It is August, the early part of the week, and there is an extremely light news schedule. Taken together, these are classic reasons why the market should be so extraordinarily quiet, as it is. For those of us not off enjoying a holiday somewhere, this can be a frustrating time: you can’t extract much alpha from markets when they are barely moving! Ironically though, there is at least one hot market boiling over right now – Bitcoin. The crypto-currency, after its “hard fork” last week, has gone to make new all-time high prices, rising by more than 22% since last Friday’s close alone!
Although there is a lot of fear that this is a bubble prone to bursting suddenly and spectacularly, I think this is a great asset to trade on a short-term basis, provided you use low leverage. It is trending strongly, and by using stop losses and very low leverage, you should be able to protect against catastrophic losses, although significant slippage in the event of a crash is a reasonably likely eventuality.
A big part of successful trading is the correct utilization of opportunist instincts. What that means in plain English, is making sure you get a piece of what’s going on right now. It is all very well to stay on the sidelines, and a great thing about retail trading is that you are under no pressure except that which you put on yourself. Yet, it is possible to be too cautious and overly restrictive of the assets you trade. If you can trade Bitcoin, and you really need a positive chance of making some good profits this month, it is probably a good idea to make sure you are in the frame here. The BTC/USD pair is the usual way of trading it, and this pair has behaved very technically, respecting obvious support and resistance and trend lines, so it is very “tradable”.
