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RE: The #1 mistake most crypto traders make
I feel the recent fall in BTC and the other coins was also due to this other reason, and it's fundamental - bitcoin and many of these had gone up too high, too soon.
Many of us who already had those coins had benefited. I was thrilled too, of course. But some of these were so eye-popping that I was also getting rather nervous. It simply wasn't sustainable.
Bitcoin's rise wasn't as much, percentage-wise. But to break past the previous high of $4,460 and then immediately challenge the psychologically formidable level of $5,000...that was too much. Something had to give. The cautious ones quietly took profits. The Chinese matter was the spark that ignited a correction that was due.
You are right, the correction was due despite the Chinese news. I sold some of my bitcoin just before hitting the $5K mark but I couldn't say that decision was due to technicals or fundamentals.
The 3rd approach I consider when investing is a contrarian one. That's about identifying when the market is running too far, usually a big spike up or down as a result of fear or greed but it also can happen because people are trend following (via technicals) for too long. Contrarianism is about taking the opposite position to the herd.
Contrarian seem to work great for crypto, but mostly for bigger cryptocurrencies (Bitcoin, Ethereum, Litecoin, Monero, etc.). When small cryptos are growing, they just positively react on every Activity Report, even on social media updates. And after that you don't want to go against such a public opinion, as in most cases only small market correction may be expected.
As long as there are good updates for a smaller crypto, the price is generally growing (until the price positioning compared to established cryptos becomes not resonable or until some really bad news). NavCoin - fresh example. Increased a few times just because of a single featured article on CryptoCoinsNews. Continuing to grow because the team is continuing to be active in updates. I hope I am not right (as I want to buy it at lower price), but it seems to me it will be growing for a long time until market correction happens.
Not to rub it in, but I was one of those lucky sods who had gotten some Navcoin before it started the big upward move :) For quite some time, it was mostly in the range of 0.23-0.27 and not going anywhere.
In my case, doing a bit of basic research had paid off. I'd often click on the link of some coin at WorldCoinIndex .com, see the charts etc. and go to the website, Reddit and BitcoinTalk. Navcoin was out of the Top 100 in terms of 24-hour volume. More of around 150 or so a lot of the time. But I started to become interested after reading the content at its website. About the team especially - these people look to have credibility. So I bought some units...and was thrilled when it shot up.
By the way, I had taken some money off the table by selling at various price levels. Then bought a few back a couple of days ago. This is a coin I'd want to have as part of my core holdings. In fact, I like Navcoin so much that I'm also running a node on my laptop. Not so much for POS rewards but because I like the coin, the dev team and users at the discussion groups.
Very interesting story. Hope it will be a success story for you, mate. Really good potential in this coin. Anything can happen, but of smaller coins NavCoin really seems to be one of the best choices. To become big it needs more penetration into the real economy: merchants, ATMs, etc. And this is a challenge - during this long way something may go wrong!
One can only do research, buy and... hope. When it comes to these coins (Navcoin, Vertcoin, PIVX, Digibyte etc.), we can argue either way on how they will fare. These will be just guesses and speculations.
Bitcoin and the more well-known coins and tokens have done very well price-wise over the past 12 months especially. And cryptos are increasingly gaining the attention of the mainstream throughout the world. It is indeed tempting to conclude that "the sky is the limit" .
This may well be the case in the coming months ahead, especially for some of these coins (I'm hoping Navcoin will be among the favoured, of course). But I'm also the cautious kind who tries not to get caught up in the hype and exuberance too much. Have to also think about the various negative developments that could happen. Including the very unpleasant thought of these cryptos crashing down to earth for whatever reason.
I hope things will continue to be like this for a while yet. But if this were a rock concert in a stadium, I'm staying near to where there's an exit. Not at the front where the action is.
By the way, I have nothing against HODLers who will not sell their coins come-what-may. Holding on to getting "the really big rewards further down the line". And they may well be right. But I'm doing it the way I'm most comfortable with - taking profits at different price levels (but not selling all). Then buying some again should the price go down (it tend to).
I've read and watched videos that say the better strategy is to just ignore the daily and weekly price movements. The "Do Nothing" (except to add more) approach. Again, this might work very well with some coins. My best wishes to them. But I'm sticking to my own strategy, which also includes being a contrarian.
I think it's a very wise approach you have. Unfortunately markets often are volatile and crashes can be common, especially in crypto. So it pays to not be greedy and take some profit when it's there to be taken. Those guys who HODL through the big crashes....it must be a terrible feeling.
You can say that again. BTC going down from $2,200 to 1,800 last July was already an uncomfortable experience for me although I held on. And the rebound came quite fast. But how was it for those in 2014 when it peaked at $1,200...and then tumbled all the way to $300 or so?
Yes, those who HODL are having the last laugh when it went back up to 1,200...plus added much more. But that took months to achieve. Many had given up up and sold before that.
It requires a lot of faith to hang on tight for long periods of time. I don't have that. Although I believe in the future of cryptos, I don't want to be a partisan or zealot. Must always remember my main goals: to protect my capital and preserve as much profit as I can from these "good times". I will continue to sway with whichever way the wind blows.