The Trend is your Friend

Jesse Livermore, the legendary early 20th century stock trader, is the single greatest influence on my trading mindset. If you have not read “Reminiscences of a Stock Operator” and/or “The Boy Plunger” I recommend you buy and read them immediately. These books about Jesse Livermore’s life are entertaining and highly educational for everyone, trader or not.

One of the best tools for tracking a trend is the Ichimoku Cloud. An example of the Ichimoku Cloud applied to BTCUSD daily chart generates 7 trades (noted by markers at top of chart with 6 of 7 trades being profitable) over the past 18 months.

BTCUSD daily chart (click for big)

Different trading styles have different time preferences. Higher timeframe charts produce less trades per year. These higher timeframe trades are more profitable for less work. In these volatile times I believe you must be flexible enough to obey trends that are between 4H and 1D. Timeframes less than 4H are too noisy and over 1D can be too slow. Timeframes come down to personal preference and trading style. For me, having been a day trader looking at 15m charts, I can tell you I greatly prefer the higher timeframes for consistency of profits and quality of life.

“After spending many years in Wall Street and after making and losing millions of dollars I want to tell you this:  It never was my thinking that made the big money for me. It always was my sitting. Got that? My sitting tight!”

“The desire for constant action irrespective of underlying conditions is responsible for many losses on Wall Street even among the professionals, who feel that they must take home some money every day, as though they were working for regular wages.”

Jesse Livermore

The key to trend trading is patience and persistence. I have lacked both the past couple of years.

Going forward I’ll be blogging more consistently on trends I’m trading.

Here’s a snapshot on a few notable assets:

Apple, a close above $374 opens target $430. However, $374 area could be firm resistance. Stop $345.

“Experience has proved to me that real money made in speculating has been in commitments in a stock or commodity showing a profit right from the start.”

Jesse Livermore

BTCUSD, in cloud and trending down. Neutral trend with bearish bias. Confirmed sell signal $8600. Triple top formed at $10,500.

BSVUSD, below cloud and trending down. Bearish trend with support near $150. Reverse trend at $170. Stay out till trend reverses.

“I did precisely the wrong thing. The cotton showed me a loss and I kept it. The wheat showed me a profit and I sold it out. Of all the speculative blunders there are few greater than trying to average a losing game. Always sell what shows you a loss and keep what shows you a profit.”

Jesse Livermore

TSLA, all time high with price 20% above Ichimoku Kijun indicator. This displacement between price and Kijun is a classic retrace signal. However, markets are irrational. I would be selling TSLA here to rebuy at Kijun support of ~$1,000. TSLA is a gamble for longs and shorts. It’s one of the most volatile and irrational assets to trade bar none in 2020 (including crypto).

AMZN broke a triple top and is now up 43% in 90 days since the Ichimoku cloud long signal at $2,008. Price looks determined to test $3,000 and I think it’s an ideal time to offload into that strength any shares you don’t plan to hold for 3+ years.

“End trades when it is clear that the trend your are profiting from is over.”

Jesse Livermore

To say these are unusual times in the markets is an understatement. Rarely has humanity had macroeconomic, political, health and cultural movements of this magnitude coinciding at the same time. Anything is possible in this environment.

Would you like to see more of these charts? What assets would you like to see tracked?

About coinspeak

20 years as an IT consultant. Escaped the rat race in 2015. Addicted to travel and tacos.

Check Also

Count Your Blessings

Jay Powell has been a generous God. Count your blessings under his reign. Powell’s policies …

Leave a Reply

Your email address will not be published. Required fields are marked *