Saturday July 9. 2016 7:00 AM
Happy BTC Halving Day! Not expecting fireworks, but not ruling them out either….
I am currently 45% Long ETH with an average price of about $10. First price target is the $15 range. The most recent blocks I’ve purchased have been around $10.75. I expect to be up to 50% invested before weekday trading on Monday.
I wish I were 100% invested in ETH, but I’m confident I’ll make the most money over the long haul because I’m not 100% invested.
Even though I had many chances to go 100% into ETH at $9.75 or even less, I didn’t. Right now, this feels bad – like I’ve “missed the bus” and now will miss out on maximizing profits and/or have to pay far more for ETH just to get a decent sized position.
It might not feel great, but it’s been very successful for me. Here are 3 reasons why:
I never load up.
- Anything can happen
I write this every couple of days because it’s the most important thing to remember when I’m trading. There are only probabilities, never certainties. I’ve watched perfect set ups that never fail, fail.
I’ve also found the stronger the set up, the bigger the disaster when it fails. If you’re perfectly disciplined and can somehow succeed trading with tight stops, you won’t get destroyed loading up when your amazing set up fails. I’m not perfectly discipline and cannot succeed with tight stops.
2. Better to wish I was more invested than regret being too invested = Keep dry powder.
This is the kind of trading advice I hate, because I know it’s true but I don’t want to hear it or even think it when I’ve fucked up and am 100% in a position that’s tanking.
Real traders know there’s always another bus you can catch in the near future so it makes little sense to put everything at risk by loading up on any given trade. This is especially true in new markets like cryptocurrency where prices can and do go to zero.
So, while I hate hearing this advice, I know it’s vital to my long term success as a trader to keep dry powder for “spike” moves (see #3 below) and it’s how I am okay being 50% invested when I wish I were 100%.
3. They love to spike price before big moves the other way
I’ve noted in prior posts I’ve been looking for a spike down to $5 on ETH where I’d love to get 100% invested. This spike hasn’t happened and I now see bullish signs that could take ETH to $15. I have an intermediate/long term target of $36. Should I stay out of ETH entirely until I see the spike down designed to “scare everyone out” or be a “stop run” I’ve often seen?
That’s certainly a safer approach than scaling in at higher prices but it also can crush you as you try to time a specific event which is a low risk trade but damn near impossible to know when it will happen and provides zero return if it doesn’t or worse, you miss it.
I try to define my trading game plan before I start. In the case of cryptocurrency I’m a swing trader, not a day trader. I want to have cash available for huge spikes, but it’s more important to me to make good returns on big moves over longer time frames than it is to make every nickel waiting for huge spikes. My money management plan is to buy 5-10% blocks to build a position when I see buying signals in the patterns and indicators.
One more thing about spikes in price: The fact is ETH had a strong spike down on to $7 on DAO news a month or so ago. There was my big spike–did I buy? HELL NO! I was thrilled to be mostly out of ETH at that point.
More recently on July 5 after serveral down days there was another spike down below my first downside target of $10. There may not be another spike down for weeks, months, or ever.
NOTE: NOTHING IN MY POSTS IS INTENDED TO BE TRADING ADVICE. Please do not base your trades on any information presented in the materials on this blog as it is for information and entertainment purposes only. You are 100% responsible for your own trading decisions.