It's Sunday morning in the UK and the first signs of cryptocurrency price recovery are appearing.
Because I am on a train, creating a video today is difficult if not impossible. However, I noticed a few things on the charts that I wanted to share so rather than all or nothing, I decided to go the middle way, break the mold and do a written post today, which I almost never do.
Bitcoin Daily Chart
First I'd like to draw your attention to a medium term trend line, which is the yellow line in this image:
Notice how the most recent fall in price from $20,000 came right back down to this trend line to touch it for the 3rd time.
With a high degree of confidence that this would be where the price would turn around, I converted some Great British Pounds (GBP) into crypto at this point.
I was not expecting to catch the very bottom, that's an unwise approach. Instead I did my analysis, decided how much I was willing to risk and then took decisive action.
What stops most people from actually placing trades is the fear of making a wrong call. That is the wrong mindset.
There is no amount of analysis that will guarantee a profit. There is always the possibility that you will be wrong, in fact its inevitable and thus must be accepted as part of the job. Wayne Gretzky wasn't afraid of taking the shot and missing, in fact he missed more shots than he scored and became one of the greatest.
What Happened After I Bought In?
Here is a close up of where the Bitcoin price is now on the daily chart. The yellow arrow points to the day I got in. I bought 8 different coins on this day including Bitcoin and I'll reveal my choices later in this post.
You can see the market went lower after I got in, which doesn't concern me.
What we see is that medium term trend line in yellow has now turned into resistance. Here is an even closer view that shows the price is now stuck under the trend line.
Notice also how it is sandwiched between the yellow trend line and the 200 day Exponential Moving Average (the green line).
What is encouraging to me is that the tails on the candles are getting higher, which is a sign that buyers are willing to pay increasingly higher prices for Bitcoin. That is what is preventing the price from going lower.
It also likely means that the vast majority of the people that wanted to sell their Bitcoin in a panic have done so. Prices can rise because of 2 scenarios, an increase in buyers or a decrease in sellers.
Sometimes both happen at the same time. This also applies in reverse when prices fall.
What Did I Buy And Am I In Profit Or Loss?
I am tracking these trades using the portfolio tool that is currently provided for free at https://www.cryptocompare.com/portfolio/
Some people don't like this tool because it's centralised and the website owners have access to the data but that doesn't particularly bother me. Just consider that before using it yourself.
Here is the state of play at time of writing:
This is obviously changing by the minute and overall I'm down 2.5% across the whole set of positions. Mostly thanks to NEO but LiteCoin is saving the day.
This proves that I entered a day early but I am fine with that. I got in at what I consider 'low enough' prices to make excellent profits in the coming weeks. That is assuming we have hit the bottom. There is still a chance we break lower again but I accept that risk.
I think it's unlikely, however I will not blame anyone if it does break lower. I accept full responsibility for my trading decisions win or lose, and you should too.
Trade Sizing
I have removed the actual amounts from this post because that information is private. However what I will share is that I put an equal amount into each coin.
So my method was as follows:
- Decide on an amount of money to put in to crypto
- Ask myself honestly if I could afford to lose all of it
- Decide how many different coins I wanted to buy (8 in my case)
- Divide the amount of money by 8
- Buy this amount of each coin
- Transfer the coin out of the exchange and into my hardware wallet
It is a good job I did equal trade sizes because otherwise LiteCoin would not have been able to bring the average up.
As luck would have it, between my Ledger Nano S and my KeepKey, I was able to withdraw all my coins from exchanges after I had bought them and sent them to my hardware wallets.
Yes this means it will take longer to transfer them back to the exchanges when I want to sell and take profits, however I rank security at the top of the priority list. To me security is even more important than speed or maximising profits.
I say that because a security breach can result in a 100% loss of your money without the markets having to crash.
If I lose money in crypto, I want to make sure it only ever happens because of a price movement outside of my control, rather than because I had poor security and someone stole my money.
Conclusion
One of the things I like to emphasize, especially to people wanting to get into crypto is the question of "why are you doing it?"
More specifically "What do you want the money for?"
This is a question you need to answer before you do anything.
What is that thing you really want to do that money can get you?
- Do you want to pay off your mortgage?
- Do you want to put your kids through college?
- Do you want a round the world cruise?
I don't care what it is, I care that you know what it is.
Once you know what it is, figure out exactly how much that thing costs TO THE PENNY.
Write it down. Then and only then should you begin your journey into crypto.
This is critically important because at all times you will know WHY you are doing it.
What gets on my nerves is when people online post one word responses like "HODL", to which my response is "HODL until when? Until you are on your death bed???".
If you don't know when to sell, you will hold forever, and you will never actually achieve your dreams.
I believe the number of people whose dream is to "have x amount of crypto" is very small because we only want X amount of crypto because that means we then have enough money to do that thing we have always dreamed of doing.
I'm sharing these thoughts with you here because this set of coins I bought in the latest crash was done with this exact philosophy. The profits I am going to make on these trades are for something very, very specific that I have listed in a spreadsheet, each with prices listed individually and then added together. That becomes my profit target.
When that profit target is reached. I will sell and do that thing I want to do.
Don't be a graveyard HODLer. Set a goal, write it down, keep it in mind and then allow crypto to help you get it.
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