How to identify when you should be buying & going long & when you should be selling if you want to play the trends effectively, especially if your a passive investor this particularly applies to you.
This is a somewhat simple but very powerful tool to know about how to identify the trend your in, do you know what trend your in currently?
Rule of thumb for passive investors to identify when to buy and go long is by using the 200 & 50 day moving average, I go into detail here exactly why you should learn this.
Using the 200 & 50 day moving average you can identify when you are in a bull market & a bear market also when a trend is about to change & time to take profits off the table or buy to go long.
Rule of thumb when the 50 day moving average crosses above the 200 day moving average, and when the candles are above the 50 day moving average, this is a sign that the trend has changed & is going up this is known as a golden cross & a good time to buy, and when the 50 day moving average crosses below the 200 day moving average that is a sign that the bull market trend is over and is a sign to sell & take profits, also known as a death cross.
There can be times when the 50 day MA can move above then shoot down again such as 2014 on the bitcoin chart, however if you sold again when it crossed back you would have been thankful weeks later.
you can see the golden cross in 2012 that lead to a 2 year bull run, then in 2014 a death cross that lead to a long bear market then In October 2015 bitcoins 50 MA Crossed above the 200 MA golden crossed to signal the start of a long bull run.
And recently in 2018 we had a death cross, that signaled the end of the bull market for now.
These are simple but effective tools to use, if all you did was place your investments by buying when we golden crossed and selling when we death cross, you would be doing pretty well for yourself since the start of bitcoin.
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