These days it seems that everyone is looking at what to buy, and you can find people talking only about when to buy what. Various pump groups are even charging for signals, and as promotion, sometimes give these trading signals for free. I strongly disagree with active speculative trading, there are many reasons why you should not daytrade/swingtrade cryptocurrencies and why that is dangerous for you!
This is the opposite of what you should be doing if you want to achieve maximum returns with least hustle!
You should know in advance at which price you should sell cryptocurrency you bought (considering nothing fundamentally changed for the worse). This is because you are making money when you buy, not when you sell.
To know if/when you should buy cryptocurrency, read my previous post on how to evaluate cryptocurrencies, where I introduced concept of expected value/probability ratio.
Once you know what is the expected value of cryptocurrency, and nothing fundamentally bad has changed since in the inception of crypto project, and current price is significantly lower than expected value/probability ratio, then why in the world would you sell?
You will recognize this graph if you have visited my previous post. As you can see, if the price is hovering way under the expected value/probability ratio’s price, you should not sell.
But, but, but price will fall down! – I am already hearing some of you. If you want to make money in the crypto space like top 3%, then you should ACT like them… which is actually pretty easy – doing nothing the whole time, just hodling. What happens between now and that bold line on the upper graph is not important.
It does not matter if there is a good chance that price will fall in the short term 5% or 50%, because if upside is not at least 100x from here, you bought the wrong coin in the first place… or for the wrong reasons, and you should sell it ASAP.
You should be AFRAID to sell how undervalued it is, then you know that you are holding the right coin. Which is exactly why many are selling on any price increase – they are afraid that it will go down after because they think it is overvalued or are just dumb speculators.
Let me ask you this, if you had this coin which behaved like this through longer periods of time, would you bother selling it if chance of growing steadily?
Just because market is foolish enough to treat it like a shitcoin, but you are convinced with your deeper knowledge and understanding that this is one of the best cryptos out there, it does not mean that you should follow the speculative market.
You should forget them! Don’t look for price targets like traders are doing – if you want the top 3% results.
Price targets are very old school way of looking at investing. When you ask price targets you are basically like Wall Street bankers at 80s, 90s and even 2000s where their clients go: “What should I buy, and at what price should I sell it at?”
Those guys are still stuck at stock market mentality and they are losing money in the crypto. Cryptos are so full of potential and you are so early, that you should just buy good stuff and hold as long as possible, get yield out of it when you can, and don’t worry about it… it will take care of itself.
Don’t worry about price targets. If you have price targets you are speculating too hard – you are buying shit that you want to sell. Don’t do that. Buy the stuff that you NEVER want to sell, and then sell when you need the money or price went really insanely parabolic.
And you can’t look at the price for that.
If Price Doesn’t Matter, What Does?
If you want really the results that top 3% is getting, you should really stop focusing on the NOISE that market is making. What will happen next with price? The best and most accurate answer is “I don’t know.” Be ready for everything.
If you look at the predictions, and if you listen to analytics people, you will conclude eventually that nobody knows what will happen. It’s interesting, it’s entertaining, it is what you want to know now, what you want to hear now, it’s all just noise. News will always publish what you want to hear anyway, what is “common wisdom” – so called narrative.
That is problem with investing because it shifts your focus away from the right things. There are so many endless choices available in the cryptocurrency market that it is easy to lose your way and get distracted from what you actually wanted to achieve in the first place.
It is very important not to get sucked in into any predictions, because where the markets go is irrelevant. The markets will go up and down, or as JP Morgan always said – Market will fluctuate. That’s it, that is all you need to know about the price, and the market.
People are only trading crypto because they don’t know anything else regarding them. If you are focused on the noise from the market, you will miss everything else. The market is here to serve us, not guide us; because the market is made for speculators, not investors.
“Cryptocurrency is going up rapidly, it must be because it’s awesome crypto, I should buy buy buy.” If cryptocurrency is crashing, “I am selling it, because it’s shitcoin going to zero, that’s why it’s crashing.” – That’s how most people look at things. Value investors think “It’s much better to buy lower than to buy higher, if it’s undervalued either way.”
Instead of focusing on the price, focus on the value. Not price, VALUE. And value is somewhere out there.
Because value is so high, and it depends on the likelihood that protocol will fulfill its potential, price can be anything between 0 and most optimistic prediction. Price can fly all over the place, and value can be sitting up there whole time.
Focusing on value is what can enable you to outperform almost everyone else, because they are focused on what they think is most important, but which actually doesn’t matter – the price. And for cryptocurrency to actually fulfill its potential and materialize this value, it can take decades. That’s why cryptocurrencies only makes sense very long term, and why I don’t recommend active trading.
And really, when you remove from the picture what doesn’t matter, focus is not the issue, and you can not get lost and sell cryptocurrency for wrong reasons.
Wrong Reasons To Sell Cryptocurrency
Is to jump into other pumping cryptocurrency. This is just FOMO (Fear Of Missing Out), and FOMO chasers are only getting burned most of the time because chasing hype is chasing emotions, which opposite of rationality, and emotions can rapidly change from FOMO to FUD (Fear, Uncertainty, Doubt). All it needs is just price to start diving a bit.
Except for the high risk, why you did not bought it before, if it were so awesome? Chasing pumps is pure speculation if you have not DYOR (Done Your Own Research) and found expected value/probability ratio for it. If you have done it, and it was one of the best you could find, why have you not bought that cryptocurrency before the pump started?
Chasing pump is best way to get REKT, because 97% of people in the crypto space have no clue what they are doing, blind are following the blind, those who yell loudest are attracting most attention, so these 97% are acting like a herd of cows heading to the cliff from which they will fall.
You are scared. It grew a lot and you are expecting correction.
It is dumping for long period of time and it’s not stopping. You are becoming very nervous and upset because of that.
It is low for a long period of time and there are no sign of life.
Someone told you that some exciting news will come for cryptocurrency you initially decided not to buy.
Right Reason To Sell Cryptocurrency
If you want to be part of the top 3% in the crypto market, then you realize that hodl-ing is best way. Not because you can not make money by actively trading, but because cryptocurrency development needs time, both to develop, and then that development to gain recognition.
Have you ever seen the traders on the fortune top 500 list? And how about investors? This should speak for itself.
The best way to know when you should sell cryptocurrency, is simply by looking at expected value/probability ratio. You can call this also risk/reward ratio but with the BIG picture on mind, not what will happen later today or in few days/weeks.
If cryptocurrency price is significantly HIGHER than your best estimation of expected value/probability ratio, then you should sell it.
You are welcome.
P.S. If this is too philosophical to you, try something very practical: When you see price is going up, buy, when you see price is going down, sell… and watch how you are losing money and sleep.