A special strategy of trading that has important potential for outstanding gains caused by extreme buying at the very start of a bull trend. And it’s inverse strategy becomes a special advantage to catch deep stop-loss hunting that occurs during the mid stages of a bull trend.
When to expect Popcorn moves?
The Popcorn moves I’ve noticed in the past were always at the foothills of the bull markets. Just as we are in January 2019!
Once the trend gets underway, we are more likely to see ‘reverse popcorn’ moves.
The Popcorn strategy involves a very different stop loss patterns than trend trading. Instead of trailing our stops behind prices, we have them set out ahead of prices as profit stops. The Popcorn strategy is a set-up-and-wait strategy that is established before the trend gets underway. And once the trend is moving the strategy is somewhat inverted – referred to as the ‘reverse popcorn’ strategy – to acknowledge the potential for sharp candle wick drops in prices while the market is in the uptrend.
It is a buy and hold strategy for anticipating that many cryptocurrencies will make a ‘popcorn move’, which means that prices pop way up and then they drop way back down – just like popcorn.
The Crypto Popcorn Trading strategy is a method for trading Cryptocurrencies that takes very little time to manage after it is set up.
The core of this strategy is to buy a diversified range of promising cryptocurrencies and to lay out sell orders in advance at extreme technical levels with a portion of the holdings.
For example, one could earmark thirty percent of the holdings of each of the different coins, and place sell orders at extreme, and even unexpected levels – and seventy percent of the coins for long term holding, or for discretionary selling. Or, as in this chart, we could mark 60% of our holdings in popcorn sell orders, and hold 40% of our coin for manual profit taking.
What Kind Of Investor Is This For?
This strategy is for the long term investor to hold cryptocurrencies for the next three to five years and take profits with a portion of the holdings, should prices spike.
This while the main focus is a long term investment strategy, it also acknowledges that cryptocurrencies often do ‘pump and dump’ style moves that I call a ‘popcorn trade’ move. We can observe that many cryptocurrencies have huge spikes up and then they come back down to nearly pre-spike levels. These could be real news creating a fever of investor interest, it could be fake-news causing fear and panic, or, these price moves could be the work of organized pump-and-dump groups that intentionally manipulate prices with organized ‘pumps’.
Whatever the source that generate these moves, we can implement a simple strategy to capture profits in these huge potential moves, without participating in a pump and dump group, and without spending time monitoring cypto news channels. Instead, with this strategy, an investor can prepare for probabilities and aim to sell out a portion of holdings IF prices spike to extreme highs.
The anticipation is that prices will come back down to lower levels after the main surge, thus providing opportunity to:
* re-invest the profits back into the same market
* diversify the profits into different tokens, coins or a different asset class
* or take profits and re-coupe the initial investment
What are popcorn moves?
This is when prices of the coin are making early bull patterns, and occasionally news gets out, amplified by social media and FOMO traders noticing the price change and trade volume – seemingly out-of-the-blue, one coin or another will do a 2x, 5x and sometimes a 10x move both up and then all the way back down, within a few hours.
The only way to be prepared for these is to buy a small amount of a lot of the coins on the alerts list, set up layered sell orders in advance – and let the markets to the work.
Drawbacks of this strategy?
First: It is only effective when prices have been on a down trend and now reaching historical low levels. As the uptrend in on, this strategy has less likelihood of occurring.
Second: You do not get to have market orders above the market and a stop loss below the market – you must split up the coin you have into those that are set in sell orders, and perhaps a percentage of coin as a protective stop loss – or, no protective stops at all. This trade method uses Rule #2 in reverse, and for the initial set up, it also removes Rule #1. (if you are sure the bottom is close enough and you are willing to keep holding over a period of years to keep your positioning ready – like an insurance policy in case prices do 10x moves, you will profit.)
The Popcorn moves I’ve noticed in the past were always at the foothills of the bull markets.
Once the trend gets underway, we are more likely to see ‘reverse popcorn’ moves.
Variations In Catching PopCorn Moves
What are reverse popcorn moves?
My conspiracy theory is: These sharp spikes down in price occur when too many traders put on trades and have their stop losses too close the technical levels in the market. When this occurs, institutional trading algorithms can recognize this market liquidity as an opportunity to take up a larger position within a small price range.
They ‘run the stops’ and buy everyone’s protective stops.
That is, for example, they may sell $250,000 of one coin across all the exchanges – and as all the stops are hit, prices drop back to the larger buy orders… and the institution can accumulate $1,000,000 position size at levels sharply and suddenly lower than current market levels. Prices naturally rebound as the institution buys back the $250,000 holdings they used in the initial nudge of the market.
Example of Reverse Popcorn Move
For the reverse popcorn strategy, we are taking profits just under historical resistance, and then we are placing buy orders, down where most bulls would have their stop loss orders.
Then, we wait for the Institutional AI Trading Bots to do their thing. Should we get our buy triggered, then we start moving protective stops under this new position. Should move higher quickly from our entry and rebound to pre-candle wick levels, we take profits.
Of course, should prices continue lower and not prove us correct on the reverse popcorn entry, we use Rule #1.
Comparing Trend Trading To Popcorn Trading
One thing that I want to do is to highlight two different trading methods and their potential outcomes.
Review these theories and test them. The first is ‘the popcorn strategy’ would be that I put on all of my trade within the bottom formation and then I take profits in stages as prices rise. Some profits taken just under historical support and resistance, and some profit targets up at unexpectable extreme price levels.
Imagine a bell curve showing how much I’m selling out at each of the target price levels. This is the preparation for popcorn markets or pump and dumps. This is getting ready in advance for that crazy pump – to be ready to sell without the need to spend time watching prices. This strategy assumes that prices will come back down after each manic surge, and you can reassess if you’re going to put more back into this market, or invest elsewhere.
Trend trading VS Popcorn Trading
Study those two methods. Do the math on some back testing.
The trend following strategy is different where you would put on a portion of your trade at the beginning and should it prove you correct and then make a staging area, you would add on another portion of your trade.
With the long term trend following strategy, you would be looking to take off your trade when the markets make a top formation and the moving averages cross-over and break the trend lines on the up trend.
In trend trading you’re growing your position when you’re proven right and then you’re waiting for the market to tell you when to get out.
Trend followers start with a small part of a position, add on to it when proven correct – and take profits after the market’s top out and start coming down the other side.
In contrast, the PopCorn Method is to put on all of your trade at the beginning and then to feather your trade out and take your profits as the market go higher.
The trend following strategy is lower risk by design because you are always smaller when you are wrong and you are bigger when you are correct, whereas with PopCorn Method puts on all the trade right at the beginning so if I’m wrong, I’m wrong biggest.
| Popcorn Buy 100% | 1000 coins | 50 satoshi | 50k |
| Popcorn Sell 25% | 250 coins | 160 | 40000 |
| Popcorn Sell 25% | 250 | 437 | 109,250 |
| Popcorn Sell 25% | 250 | 663 | 165,750 |
| Popcorn Sell 25% | 250 | 827 | 206,750 |
| Total Return | 944% | ||
| Trend Buy 50% | 500 coins | 50 sats | 25k |
| Trend Buy 50% | 324 coins | 77 sats | 25k |
| Trend Sell 100% | 824 coins | 527 sats | 434,248 |
| Total Return | 768% |
Which of these strategies fits your trading style so you feel joy and ease while doing it?