Hope is a mistake
smells like a short squeeze brewing
A few days ago I thought this was the highest probability for Bitcoin over the next week.
What I’d like you to notice is that I start with a VERY tentative hypothesis…
And every new bar I get to evaluate whether it fits with the hypothesis. \
The more bars I get following the script the more I start to have confidence that the market is behaving reasonably (and there are times when the markets behave like a mental patient)
You must also keep in mind that when weird shit happens (low probability outcomes) then it probably catches traders by surprise… and surprise cause traders to freak out, panic and overreact in the opposite direction.
So when reading the tape you ought to stay laser focused on how you FEEL about the bar that just appeared on your chart.
If it provoked a WTF reaction for you, chances are you aren’t the only one.
If your ass is a little puckered… probably that's a good sign for market reversal.
Now the other thing to keep in mind is that when you “think” something is definitely positively happening, that really means the odds are about 70:30 at absolute maximum.
Most of the time financial markets exist in 55:45 or 60:40 odds.
And that’s actually OK.
Casinos make plenty of money with a smaller edge, right?
What fucks the retail traders like us over is the BIG MISTAKES and the CARDINAL SINS.
Usually these are all about oversizing, not being willing to notice when you are wrong, and not getting out when the going’s bad.
When you are wrong, and the market proves you wrong, you gotta just cut the bleeding immediately, no matter how painful.
You ever hear the joke about the bridge builder?
You build 100 bridges and you suck one cock… you aren’t a bridge builder anymore…
One lousy cock….
Trading is an infinite game, so when you make the big mistake and decimate your account… you aren’t really in the game anymore.
One lousy mistake…
Of course, having a SYSTEM will largely stop this fuckery right in its tracks, but I’m well aware that style of trading hasn’t got the flair and fun of YOLO degen gambling.
(if having a system sounds like a better strategy then give yourself a cookie and CLICK HERE)
So where are we now?
We’ve had an extreme of scary emotions last weekend that almost certainly constituted at least a temporary bottom (high prob) and maybe the real bottom (low prob).
The stock market is all aflutter with doomsday talk about runaway inflation and bad bad things…
Which is usually when your spidey sense should be tingling.
When the crowd is all positioned one way, they are liable to be caught with their cocks in the car door on a little move in the opposite direction.
And welly welly well… Stocks are primed for a short squeeze (note this is the same buy setup as we use in our crypto salary system)
And the other major markets are showing potential signs of reversal…
The USD is (tentatively and very speculatively) looking ready to fake tourists out.
And the 10 year bonds are leading the way in the opposite direction of the headlines
And right when $7/gallon gas is in the news… Crude looks like a failed breakout, taking a tiny bit of pressure off the Fed.
Viewed as a package… everyone’s certain that stonks are fucked and rates are going up (long term they are but short term its a bit overdone)...
Probably a good chance for Mrs Market to fuck everyone around for a bit.
You see, markets also follow a very reliable “easytime-hardtime” script. If they’ve gone through a period of clean, easy-to-read trending… you can bet they are about to turn choppy and impossible to predict for a while.
One final lesson for today…
The highest probability outcome for any market is the one that fucks around the most people.
And here, that highest probability outcome is a surprise reversal in stonks/dollar/rates dragging crypto up… which gives the crypto boys a much needed sense that everything’s going to be ok…
Before it fucks them right in the ass one more time.
Remember the immortal words of legendary market wizard Mad Max…
“Hope is a mistake”
So endeth the lessons
Scott
P.s. tell me you lent 15,250BTC and $350m USDC to 3 Arrows Capital without telling me you lent 3 billion dollars to 3AC. That’s gonna leave a mark.