I sold all my Bitcoin when it hit $8400 on July 24th. Now it looks to be in a corrective trend again, which is exactly what I thought could happen. At the time when I sold it, all of the "professional" analysts were still saying that the rally could keep on going to 9-10 thousand or beyond. This is how Elliot Wave theory works. It shows possibilities. But it doesn't factor in all the other important factors, like current market sentiment, or the human psychology factor that drives the markets more than anything else.
Why did I sell at $8400 when others were clinging to their bags, with hopes of getting wildly rich? Because I've learned that the real way to get rich in the markets is through patience and discipline. And a big part of that is taking your profits before everybody else does. Even if the rally had continued on, I had already locked in my profits, and I would have lost nothing by selling when I did. My goal as a trader is not to squeeze every ounce of profit out of the market, which is impossible, but to make more than I lose from all of my trades averaged together.
I don't have a crystal ball, and I don't always predict things correctly. Trading is about working a strategy that lets you make money no matter what the market does. What this means is having an exit strategy that gets you out of a losing trade before the losses are very deep. This is usually done with a stop loss. And you need to set your stop loss up to where your potential profit is at least two times your potential loss. This is called the 2:1 risk to reward ratio rule that all professional traders follow.
That's pretty much the heart of trading. Once you accept that you're going to get it wrong sometimes, and that you're going to LOSE money on a lot of your trades, you will realize that the only way to trade successfully is by using the same tried and true methods every other professional trader uses. This method only works if you have the guts to do it. You have to get over your fear of making a move and taking a loss first. Nobody can possibly trade the markets without taking a loss sometimes.
And whenever you do take a loss, you have to learn to be totally detached to it. The traders who get upset over their losses are the ones who lose the most money. And, likewise, the ones who get overly-excited over their winning trades, also wind up losing money by getting overly-confident and letting their ego take over. The moment a trader starts thinking they're a genius, and making moves outside of their strategy, is the moment they set themselves up for the worst losses of their trading careers.
Nobody is a genius when it comes to trading. It's a level playing field where your brains don't really matter much. All that really matters is your ability to execute your strategy and remain calm and collected while doing so. The last few days I have watched Bitcoin move painfully slow in a channel between $7,800-8,300, knowing full well that it could take off again at any moment, but I haven't made any moves. I know that if I wait long enough, the market will present a far more favorable opportunity.
My strategy is simple, to buy low and sell high. I already sold high. Now I have to wait to buy low again. A lot of people may not want to hear this. They think that Bitcoin is going to the moon and they've bet all their money on it. All I can say is good luck! I don't know what's going to happen next, but I know what I'm willing to wait for. And I know that I'll get what I want if I wait long enough.
NOTE: This is not investment advice. Everything written here is for educational or entertainment purposes only. Always do your own research before you invest, and never invest more than you can afford to lose.
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Thanks for visiting my page! Seldons PlanWriter | Trader | Traveler | Father of 5
