Have you bought the recent pullback because it seemed like the right thing to do? Maybe it seemed that way because everyone on Twitter was doing that also? When it comes to any financial market, "conventional wisdom" or what may "feel" right is often the WRONG thing to do, even if the market randomly rewards you for such a behavior.
In my previous article, I wrote about WAITING for a confirmation of a buy signal to develop around the 48K to 50K area support one week ago. The signal NEVER confirmed and guess what? No trade. After that, Bitcoin made its way to the 30K low and we simply STEPPED ASIDE.
As I tell my followers, RISK should always be evaluated FIRST, not reward but that idea goes against human nature. How come none of the other "gurus" or "authorities" were warning about these risks two months ago? Instead I watched video on top of video trying to convince me that these "top 3 alt coins will make me rich in a month". Meanwhile Bitcoin and most alts are off their highs by more than 50%. If this does not teach you a lesson about listening to PEOPLE, I don't know what will.
As of right now, Bitcoin has generated another sell signal (by taking out the previous inside bar low). 30K is the next major support and IF it is decisively taken out, the 23K to 20k area is the nearest major support. Will it go there? I know everyone wants a prediction, but markets don't unfold in absolutes.
As far as swing trade strategy, we don't short Bitcoin, so that side of the equation is not even a question. The rules are simple: wait for price to develop bullish structure around the 30K area for a potential long, or wait for the same process around the 20K area.
In terms of investing, the fundamentals of Bitcoin have not changed so IF you believe in the technology, accumulating some inventory near lows is not a bad idea, the thing is you MUST have a sizing strategy in place, AND a specified investment amount. If you don't you really should not be putting money at risk because you will most likely react emotionally at the least opportune times.
If you look around now, you will see many bears calling for 20K, 15K, etc. While anything is possible, you need to be able to evaluate risk and make reasonable decisions on your own. The crowd REACTS to information, which occasionally results in a random reward and reinforces ineffective behaviors. Stop consuming and reacting to the SAME information as everyone else. Learn to listen to PRICE.
Thank you for considering my analysis and perspective, I hope you found it helpful.
MArc, I haven't opened any trade on the rebounce, but I took advantage of today's low prices to buy a periodic amount in a long term view.
Would you consider that wrong as well?
My inventory strategy is: instead of buying small bites periodically, I sum them up and in the end buy on the dip. So today I actually bought almost 8 weeks worth of periodical amount, all in one chunk and at a approx 40% discount compared to previous prices
andreyevic
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@john_galassi, but how could you know that this is the dip? maybe 20k will be the dip? or low 40k could be dip too (turns out it didnt but we cannot know that).
Amit26
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@andreyevic, You will never know the exact bottom or peak. May be 20K, 10K or may be its right now. But currently we are around 50% below ATH, and its pretty good price to buy some
andreyevic
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@Amit26, i was pointing out that to save cash and buy "the dip" is a wrong strategy because one simply cannot know the dip. taking small bites in pre-determined levels of interest is much more reasonable to me. and yes, i too find this levels interesting to build some inventory.
john_galassi
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@andreyevic, @STPAUL007, as Amit26 put it, I didn't say I look for the *bottom*, but rather for a significant dip. They are not the same thing: I agree that is highly unlikely being able to guess the bottom, and that's not what I am looking for.
On the contrary, I don't buy highs, so I didin't buy when bitcoin was high like it has been until two weeks ago.
But when it makes some significant drops at key levels like now I guess it could be a good time to buy.
So, instead of DCAing regular amount every week, I set those amount aside and then buy all together when the price drops significantly, or in other words makes a "dip", in my terms (assuming that my terms are correct of course). Dip, not bottom.
A variation to the same strategy could be buying AT THE SAME LEVELS but only when the price goes up, but you could be involved in false starts and false breakouts. And, to be honest I never tested it until now.
So, for the time being, this seems a pretty solid strategy to me for the long term.
At least I am comfortable with it.
I hope I expressed myself clearly and answered your objection.
If you want, I would like to hear your opinion about that.
thanks
STPAUL007
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@john_galassi, Well ... i see a lot of words but no numbers, what does it mean " significant" " comfortable " dip ? 15% from ATH ? 25%, 40%, 50, 60 ? when it hit zero ?
STPAUL007
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@john_galassi, you will not catch the dip, unless you have a crystal ball. It can easily jump back to 43k on Musk tweet and than what ?
Would you consider that wrong as well?
My inventory strategy is: instead of buying small bites periodically, I sum them up and in the end buy on the dip. So today I actually bought almost 8 weeks worth of periodical amount, all in one chunk and at a approx 40% discount compared to previous prices