be a min. of 2X the stop loss as I run a min risk : reward of 1 : 2 (as mentioned here). 

Technical analysis - the setup

First of all, I was paying attention to a trendline which the price has been bouncing around for quite a while. You can see it in the snip below.

As you can see, at the end of the price range, we have a pretty solid thrust through the trendline, with a bullish candle on the 1-hour chart. What followed this bullish move, was a descending wedge formation which is an indication we might see another move to the upside. So I was patiently waiting for the wedge formation to be broken, and see a re-test of it, in order to execute a long trade. The snip below is a 5-minute chart. 

You can see we have the clear break of the trendline to the upside. Following this, we have the descending wedge formation to the downside, indicating a possible break out to the upside. The 4th arrow indicate where I took a long trade. The price broke out of the wedge, and went down to re-test the upper part of that formation. After this, I executed a long trade. 

After the trade execution, the trade was range bound for a while, without any proper move to either side. While this cannot be seen from the snip above, eventually, the price dropped down and hit my stop loss. 

Post-trade analysis

While taking a loss isn’t ideal, I followed the rules I had at the time. Looking back, I could have moved my stop loss to break even, but this give the trade even less room to range trade before a potential move to the upside. 

The one thing that I have should have had a rule for, is a time-based exit, when the trade is based on such a technical setup. As there was no follow-through on the technical setup, shortly after the move, I should have closed the trade. While I do not know how much time I should give a technical setup to shows its expected move, I do think I gave it too much time here. I will be adding this in some form to my set of trading rules. 

Final thoughts on my first bitcoin trade

It’s been quite a while since I actively traded any market. It brings back, a lot of memories. While it is easy to convince yourself, you will stick to your rules, and not get caught by emotions, it is much more difficult to actually do so. When the trade was closed, I imidiately felt the need to execute another deal to “win back what I just lost”. I did not do it, but it became very apperent how easy it is to get caught in such a mistake. I was also annoyed by the $ loss, while I should consider this a requisite for trading. Rather than looking at the monetary loss, the perspective stastical and percentage based. There is a lot to work with here, and I will continue to do so. I also need to work on my approach with the periode I trade. I have been switching too much between 5- minute charts to 4-hour charts. I need to have a clear set of rules here. There is a lot to work on here. 

Now it is time to get back to some trading. Check back later for more information on how this journey is progressing.