The Most Common Advice
Anyone who has been around any kind of trading or investing for any length of time will have heard the age old, sage advice of "buy low and sell high". This is probably the most common phrase that is given when someone asks for advice about how to play the markets and it is both patronizing and honest at the same time. It is patronizing because it is simple and seemingly obvious and it is honest because that really is the best and easiest way to make money. However what is lost in the ambiguity of this statement is the nuance involved. Without a little more elaboration, a new trader or investor could get very frustrated and drive themselves crazy trying to take this phrase at face value. So let me provide a little more context.
Buying Low
When I first started investing in cryptocurrency, I was addicted to the hourly, half hour, 5 minute and even 1 minute charts! I knew the markets moved quickly and I wanted to capitalize as much as possible as quickly as possible. I needed to know what was happening so that I could nail that low or that high in real time so that I could make enough money to buy my Lambo! You will drive yourself crazy trying to pin point the absolute low to buy, you need to be ok with buying on the downtrend and/or buying on the start of the uptrend. Remember that this is about making money; set a goal for yourself in percentage of profit, not in dollar amount. A 25% percent profit on a daily trade is a decent gain no matter how much money you have in the game. If you want to be more aggressive, look for 40%, but set the goal. Make sure to cover your self as well and have an exit strategy; set an alarm on your trading software or a stop-loss limit sell on your exchange at 5%-10% so that if the price dips quickly, you will be able to mitigate your loss. Incremental gains will pay the bills and moonshots with buy the Lambos! Not all of them are going to be 100%, 200% or 1000% percent profits.
Sell High
Again, don't drive yourself crazy trying to nail the top of the trend; set a profit goal for yourself and stick to it. Sell off half of you holdings when the price goes up by 30% and then sell the other half if it goes up by 50%. If it keeps going up after that, oh well, you made the money you wanted out of the trade. One of the things that I struggle with is I only invest in projects that I really believe in so I have a hard time selling and taking profits. But again, I am in the game to make money as well as support these projects so I sell off a portion of my holdings when the price is up to take some profit and then use some of that to buy back in when the price goes down again.
The Long and Short of It
The point of this game is to have fun and make some money. Don't drive yourself crazy trying to squeeze every last penny you can out of every trade because at the end of the day or the year, that effort and aggravation is not worth it. Set profit goals and stick to them; making money is making money and losing money is losing money. Take your profits when they are there, mitigate your losses when you can. I think this deceptively simple phrase would be more accurate if stated as "buy on the downtrend or beginning of the uptrend and sell on the uptrend when you have met your profit goals" but that doesn't really roll off the tongue in the same manner!
I am just an amateur and I am always learning myself. Please add your opinions to the comments below!
Check out my other crypto posts:
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Bank of America Admits Crypto a Threat
Attention Haters: Ripple Making Some Big Moves
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Here We Go Litecoin!
Big Gains for Ripple on the Horizon
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