I mentioned in my previous article that I would talk about technical analysis.
Technical analysis contrasts with fundamental analysis, where you look at the fundamentals of a project, such as usability, revenue, leadership, etc.
Technical analysis is where you analyze and predict the movements of the movements of an asset based on price history.
Technical analysis is essential to two types of profiting in the markets:
- Investing
This is where you buy and hold an asset over an extended period of time, usually long term, one to ten plus years.
- Trading
This is where you buy and sell asset over a short period of time. Really there are two types of trading mainly:
A) Day trading
This is where you buy and sell on really short intervals attempting to make profits on small up and down swings in the market, holding a particular asset for no more than a single day.
B) Swing trading
This is where you buy and sell on intermediate intervals attempting to make profits on small up and down swings in the market, holding a particular asset for one to three months.
In the cryptocurrency market, it's best to do a combination of investing and trading.
What we do is we invest over a period of 1-3 years, buying low during the bottom of a bear market and selling high at the top of a bull market.
Here's the best way to play a bull market, given that our goal is to make a 100x profit on our investment, starting with 5,000 dollars and ending with 500,000:
Cashing out on intervals.
The reason we do this is we avoid an all or nothing approach. If we buy and hold without cashing out on intervals, we might reach the top of a bull market and then see our profits plummet when the market suddenly experiences a 75% market correction, which it inevitably will.
In this way, we ensure that we acquire profits incrementally rather than try to predict exactly when the market will climax and cash out everything all at once.
It's best to cash out incrementally like this:
I would start with the first cash out of 10% at 10x, so you cash out $5,000 from your $50,000 gain.
Then, I would cash out 10% at 20x, so you have cashed out a total of $10,000 from your $100,000 gain.
Then, I would cash out another 10% at 30x, so you have cashed out a total of $15,000 from your $150,000 gain.
Then, I would cash out 20% at 40x, so you have cashed out a total of $40,000 from your $200,000 gain.
Then, I would cash out 30% at 50x, so you have cashed out a total of $80,000 from your $250,000 gain.
Then, I would cash out 40% at 60x, so you have cashed out a total of $120,000 from your $300,000 gain.
Then, I would cash out 80% at 80x, so you have cashed out a total of $320,000 from your $400,000 gain.
Finally, I would cash out 100% at 100x, so you have cashed out a total of $580,000 from your final gain.
At this point you have likely reached the end of the bull run.