If you have one rule when you trade Crypto it's this:
ONLY Buy The F%!&?ing Dip (BTFD)
This rule has been said in different, probably more eloquent, ways by people who are at least a million Lambos richer than me.
E.g. The Buff-Meister "I will tell you how to be Rich...Be Fearful When Others are Greedy. Be Greedy when others are fearful." -Warren Buffet
A couple of other examples are;
- John D. Rockefellar: The way to make money is to buy when blood is running in the streets.
- John Templeton: The time of maximum pessimism is the best time to buy and the time of maximum optimism is the best time to sell
Whilst in theory it seems that buying a coin after its shot up in price is madness, it happens...and more often then you would want to believe. It is a testament to how powerful FOMO buying is, and we are all guilty of it - let me paint you a picture of how this can easily happen.
FOMO Buying - Not even once
Its 9PM and you're scouring the internet researching coins. You're currently knee deep in shitcoins wading through trying to find the coin that will be the next Ethereum.
You read some obscure reddit post about BTFD coin. It catches your eye. Their website is slick, they have a flashy team with enough credentials to line your room with...and wow only at $0.5 a coin! This is it, this could be the coin that changes everything...it's the new Ethereum! Wooooowwy and its only at $0.5 so cheap...
You start doing some mental gymnastics...if i get 1000 coins and it go's up to $10 that's $10,000! Then you remember this is the new Ethereum it'll at least get to $500 a coin easy. Your heart starts pounding, adrenaline starts pulsing through your body and you realise the drumming sound in your ears is actually your heart beat. You reach for the calculator and find out that at $500 a coin you'll be left with a cool $500k...
Your mind goes to dreamland... you start to think about all the things you can do with $500k...what Lambo are you going to buy? Can you buy Lambo's with Crypto? A few google searches later you discover it's trickier then you thought. But hey whatever you're half way to becoming a millionaire soon.
You snap back to reality.
You refresh Bittrex and see the price is...$1. What the... how did the price just double! You check the time and see that its only 9:30PM...how can it go up like that in 30 minutes! You then start to go through the 5 stages of grief (1) Denial (2) Anger (3) Bargaining...but you never make it to step (4) you remind yourself this coin is going to the moon, you get more emotional and think "F@$k IT"... you do a quick price check...its now at $1.10...Shit i need to buy this NOW.
FOMO buys @ $1.10
You head to bed exhausted from the ordeal but can't resist to check the price one last time...$1.20...you chuckle slightly and think "yes +9% in one hour i'm a genius"...What colour Lambo should I get red? Yellow? Black?
The next morning you wake up to find the price has tanked to $0.70, your dreams of becoming rich vanish, that drumming in your ears is back, your sweating F$&K!! how could this happen! you login to bittrex and click the sell button. You just panic soldFin
Conclusion
I think everyone at some point must have FOMO Bought something...I'm definitely guilty of it.
However when I started adopting a strategy of ONLY BTFD I found myself winning on most of my investments.
What does this mean practically? When the market is rallying (like it did end of December) just switch off your computer and go outside, see some friends, feed your dog. Whatever. Do ANYTHING except buy Crypto...because FOMO buying is the worst thing you can possibly do. The market may go up for days...even weeks. The longer the rally the harder it will crash.
Whilst Crypto's aren't bound by the Laws of Physics...I still find that the old rule "what goes up must come down" still seems to have an affect on most Cryptos.
Just be PATIENT and wait... when the time right time comes, other people will be panic selling the ETH they bought at $1,300, and you'll be BTFD at $750 per ETH.