It has been a long week and nothing hurts more than seeing your account down 20-30% or more. It's heart wrenching at times, and most of us, including myself, felt the urge to just sell and get out of the market. This is where hindsight comes in. I shouldn't have sold!
I want to address a couple things as I often am asked the question where should I buy, where do I sell? This can be sometimes the most difficult thing to determine, and it varies depending on one's means. First to determine this we write down what our goals are. Are we a long term investor where we intend on holding for years? Or have you decided to just day trade coins for fun. How much money are you playing with? These questions will determine your style of trading.
I am an avid poker player. I play for fun, but there is a huge parallel in playing poker and investing in any market. My dad used to tell me "son if you look around the table and do not see a sucker, YOUR IT". Words a gambler must live by. Trading is no different. Simply stated, you have to know your position at the table. Your position is your stack size. If your stack is small, you can NOT play as loose as those with larger stacks. If you have a larger stack, you can play a little looser and more aggressive. If you read a player wrong with a large stack, you can easily get out of the hand and move on. With a small stack one wrong read could wipe you out. So if you have a smaller stack, you can NOT play the same way larger stacks do. You can only play high probability hands, or you'll end up likely broke.
Same goes for investing. This is the reason I do not post buy here sell here and try to be clear on WHY I am making the trade. It's all relative to the type of trader. I mentioned this in another article as D-Man and myself had two different calls. Neither was wrong, they were just intended for different types of investors. I try to explain the purpose of my trade and you must determine if it applies to you or not. Do not force it.
Bottom line, If you have a small stack, you should be invested in coins with the highest probability of going up. It's boring I know. So is sitting at a poker table for hours with a small stack waiting for that perfect hand. But that's how we must play. If you have less than a few hundred dollars, then one of the big 4 should be your choice. Slowly add until you get $500 in one then start adding to the next. This is how you build a solid portfolio with a little at a time. And you will be surprised how it grows! I know you want to call that flush draw with a small stack, but you cannot afford to miss! However if you have 10k or so, then maybe 70% in core holdings. 15% in cash and 15% in speculative coins. 20k or more, you can adjust a little more speculative. Now these are just guidelines, so you as an investor must determine for yourself, where do I fit. Regardless of stack size your core holding should never be less than 50%. If you have a small stack, more often than not you will lose it all gambling. Know your position at the table and don't be a sucker.
We are nearing the completion of the correctional cycle. Some of the coins have completed and hit the expected the target level, BTC is yet to be determined. So do I add here? Let's say you PLANNED to buy another 10 ETH. It has completed the cycle, and has a high probability of going up from here, so adding 3-5 coins at this level is warranted. I would then wait for a break to the upside. I like buying strong upside breaks. If your long term, here is a chance to add a little, and then wait for a signal to tell us the next bull cycle is confirmed to add more. If your looking for a short term trade you could buy the bounce with a tight loss, and tight target level, but this is hoping for a flush draw!!
Good luck in the Pits!
Bình luận
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I want to emphasize BTC may go further south, However, I think too many are calling for the $3000 level, which lessons the probability of getting there. Somewhat a crowded trade, and what could happen is a big stack jumps in early, which would cause a quick reversal and everyone jumping in thinking the missed it.
If BTC didnt correct yet, wouldn't/couldn't the corrected BTC price bring the prices of other 3 lower (which is corrected)
goldbug1
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@neverfollowr, Thanks and good question. I based them all in USD so BTC would not be a factor. But since we trade in BTC (at least I do) I have to be cognizant of where I am at.
Thanks for the question!
zerocashcool
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It's as if you read my mind.
I'm a fish with a medium sized stack and I've been getting eaten by sharks. You've just made me a better player! I'll build up my stack trading like Dan Harrington and loosen up into a Gus Hanson style once I'm rich and know what I'm doing. Thanks! :)
goldbug1
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@zerocashcool, LOL I knew there were some poker players out there. Thanks for reading and good luck!
dgorbik
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Interesting poker analogy. But in poker it's a size relative to other player's stacks. What is it relative to in crypto markets? Isn't it relative to your cost of living? I can imagine for some people $300 might feel just like 30k for others.
goldbug1
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@dgorbik - good question. It's relative to how you invest or trade. If $300 is a lot of money to you and you buy in at the $200 minimum table you cannot play the same way someone plays that thinks $300 is pocket change. They can buy in over and over, you can't. They can play 45 suited 8-10 off suit. Lower probability hands that have high payoffs, because they don't care if they lose $800. If $300 is a lot to you then your playing AJ or better only. Hands with the highest probability of winning. If all you have is $300 and you start playing lower probability hands, statistics show you will most likely lose. Now there are the exceptions and many will point to them, but I have received messages from many several people for which $300 is 30k to them. And they have been unsuccessful in trading mainly from playing low probability hands. I'm not telling anyone what to do, I'm just providing my opinion.
The point is, if you do not have discretionary cash to lose, then IMO do not trade speculative stocks or coins. You invest in the ones with the highest probability of growing in the future. It's boring, it's like sitting at the table waiting for AJ or better! Your throwing away 78 suited though you are tempted to play. But in the long run this is the best strategy.
Bigby
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If we are expecting to see BTC go further south I will wait on ETH also. They seem to be very closely correlated.
goldbug1
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@Bigby, Ill take a look at ETH I should anyways, I often forget I have it as it's not as exciting ;)
jayant_kaushik
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Thanks for this analysis man.
A quickie.. In your opinion which currencies should one invest in right now and forget till 5 yrs?
Thanks
goldbug1
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@jayant_kaushik, BTC ETH LTC OMG XRP would be my top 5 and actually are! you could substitute DASH for LTC as they already have market penetration, but those are my favorites. I would research them however to verify.