Trading strategy focus
Saketh emphasized that his trading strategy does not hinge on predicting the rise or fall of cryptocurrency values but rather on leveraging technical aspects to secure profits. By focusing on shorter timeframes and technical analysis, traders aim to navigate the volatility without making long-term investment bets.
Evaluating market conditions
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The discussion covered the importance of assessing various factors before forming a trading view. Saketh outlined his approach to evaluating market volatility and potential bounce-back scenarios. He distinguished between a genuine market recovery and a “dead cat bounce,” a temporary rebound in a downward trend. This analysis is crucial for anticipating potential severe down moves if the bounce proves to be short-lived.
Chart analysis and trade execution
Saketh demonstrated the practical application of his strategy by analyzing current charts and trading options. He discussed the volatility of Bitcoin options and the need for strategic trade placement. By choosing expiry dates like August 16, he aimed to strike a balance between risk and reward, opting for a bearish position with a short strangle strategy.
Liquidity considerations and trade adjustments
Addressing liquidity issues, Saketh pointed out that bid-ask spreads could affect the effectiveness of trades. He highlighted the importance of ensuring favorable risk-reward ratios and adjusting trades based on market conditions. For example, he noted that while the August options showed promising premiums, current liquidity might not support the desired trade effectively.
Strategic positions and hedging
Saketh outlined his approach to setting up trades with specific price targets and potential hedges. He discussed taking a slightly bearish stance with options such as the 63,000 and 85,000 call options, and how to adjust positions if the market trends upwards or downwards. His strategy included setting clear reference levels for adjustments, such as 60,000 and 53,000, to maintain a manageable risk profile.
Future outlook and next steps
Looking ahead, Saketh plans to revisit and adjust his positions based on market movements and volatility. He advises traders to remain cautious and adapt their strategies as new information and market trends emerge. Saketh also emphasized the importance of preparing for potential adjustments and considering longer-term positions if current market conditions persist.
(Note: This article is for educational purposes only and is based on Bitcoin data as of August 7th)
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of the Economic Times)