We’re curious how “buy and hodl” investors are feeling today? Probably just like stock investors in early 2009 during the financial crisis. They’re likely finally starting to wonder, “I’m still way up on my BTC or ETH, should I sell and just be done with it?”
- That’s not buying and hodling
- That’s EXACTLY what they want you to think.
- Maybe they should just sell and take their profits — ANYTHING CAN HAPPEN
Of course every situation is different so we can’t recommend what you should do right now, however, we can review an alternative to strictly buy and hodl investing that’s worth considering, especially in a market as volatile as cryptocurrency.
3 SIMPLE KEYS TO LONG-TERM INVESTING WITH LESS STRESS
KEY 1 Define Your Trading Funds
What if you were watching the crypto market drop 50% over the last few weeks with 50% of your investment funds in cash? It’s fairly easy to accomplish this if you set up clear definitions for your funds — we like the following:
- VST = Very short term
- ST = Short term
- IT = Intermediate term
- LT = Long-term (essentially buy and hodl)
This approach allows you to have funds available for short term opportunities when they arise. More importantly, if you don’t want to be an active trader, you can leave the VST ST and IT funds in cash so you’ve got a hedge against huge downturns like the current crypto correction.
Here’s a handy table we shared in a recent subscriber educational post
You can learn much more about defining your trades in our educational post:
KEY 2 DEVELOP A SCALING STRATEGY FOR INVESTING
Here’s a scaling strategy we shared in a recent post (link below) and have been reviewing for weeks with our newsletter subscribers
- Block 1 10%
- Block 2 10%
- Block 3 20%
- Block 4 20%
- Block 5 FINAL BLOCK 40%
“BLOCK 6” RESERVE Some traders keep a reserve fund usually = 25% -50% additional for a 100+% investment if patterns and indicators justify the additional funds.
A scaling strategy can be applied to VST ST IT and LT funds to minimize risk. Popular “safe” investment approaches such as “dollar cost averaging” is a form of scaling.
We think the following descriptions of these blocks (from the post) describe where we are today:
Block 4 Use Daily and even weekly charts once price gets this low. Here’s where you also need to take a hard look at what “wave” your investment is likely in. As we get closer to fully invested we want to be convinced that our story for the investment is still valid.
Block 5 Same as Block 4 — careful consideration should be given to REDUCING your investment before adding block 5 or 6 — why will this investment go up from here? You need a better answer than “it just has to” or “I want to make back what I’m down”
Where are you in your investing strategy today? Fully invested and watching losses mount? Don’t feel badly if you’ve gone too fast — whales and bots are experts in convincing you the bus is leaving without you….until it isn’t.
You can learn all about scaling strategies in this cryptopatterns newsletter post
KEY 3 10-20% RETURN / YEAR ON INVESTMENT FUNDS IS EXCEPTIONAL
We were screaming this while BTC was near $3000, and we’ll keep screaming it if BTC falls back below $1000 (could that happen? ANYTHING IS POSSIBLE).
Just like the attitude that many traders chase 100% returns when they seem to be happening on a daily basis, buy and hodl investors tend to get way too comfortable that a hot market will stay hot forever, or “always come back”.
The stock market has skewed our thinking because we’re in an extended rally. If you bought in 2000 you barely broke even in 2010–a 10 year period before another uptrend started. Or for a current example. Natural Gas is a useful commodity, right? Seems like a good long-term bet to “always trend up” Take a look at this long term 10 YEAR Natural Gas Chart 2007-current:
This doesn’t mean you shouldn’t buy and hodl. What it does mean is to set realistic expectations for your investments. Look around. What else can you invest in right now that you can earn 10-20% on your money per year? Most safe investments are lucky to pay 2-3% per year!
So there are 3 keys to consider. We’ll add one more. We think KEY 4 could be to subscribe to cryptopatterns newsletter, so you can stay aware of probabilities for big moves in the crypto market. We teach subscribers SAFE trading / investing strategies at all times and are proud of the fact we’ve been encouraging subscribers to use a scaling strategy for their investing funds for weeks.
With those 3-4 keys in mind, NOW is a great time to reset your thinking, and decide just how much sense buy and hodl truly makes for you.
Once you’ve got realistic goals and the above keys in mind, you can make needed adjustments to your cryptocurrency investment portfolio to plan to earn a strong return like 10-20% overall per year that will put you in the top 10% (more like top 1%) of all traders and investors.
This site is for educational and entertainment purposes only and not in any way intended to be investment or trading advice. You are 100% responsible for your financial decisions at all times. It is highly recommended you DO NOT make any investment or trading decisions depending upon what you read on this blog/newsletter! All information presented (c) 2017 JBP cons, inc. All rights reserved.