Bitcoin Price Diary: How REN/BTC Double Bottom Made Me 49% Profit

Published at: Oct. 12, 2019

In this third installment of my Bitcoin Price Diary, I’ll revisit some open positions which are still in play and review a sizable trade on REN. I also have a position in Bitcoin (BTC) that is still largely open.

As I have said a number of times on Twitter, I believe that it has been an altcoin season for months and that altcoins found their local bottoms in August. I have been comfortably trading them since. In early October, Bitcoin dropped and was ranging sideways, giving altcoins even more room to appreciate.

At the time of writing, Bitcoin price is a few days removed from a sizable 6.6% move up, which caused a drop across the board on many altcoins. I am proceeding with caution on altcoins for the moment until Bitcoin has provided clearer direction for its next move.

I prefer to keep my active trades at a minimum because it helps me manage my risk. Opening multiple altcoin positions at the same time rarely works for me as they move in tandem based on Bitcoin price moves.

This is why I assign a 1% risk for multiple positions as failing to do this can lead to sizable loss across the board. I prefer to identify the 1 or 2 setups I like the best and allocate more funds to heavier positions. In this case, I deployed the bulk of my trading capital into a REN position, which worked out beautifully.

Let’s take a look at some charts to see how the process worked out.

REN/BTC: Setting up the trade

Entries: .00000512 (sats), .00000601 (sats)

Targets: The target of the initial breakout, for me, is a trip to the all-time high. This is ambitious, but my first target for a small portion of the trade was set at .00001396 (sats). This would be a 170% gain.

At the time of entry, I was watching for a potential double bottom (confirmed with a break of .00000601), with a target around .00000840. This would be a 64% gain from the first entry and a 40% gain from the second entry.

Stop loss: In case the trade goes belly up I’ve placed a stop loss at .00000476 (sats), which equates to a 7% loss on the trade.

Calculating the risk-reward ratio

It’s also good practice to consider the risk to reward ratio when making an investment, especially with altcoins given Bitcoin’s current dominance rate.

The risk to reward ratio measures the difference between a trade’s entry point all the way to the stop-loss and sell or take-profit order.

Comparing these two provides the ratio of profit to loss, or reward to risk. For this trade, it is roughly 26 (!!!) at the first target and 9.6 at the second target.

General analysis

REN has been in a clear and sustained downtrend since hitting its all-time high in July. I caught most of the move up and was able to profit, exiting near the top. I had very little interest in trading it again, and consistently posted on twitter why I viewed more downside as likely.

As previously mentioned on twitter I believe the down move began with a head and shoulders and daily bear div.

Price ultimately fell well below this area into the .00000360 zone.REN/BTC 4-hour chart. Source: TradingView

I clearly targeted the low 0.000005 area, as can be seen by my consistent posting about the green weekly demand zone on my old charts.