Buy low, sell high is the number one rule of investing. It seemed so easy to me when I started investing in cryptocurrency a few months ago. Sadly, I learned the hard way that's it not at all as easy as it seemed.
Last night, Litecoin reached an ultimate high. What I should've done is sell all my Litecoin and make a profit. Instead, what I bought Litecoin at the ultimate peek and then watched the price go down and my hard-earned money with it.
The problem is that when a certain's coin price starts to rise parabolically, we all decide that it's time to buy. We end up buying at a high point and then, inevitably, the price drops. Similarly, when we see a certain coin's price drop, we tend to panic and decide to sell. This is exaggerated by all the information that we read. Usually, if a coin's price is dropping, most media, blogs and posts start having a panicking tone, which makes us readers panic as well. If a coin's price is going up, then all media, blogs and posts start hyping it up, which makes us believe that the price will continue going up.
I learned that I need to get out of that mindset. Now, when I see red, I BUY, BUY, BUY. When I see green, I SELL, SELL, SELL. I'm trying really hard not to panic when I see a price of a coin that I own go down - instead, I stock up even more. Similarly, I try not to buy into the hype when I see the price of a coin go up - instead, if I own it, I sell.
We'll see how this strategy will hold out in the long run. I'm debating whether HODLing is an even better strategy. Perhaps, it's easier not to worry about the dips and peaks and to simply HODL for the long term. I guess I'll find out in the end.