๐งต How to Buy the Dip
A large part of crypto investing is dealing with your psychology.
Furthermore, buying dips is one of the most effective ways to have great returns long-term. But how should you approach it? ๐
A large part of crypto investing is dealing with your psychology.
Furthermore, buying dips is one of the most effective ways to have great returns long-term. But how should you approach it? ๐
Is this the bottom, or will it drop 20% tomorrow? You don't know.
Those who claim to know very likely don't.
This is important. I don't recommend following gurus that make specific price predictions with a lot of confidence.
Those who claim to know very likely don't.
This is important. I don't recommend following gurus that make specific price predictions with a lot of confidence.
I've seen them being wrong SO many times. Take everything with a huge grain of salt. No matter how sophisticated their TA is.
95% of it is no better than a coin flip.
95% of it is no better than a coin flip.
The forces behind markets are very complex and as a whole it is unpredictable.
Is that left-over 5% legit? In my opinion, yes.
But it requires so much expertise that the likelihood of you messing it up by being on the other 95% is too high to be worth bothering with.
Is that left-over 5% legit? In my opinion, yes.
But it requires so much expertise that the likelihood of you messing it up by being on the other 95% is too high to be worth bothering with.
Here is the most fundamental problem of buying when the price is low:
If you buy now, you won't have as much (or any) money if it dips further.
If you don't buy now, you risk losing the low price. Maybe BTC will only get this low again next year. Or never.
If you buy now, you won't have as much (or any) money if it dips further.
If you don't buy now, you risk losing the low price. Maybe BTC will only get this low again next year. Or never.
Here is the system I developed over the years:
- Have a set amount you want to invest (for example, $2000)
- Make thresholds for dip levels (eg 10%, 20%, 30%)
- Decide the allocation for each threshold (eg 40%, 30%, 30%).
- Have a set amount you want to invest (for example, $2000)
- Make thresholds for dip levels (eg 10%, 20%, 30%)
- Decide the allocation for each threshold (eg 40%, 30%, 30%).
Remember that you have no idea what the bottom is, so there is a balance between leaving enough space for a further dip vs making sure you grab some right now.
$BTC today: $36,300
Here is an example>
1st dip threshold (10%): $32670 (Invest 40% of funds = $800)
2nd dip threshold (20%): $29040 (Invest 30% of funds = $600)
3rd dip threshold (30%): $25410 (Invest 30% of funds = $600)
Here is an example>
1st dip threshold (10%): $32670 (Invest 40% of funds = $800)
2nd dip threshold (20%): $29040 (Invest 30% of funds = $600)
3rd dip threshold (30%): $25410 (Invest 30% of funds = $600)
Your thresholds should be determined by how confident you are in the price going in a particular direction. For example, if BTC is stable for a while and then drops a little bit, you may reasonably think it can still drop a lot.
Likewise, if BTC has already made a massive drop, then the likelihood of having yet another big drop is more unlikely (but still very possible).
In practical terms, in the example I gave I think the thresholds are a bit too aggressive. I doubt that BTC will go under $30k, and therefore I would likely never even use 60% of the funds.
But of course, I can be wrong. If BTC dropped to 25k, then I would have nothing else to invest.
There is nothing special about the values I described here. You can set anything. The threshold numbers, allocation, etc.
It's all preferences and you should do your own strategy.
I also mentioned BTC but this can be applied to anything.
It's all preferences and you should do your own strategy.
I also mentioned BTC but this can be applied to anything.
The bigger point is to have a plan. A precise, calculated, mathematical plan.
Don't run on emotions.
Adjust the plan over time based on your experience and knowledge.
Don't run on emotions.
Adjust the plan over time based on your experience and knowledge.
I hope you've found this thread helpful.
Follow me @DazaiCrypto for more.
Like/Retweet the first tweet below if you can:
Follow me @DazaiCrypto for more.
Like/Retweet the first tweet below if you can:
BTW I'm still travelling so sorry if I'm slow to reply to DMs. I had this thread already written so I could have something for you while I'm away!
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