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Dollarcostaverage

Dollar Cost AveragingWith the markets getting banged up earlier this year, you have a LOT of opinions being thrown around on the best way to passively invest in the stock market. Because of this “Dollar Cost Averaging” has been making its way around the internet again as the best thing since sliced bread…but does it actually work long term? So in this article, I’m going to cover: What is it? Should you use Dollar Cost Averaging? Does it make sense? Is this a good strategy? Or is Dollar Cost Averaging not so good…and just plain stupid? So let’s dive into some examples to see if Dollar Cost Averaging is all it has been hyped up to be. What Does Dollar Cost Averaging Mean? The first time I remember hearing about it was in the ’90s where the market were basically just going straight up. Around that time financial planners recommended it because, at that time, you could basically close your eyes and buy, and within a few months you would have made money. They would suggest that at the same time every month you would purchase a particular stock or stocks, no matter what it or the rest of the market was doing. Example: Apple Let’s take a look at and example using Apple (AAPL) . This morning I went back over the past 17 months, so from January 1st, 2019, and I looked at the price of Apple at the beginning of the month. So the idea here is that you would invest $1,000 a month into AAPL shares. Let’s go through a few months and see how it performs, starting with January 1, 2019. At that time, AAPL was trading at $154.89/share. With my $1,000, I could have purchased 6 shares, costing me $929.34. Onto to February, AAPL is now trading slightly higher at $166.96. This time around you’re only able to purchase 5 shares with the price of the stock now higher. If you would buy 6 shares, you would invest more than $1,000. The rules for Dollar Cost Averaging is that you have a maximum amount that you stay below. So now you have bought 6 shares for $154, and 5 shares for $166. This means that you now have 11 shares and the average price is $160. The idea here is that you keep doing this every month, and you see your average price changes. If you continue to do this for 17 months, you would have accumulated a total of 69 shares. And over these 17 months, you would have invested around $15,000 to be exact, $14,998. So the idea here is that you invest a fixed amount every month. Now let’s take a look at an Apple chart really quick here and see what has happened since January 1st, 2019. Right here, I marked it in green. As you can see, Apple has been consistently going up, until it was hit by the pandemic but has since recovered and is going nicely up. So what does this mean for your 69 shares that you would have accumulated over the past 17 months? Well, 69 shares, and the current price right now of Apple is $317. This means the current value of your 69 shares is $21,934, which means that you would have made a profit of around $7,000. If you express this in percent, it would be a gain of 46% over this past 17 months or 33% per year. Not too bad. So Does Dollar Cost Averaging Make Sense? Based on this example, it seems that Dollar Cost Averaging is a pretty good idea where you are investing a fixed amount regardless of what the price is. The main concept or idea here is really to make trading or investing as easy as possible for everybody by not worrying about the stock price. But…is it really a good idea? More Dollar Cost Averaging Examples I chose two more stocks, that I’m sure you’ve heard of before and one somewhat special for me since I used to work for them: IBM IBM is a household name, their stock in the Dow, so I think most would agree they’re a solid company worth investing in, right? I can remember back in the day when everyone (including your barber) was telling you to invest in names like IBM and AT&T. So these are the two stocks that I want to look at right now. Example – IBM On January 1st, 2019 IBM was trading at $112.01, so we could buy 8 shares and invest a total of $896. If you were to look at the chart, you will see IBM’s price fluctuated between $112 to $134, and went all the way up to $140. Now we’re following the exact same principle that we did with Apple where we’re buying shares for $1,000 always on the first of the month regardless of the price. Therefore we are adjusting the number of shares. So after a year, we would have accumulated 120 shares with an average price of $132. So after a year we would have invested $15,919 into IBM. Now as of today, today is May 21st, 2020, the current price of IBM is $120. So let’s take a look at the charts before we come back to the results. So we’re looking at IBM and we are doing the exact same strategy that we did with Apple. We start on January 1st, 2019, and every month we are investing a fixed amount. As you can see, IBM has not been going up as nicely as Apple. This is exactly the problem, if you look now at the Dollar Cost Averaging, we see that over these past 17 months we would have actually lost $1,500. That’s a loss of 10% over 17 months or 7% a year. So what does this mean? Is Dollar Cost Averaging a good idea or not? Before I answer that question, let’s take a look at one more example. Example – AT&T Over the years everyone has said, “Invest in AT&T . This is what grandma did,” right? Didn’t grandma invest in AT&T and hold the stock forever? So I thought let’s use this as an example. Now, since AT&T is trading at a much lower price, we can afford to buy more shares. After the course of 17 months, we would have 405 shares, and we would have invested around $16,800. Let’s take a look at a chart and see what AT&T did over the past year and a half. Very similar to IBM, a little bit better, AT&T was going up until the pandemic hit. As of today, May 21st, they still seem to be hurt. So what does this mean for the Dollar Cost Averaging? If we look at the current price of $29.64, the current value is almost $15,000. We did invest almost $17,000 so we are sitting on a loss of $1,842. This is 11% down over 17 months, or 8% down over the past year. Is Dollar Cost Averaging A Good Strategy? What does all of this mean? Dollar Cost Averaging is a concept that comes from the 90s and this is when the markets were just going up-up-up. Right now we are coming out of the longest bull market in history. It has been steadily going for 11 years, so it should actually work like a charm. The critical part, the absolute key for Dollar Cost Averaging to work is to pick a stock like Apple that is constantly going up. And, hey, can you ever really be sure that you’re picking the right stock? Recap I personally think that Dollar Cost Averaging is kind of a stupid concept, even though it is super simple. I believe if you put a little bit of effort into learning how to trade, that you can run circles around the market. Because even if you look back at our example of Apple, we see that we made 33% per year. The way I personally trade, I only spend maybe 15 minutes a day trading and my goal is to make at least 60%. Recently, I traded an account and almost doubled it in two months. Right now, I’m trading another account where I’m planning to make at least 10% per month. With a little bit of effort, I believe that you can run circles around Dollar Cost Averaging. I highly recommend that you learn more about how to trade and don’t fall for the simple kindergarten principle here that is Dollar Cost Averaging. Anyhow, this is my take. Now you have some real-life examples and can decide whether this makes sense for you or not.
NASDAQ:AAPLEducation
by rockwelltrading
25
BTCUSD Trading Idea going into 2020Personal outlook - Not investment advice, serves as a note to keep track. This is focused on optimizing the process of dollar cost averaging into Bitcoin. The initial buy in (~15%) to be placed at the 50 week moving average expected in November. The second buy (~20%) to be placed at the long time support around 5900 which may coincide with the 200 week moving average coming up by January 2020. If this strong support breaks (unlikely) add %25 around 4500-5000 if the MACD is signaling a cross (April 2020). As this is now fairly well positioned for the long term, only add ~10% more whenever a correction above 25% occurs, preferably in August or November 2020. Closing Strategy: DAI
COINBASE:BTCUSDLong
by svg1996
Risk Management: Satefy Orders (Dollar Cost Average)I believe risk management is key, because sometimes, finding the perfect entry will not be enough. The market is what it is, and nobody can predict with 100% accuracy how the price will behave, even with all the great indicators we got out there. With that in mind, we should come prepared that the price will go against you, and we should take advantage of it, because most of the time it will bounce back up. This technique is especially useful in trading low timeframe also known as Scalping. The idea is to lower the inital entry order size , and split the remaining order size progressively through the safety orders as the price goes against you. This will make the total trade average entry - or break even - at a lower place than if you were simply trading the initial entry. That means the take profit will also be lower, because we can now take profit from the total order size/volume . Here is a simple example with a long: We buy in on the `LONG` label with 10% of our trade capital at around 9325$. Our take profit is 1.3% which makes a 9447$ target. But the price goes down, until it reaches our first safety order trigger line, at around 9231$. At this point we add 10% of our trade capital. It is the `DCA` label on chart. The break even line is now in the middle of the inital entry price and the safety order price, around 9275$. We still have our 1.3% take profit target, but it is now at 9396$ instead of 9325$. At last, the price bounces back up, as expected, and we take profit. Example with a short with 2 satefy orders: What are the risks? In the worst case scenario , which we know will happen at some point, the price does not go back up. It is important to know what are the risks so that we do no get liquidated or lose too much of our account. Let's dive into the numbers. We set up our strategy so that we have 3 satefy orders max, and the stop loss is on step below the last one. That makes 4 entries in total, and we decide to use 1% of our capital on each entry. Each step is seperated by 1% of the price to make things easier. When we hit stop loss, how many % do we lose? 1. On first safety order, price is down 1% and we traded 1%. That's 1% drawdown. 2. On second safety order, price is now down 2% for 1% of our order, and 1% for the other 1%. That is 1.5% drawdown. 3. Of the third safety order, we get 3% + 2 % + 1% = 6%/3 = 2% drawdown. 4. On stop loss, we get 4% + 3% + 2% + 1% = 10%/4 = 2.5% drawdown. => The price went down 4% but we only lost 2.5% of our inital capital. That is why we can say that safety orders reduce risk . /!\ Using leverage will multiply the risk. Using 2x we would have lost 5%. This can climb very fast, so be careful. One thing we can do when a stop loss is hit is to reverse our order, as most of the time our stop loss is hit because the trend is reversing. But again, be careful as it could cost you double.
BITMEX:BTCUSD.PEducation
by cyatophilum
5
CVC: The hidden gem with a dark sideCVC (Civic) is a hidden gem with a dark side. With a market cap of only 20.12 M, this coin has quite a good history of scalping, as well as being stuck in a sideways rutt for months. Its an interesting coin to trade simply because of its unique behavior, however, one must understand the risks involved. This coin has a low market cap, so additional care must be used while trading it. Also, the dynamics of such a coin do require a bit more of a budget to manage its unexpected drops. This type of coin is really a very good coin though, for a saving account paradigm (constant dollar cost averaging at fixed percentages or steps), with the proper budget. 100 leverls at 1% of a linear base level can result in consistent profits, but don't be complacent about your risk assessment.
Long
by RobertD7723
Plan To Shift Into Leveraged Eth Before April Bull MarketEthbtc just completed 5 distinctive waves and is now printing a weakening pattern of wicky doji bars which suggests impending reversal south. I am extremely interested in this chart because my main long term trading plan is to shift my 1x btc and eth holdings into 3x leveraged ethbull tokens. I don't know what pattern this correction will be so I am assuming it to have a choppy wxyxz pattern. The ethbtc impulse lasted 7 weeks, so if you assume that the correction will also take 7 weeks then it gives a bottoming date at March 20. Last year we saw a huge run up starting April 2, this somewhat coincides with the March 20 date. My plan is to allow ethbtc to dump out as much as possible then begin dollar cost averaging until March 20. I do not intend to get the best price but want a reasonable average fill. I will wait until the first green day then use that as my starting point, divide the number of remaining days until March 20 and then scale in evenly across each day until I am 100% in ethbull. I strongly feel this is a pivotal point and that how I treat this opportunity could be the most important decision I make for the next 5 or so years. Eth could do some incredible things and getting into a position where I can ride out all choppiness all the way to the other end of the major bull cycle could be one of the best trades I ever make. I am not so interested in shorter time frames and am spending my focus researching longer macro cycles in order to prepare my mindset to stay with this trade until the logical conclusion and then have the discipline to take profit without overstaying my welcome. The 6 month cycle might produce a sell signal in june/july but I would actually like to be able to hold through that at least until December. I will be posting future charts on what I find regarding trading these longer cycles.
Long
by mljones
5
Dollar cost averaging plan next 7 weeksThis recent impulse lasted 7 weeks on eth. It also hit the 16 week donchian channel high from a previous chart I posted which indicates this is a long term buying signal. I strongly expect the recent impulse to reverse a bit since the final leg is an extended 5th wave and those are almost never stable. They do retrace. Since we're getting into a phase where trading is going to get a little crazy I am just going to dollar cost average accumulating leveraged ethbull tokens using my existing btc and eth holdings. Whether eth goes high or low during this period my priority is to just get a decent overall average fill. I have been tracking the rate eth is getting locked by defi and have mentioned a number of times about the possibility that defi locks eth at a rate faster than new eth is mined. That would be the catalyst to send eth to much higher highs as posted in the previous chart. So I feel like the decisions I make over the next month or so could be pivotal on everything that comes for the next several years. My trading here needs to be such that it gets the basic idea right. The worst scenario would be to try to get an exact entry but miss the fill and then have to chase it. I'm going to sleep on this which will give eth another day to dump out a bit and this price action will give me time to decide exactly how to proceed.
by mljones
5
Cup And Handle Posted Long Ago Has Now Printed HandleI am dollar cost averaging on various alts and btc now that the long term handle of the giant bullish cup and handle has printed a bottom. I am scaling in with targets that are at least double the current prices so that I can have a 1 RRR without using a stop. I am not going to try to time things very carefully but will deliberately just buy at consistent intervals in order to mechanically get an overall average that reflects the vwap for the next few months. I am going to spread out the scaling in process so I am still adding to positions well into next year, I especially want to be sure to save ammo so I can add on December 17 this year which could be a very important date for cryptos. I am especially interested in building a large eth position, it should be at least half my overall position in cryptos. I am also interested in ltc which has a lot of room to move to the up side from here.
BITSTAMP:BTCUSDLong
by mljones
Patience Will Pay Off For XRP HodlersPatience is a virtue, XRP hodlers understand that statement. XRP has been in a massive downtrend since January of 2018 and no amount of news or announcements has been able to break it out of the downtrend. BUT, it has been in a slight uptrend since mid August 2018! XRP is strong, fundamentally speaking, and I believe it will continue to be a Top 3 blue chip cryptocurrency. I have marked my first 4 price targets with my fifth (T5) being a return to its weekly ATH close at $2.76 (800% increase). It's time to start buying small amounts of XRP until the downtrend is broken. You're never going to time the bottom of a stock or coin, that's why DCA is so helpful, especially when prices are this low. Everyone is scared to buy XRP and that's the time to buy. When XRP runs, it runs fast and hard, don't get left behind because of greed for a lower price.
KRAKEN:XRPUSDLong
by ParCrypto
How to interpret the results of my Dollar Cost Average indicatorGood morning to the US, Good afternoon to the EU, and Good night to ASIA This post has 2 purposes. 1) Showing you with the video below how to use my indicator Dollar-Cost-Average-Data-Window-Edition/ 2) Collect your likes and move up in the Pine scripters ranking (no shame) Let's start with the first goal here Here's a quick reminder of what's the Dollar Cost Average investment/trading method Dollar-Cost Averaging is a strategy that allows an investor to buy the same dollar amount of an investment on regular intervals. The purchases occur regardless of the asset's price. My Dollar Cost Average (DCA) indicator will analyse for the defined date range, how the DCA method would have performed vs investing all the hard earnt money at the beginning If you missed the video above, here's the link again Dollar-Cost-Average-Data-Window-Edition/ (Yes people ask me info that are on the description, screenshots, videos so please don't take it personally if I repeat myself a bit, trying to get my inbox empty by the end of day and receiving loads of questions already answered won't help :p) The DCA performance versus Your trading performance Full disclosure here before going further ..... it's not because a DCA methodology worked in the past that it's guaranteed to work in the future. Otherwise, trading will be too easy and we''ll be all multi-millionaires But as we say often that the "trend is your friend", dollar cost averaging on a bullish market in a daily/weekly/timeframe is often (but not always) a way to make a decent amount of money To be honest, most of my friends who dollar cost average are making much more than many of my traders friends who're staying hours per day in front of the chart. They take less trades but they're consistent with their method. DCA allows to reduce the stress of trading, the stress of chosing the right moment, the right news and the right crypto animal twitter accounts to follow. A day trader, is more likely to commit mistakes in my opinion. This is certainly not because you take more trades that you'll have a better performance and I hope my tool will highlight it for you. Taking more trades increase the risk of losing as each trade is an opportunity but also a risk and the higher the number of trades, the higher the risk is of losing your previous gains This educational post is not an invitation to DCA blindly and abandon your trading not all. Because if you do, I'll be unemployed... but a great way to introspect and think and ask yourself the good questions : - Am I outperforming a DCA method ? - If my personal performance is negative or way below the DCA, should I reallocate part of my trading capital into a DCA-oriented methodoogy ? The DCA humbled me a lot on assets that I was so sure to have a killer performance with my trading. It has been and still is a great trading lesson that I'm sharing with you today See you tomorrow for the strategy version of that indicator which will help you compare side to side your own strategy vs a DCA ____________________________________________________________ Feel free to hit the thumbs up as it shows me that I'm not doing this for nothing and will motivate to deliver more quality content in the future. - I'm an offically approved PineEditor/LUA/MT4 approved mentor on codementor. You can request a coaching with me if you want and I'll teach you how to build kick-ass indicators and strategies Jump on a 1 to 1 coaching with me - You can also hire for a custom dev of your indicator/strategy/bot/chrome extension/python
BITSTAMP:BTCUSDEducation
by Daveatt
1
Sawcruhteez Strategies: Advanced Dollar Cost Averaging Methods Disclaimer: If you are primarily interested in copying other people’s trades then this is not for you. However, if you are willing to put in the work that it takes to learn how to trade for yourself then you have found the right place! Nevertheless please be advised that you can give 10 people a profitable trading strategy and only 1-2 of them will be able to succeed long term. If you fall into the majority that tries and fails then I assume no responsibility for your losses. What you do with your $ is your business, what I do with my $ is my business. Click here for my Comprehensive Trading Strategy | Click here for my Comprehensive Trading Process In the previous post I outlined two strategies for How to BUY THE DIP . Both approaches are quite hands on, requiring consistent analysis and actively managing orders. They are primarily meant for individuals who actively buy and sell on an intra month or week basis. This post is for individuals with the hodler mentality, who simply want to implement a structured plan to buy BTC before planning on hodling for multiple years. This person is almost always going to find a dollar cost averaging approach as the best way to achieve his or her goal. If you are convinced that the next bull market is here, and you have money waiting patiently on the sidelines, then the goal is to convert the fiat into BTC as safely as possible. The goal is not necessarily to get the very best price, instead the objective should be to maintain a cost basis that is lower than the spot price. Dollar Cost Averaging into a bull market is a very simple and effective way to make that happen. If it is a bull market then the price will be consistently appreciating and after enough time consistent purchases are expected to result in an average cost basis than is lower than the current spot price. Dollar Cost Averaging is an approach that allows someone to regularly buy the same dollar amount of an asset. There are two ways to Dollar Cost Average, by time or by price. Anyone with a retirement account is Dollar Cost Averaging into the investment by time. Generally a specific dollar amount will be invested on a monthly basis, regardless of the price of the underlying asset. The other way to Dollar Cost Average (DCA) is by price. For example if an individual has X to invest then that person can enter 10% every time that the price appreciates 10%. This is a more aggressive approach and is done to ensure that a certain amount of exposure is achieved at a certain price point. When Dollar Cost Averaging by price it is possible to go months, or years, without making an entry. Conversely it would also be feasible to make multiple entries during the same month if the volatility warrants it. Both approaches are completely valid. The preferred method will be determined by an individuals circumstances and objectives. If one has disposable income on a monthly basis then using some of it to regularly buy BTC can be a very good option (DCA by time). On the other hand if an individual has a lump sum of cash waiting on the sidelines then it may be preferred to scale in as price appreciates (DCA by price). This can be done to ensure that the full lump sum is entered before the price gets to high and / or if a certain amount of the underlying asset is desired. Some businesses will implement this approach if they require a certain amount of a commodity to operate profitably. Those sitting in fiat may choose this route if they want to make sure they get at least X amount of Bitcoin. Dollar Cost Averaging by Time This approach is ideal for individuals whose monthly income exceed his or her expenses. A portion of this disposable income can be earmarked to buy BTC as long as the market is bullish. This post will go in depth about how to determine if the trend is bullish or bearish. However there are many technical tools that can be used to accomplish this goal. My preferred method is Consensio . The Ichimoku Cloud is also very powerful. When utilizing this approach it is very important to have a gameplan for what to do if the price declines for an extended period of time. If the value of the investment declines each month after buying more it can be very difficult to cope with mentally and financially. This is especially true if there is no backup plan for putting the purchases on a moratorium or executing a stop loss and exiting the position all together. Dollar Cost Averaging when the price is declining in a bull market is generally the best time to buy. That is because the same dollar amount buys more of the underlying asset. This improves the cost basis and is a primary advantage to the approach. However if the price continues to decline for months, or even years, then buying more of the underlying asset only increasing exposure to something that is depreciating. This is why it is very important to have a plan, and stick to it. If Dollar Cost Averaging by time then it could make sense to implement a stop loss system that is based on time. For example: if price depreciates for one quarter then stop adding to position for one quarter. If price continues to decrease for two quarters in a row then exit the position entirely. On the other hand if price increases during the second quarter then resume Dollar Cost Averaging in the third quarter. It would also be possible to implement a stop loss system based on price. For example: If price declines 15% then Dollar Cost Averaging is placed on a moratorium. If price declines 30% then stop loss is executed and position is exited. This approach is very tricky with Bitcoin. It will often decline 45% in the middle of a bull market. Therefore if this is the preferred strategy then it is important to backtest the percentages that an asset can decrease while remaining in a bull trend. This needs to be done for every asset individually before starting the purchasing program. Dollar Cost Averaging is usually done by those who intent to buy and hodl the investment long term. Most will do this blindly and that is very dangerous. It is very important to have a plan for profit taking, even if planning to hodl for years, or decades. The profit taking strategy can also be done based on time or price. Retirement accounts have a built in profit taking approach that is based on time. Most IRA’s will not allow one to withdraw until they are 59 ½ without severe penalties. Therefore the gameplan is generally to contribute on a monthly basis and start withdrawing / profit taking after enough time has passed to avoid paying penalties. If someone is Dollar Cost Averaging into Bitcoin, or another speculative investment, then it could be a good idea to implement a time horizon for withdrawing / profit taking. A generic gameplan would be to buy Bitcoin with 1% of monthly income, every month, for the next 5 years. Afterwards the plan could be to hodl for a minimum of 5 more years. 10 years from now it will be time to take profit, if all goes well then it could be possible to withdraw a small percentage (~ 5%) per year indefinitely. The main idea with this approach is to figure out the minimum time frame that you wish to hold onto the investment and at what point would you be able to consistently withdraw for the rest of your life without depleting the account. Another approach would be to take profit 1 year after each halving . Enough to cover the initial investment and then hold the rest for 10+ years. This can be an effective approach, but I believe it is inferior to taking profit based on price. That is because it is often best to sell when the price is high, opposed to waiting for a certain date. This is true for almost every investment class, Bitcoin might be a different story due to the depreciating supply. However taking profit based on price can be very tricky, especially for people with a set strategy that employs consistent buying. That is why I believe that it is crucial to learn how to identify the trend and have an incremental process for stopping the buys and then exiting. This is where Consensio works so well, it is a step by step process for recognizing trends and reversals. Dollar Cost Averaging by Price This approach is for individuals who have a lump sum of money on the sidelines who want to ensure gets entered by a certain price. Let’s use a hypothetical individual who has $25,000 in cash. That person, who we will call Dollar Bill, wants to make sure that they can get at least 2 BTC with that money. However, this person is relatively smart and does not want to get overexposed too early. Instead he intends to enter in pieces and only when the price is appreciating. Bitcoin currently is trading at $7,981 and Bill has decided that he cannot sit on the sidelines any longer. Insteading of FOMO’ing in he takes a step back to reevaluate the landscape and come up with a gameplan. He starts by analyzing the charts. Using prior highs he is able to identify major areas of established resistance and he notices three key price points where he wants to enter. The major areas of horizontal resistance are as follows: $8,219 | $9,619 | $11,491 If those levels are broken then the protagonist wants to make sure that he become known as Bitcoin Bill. He is telling all of his friends to buy right now and has grown tired of his moniker after learning about the perils of fiat money. To realize his dream of owning 2 Bitcoin he has implemented an initiative to scale in slightly above each level of resistance. The target entries are: $8,501, $10,251 and $12,251 This won't get the best possible price but it will ensure that he only adds to the position if the market is moving in his favor. Entries are set slightly higher than the levels of resistance as a way to try to avoid fake breakouts, otherwise known as bull traps. Our hero used to be known as Billy Bull Trap and he is determined to make sure that doesn’t happen again. Now he must calculate how much to enter at each level to ensure that he gets at least the 2 BTC that his heart so desires. Since there are three entry points he decides to separate his $25,000 desired exposure into thirds. The calculation goes as follows: $25,000 / 3 = $8,333 Enter $8,333 at $8,501 (target entry #1) = 0.9802 BTC Enter $8,333 at $10,251 (target entry #2) = 0.8128 BTC Enter $8,333 at $12,251 (target entry #3) = 0.6801 BTC Total = 2.4731 BTC Average Price / Cost Basis: $10,108 per BTC After going through the calculations he immediately enters the orders, using Good-Until-Cancel Stop Market Buy orders. A Stop Market Buy order will not trigger until a certain price is reached. Good-Until-Cancel means that it will remain active unless Bill changes his mind and manually cancels the orders. This type of order allows traders and investors to enter positions as soon as the price reaches his or her desired level. This can be very beneficial for those who do not want to wait at a computer all day and night for the right time to enter. They also work very well in volatile markets that are open 24/7 for people who like to sleep without a price alert alarm. By inputting the orders right now Bill knows that he will be able to buy Bitcoin at the prices he wants regardless of when it happens or where he might be. This is a great option for Bill, who is an avid golfer that spends all of his spare time working on his short game in hopes of earning another new moniker. He despises being called Double Bogey Bill by his golfing friends. It is important to note the difference between a Stop Market Buy order and a Stop Limit Buy order. As the name suggests a Stop Market will trigger a market order to buy as soon as the price is reached. This guarantees a fill, but means that there will often be some slippage. If markets are moving fast and breaking through resistance then there may be a relatively small amount of liquidity available in the order books. If that is the case then it is possible to pay a much higher price than expected. For example: if a stop market order to buy 0.97 BTC is triggered at $8,501 then there needs to be at least 0.97 BTC available to be sold at $8,501 on that individual exchange. If not then slippage will occur and a higher price will be paid. It is entirely feasible that the market order will go all the way up to $8,600+ before filling. This is especially true for large orders and / or exchanges with lower liquidity. Individuals that want to avoid slippage will use Stop Limit Buy orders instead. This will trigger a limit order that will only get filled if someone else market sells at that price. If there are enough market sellers at that price then the full order will get filled. If not there the limit order will be in danger of getting blown right through. When price has a legitimate breakout there is generally an overwhelming amount of buyers and very few sellers. If there are few sellers then it means a buy limit order has a high risk of not getting filled. There are pros and cons to each order type. As is often the case it will come down to an individual to determine what is best. Stop Market orders will always get filled but can often be at a worse price than expected. This risk is greatly minimized for smaller position sizes and / or higher liquidity exchanges / assets. Stop Limit orders will never experience slippage but they will be at risk of getting skipped over. This risk is greatly increased for highly volatile markets. Bill is determined to buy a minimum of 2 BTC for the $25,000 that he has available. Using Stop Limit orders is out of the question for Bill because the risk of getting skipped over is much greater to him than the risk of paying a slightly worse price. Furthermore his calculations show that he can expect to get 2.47 BTC based on his target entries, therefore he feels confident that he will end up with a minimum of 2 BTC even if he experiences significant slippage. With a gameplan in place and orders on the books it is possible to be prepared for upcoming price action before it happens. Being proactive instead of reactive is the primary differentiator between emotional investors and the proverbial smart money. Being able to execute that plan is what separates the pros from the wannabes. Dollar Cost Averaging by price is not designed to buy in at the cheapest price. Instead it is meant to ensure that a certain amount of the underlying asset is acquiring and that you are buying into a market that is appreciating. This approach should absolutely be combined with a profit taking strategy. Many who buy in based on certain price levels will prefer to exit at certain price levels as well. For example Bill might decide to sell 0.5 BTC at $20,000 and 0.5 BTC at $100,000. After recouping more than his initial investment he may choose to let the rest of the position ride indefinitely since he now has a negative cost basis (withdrawn more than was originally invested, while still maintaining some of the original exposure). This is by far my preferred approach, and is very possible in a crypto bull market with the right plan and execution. Daily Dollar Cost Averaging A very effective way to Dollar Cost Average by time is to buy a very small amount every day until the desired amount of exposure is achieved. This can be a good strategy for individuals with a disposable income as well as for those who have a lump sum to invest. Those with a lump sum can enter 0.25% - 0.5% of the capital on a daily basis. This will process would take 200 - 400 days to get fully entered. If that is too long for an individual’s taste then it is possible to enter a higher percentage, however I would not consider doing more than 1% per day. Individuals with disposable income on a monthly basis can enter 3.33% per day. That will enter the full amount before the month is over. Then the following months surplus is used to continue buying the same amount per day. Exchanges like Coinbase and Gemini have an option to set a recurring purchase for x amount. This can be a great option for individuals who do not want to Dollar Cost Average by time, however this could obfuscate valuable lessons. Manually doing a Daily Dollar Cost Average can be a tremendous learning experience, especially for those who are uninitiated to active buying and selling. If you decide to use this approach then pay very close attention to the emotions that you are feeling when making the purchase. Are you motivated to buy when price is down 10% over the last 24 hours? Do you feel like buying more than the predetermined amount when the price is up 5 - 10%+ over the last 24 hours? I would strongly suggest keeping a journal that details emotions when implementing the Daily Dollar Cost Average approach. This will enlighten you to when the market is controlling your emotions and when you are prone to making poor decisions. Combining Dollar Cost Averaging with Buying the Dip In the first post I outlined multiple strategies for How to BUY THE DIP . In this post we covered multiple Dollar Cost Averaging methods. It is important to note that these two approaches are not mutually exclusive. In fact they can complement each other quite nicely. I love buying dips in Bitcoin bull markets. If done properly it be extremely rewarding. However it is highly risky and can be very costly if not done effectively. The risks include: 1) Buying a dip that is only the tip of a major selloff 2) Buying a dip and getting whipsawed out of the position right before the market explodes to the upside 3) Waiting for a dip that never comes and letting price get away to the upside As is generally the case when presented with multiple desirable options I prefer to use a combination of Dollar Cost Averaging and Buying the Dip . I find this to be very beneficial to my pocketbook as well as my psyche. Being stuck on the sidelines waiting for a dip can cause a lot of anxiety. That stress can be greatly alleviated by knowing that there is a Dollar Cost Averaging approach in place. Buying small amounts as the price appears to be running away also helps to be patient about waiting for a dip. I like to set a portion of my fiat aside to buy dips and I will use the remainder to start Dollar Cost Averaging. I prefer a ratio somewhere along the lines of 60% for buying dips and 40% is used for Dollar Cost Averaging. I may go as high as 70% / 30% with that ratio depending on market conditions. For individuals who have less experience, or those who do not have the time available to analyze charts on a daily basis, I would suggest a much different ratio. Something along the lines of 10% - 25% for buying dips and the rest set aside to Dollar Cost Average. I think it is always good to have something available to buy when the price dips. The best buying opportunities often occur when Bitcoin drops 30% - 40% while remaining in a bull trend. Having at least 10% of your desired exposure set aside for times like this can be very beneficial. Therefore even if I was committed to a Dollar Cost Averaging approach I would still want some set aside to buy when Bitcoin is oversold in a bull market. While this approach will never get you fully entered in at the bottom, it will be a reliable way to gain exposure into markets that are moving in your favor. My goal is to minimize risk and maximize strike rate. Utilizing an approach that combines buying dips with Dollar Cost Averaging is the best way that I have found to do that. The last puzzle pieces are learning how to identify the trend and manage stop losses. I use the 50 and 200 Day EMA’s to determine the trend. If the 200 EMA is moving up, with the price above and a golden crossover with the 50, then it is a bull market. When Bitcoin is in a bull market then I want to establish a significant amount of exposure while staying flexible and properly attending to my risk. I also use the 50 and 200 Day EMA’s to determine my stop loss. As long as price is above and the trend is up then I want to be in. As soon as the price falls below and the direction of the EMA starts rolling over then I want to start scaling out. If a death cross occurs then I want to be fully out of the position. Another effective way to manage stop losses is with the Bill Williams Fractals on the daily and weekly charts. Through learning how to identify the trend and properly manage risk it is possible to consistently beat the markets average rate of return of a statistically significant sample size.
BITSTAMP:BTCUSDEducation
by Sawcruhteez
7
Bitcoin Price Action Update (day 345)Disclaimer: If you are primarily interested in copying other people’s trades then this is not for you. However, if you are willing to put in the work that it takes to learn how to trade for yourself then you have found the right place! Nevertheless please be advised that you can give 10 people a profitable trading strategy and only 1-2 of them will be able to succeed long term. If you fall into the majority that tries and fails then I assume no responsibility for your losses. What you do with your $ is your business, what I do with my $ is my business. Click here for my Comprehensive Trading Strategy | Click here for my Comprehensive Trading Process | Click here to learn about the 2 BTC' to 20 BTC' Trading Challenge Disclaimer: If you are primarily interested in copying other people’s trades then this is not for you. However, if you are willing to put in the work that it takes to learn how to trade for yourself then you have found the right place! Nevertheless please be advised that you can give 10 people a profitable trading strategy and only 1-2 of them will be able to succeed long term. If you fall into the majority that tries and fails then I assume no responsibility for your losses. What you do with your $ is your business, what I do with my $ is my business. Consensio: Fully bullish ... Patterns: Hyperwave fractal , lol Horizontals: R: $7,300 - $7,500 Trendline: 30 minute channel Parabolic SAR: $4,497 | $6,719 on 4h, probably a good one to keep an eye on Futures Curve: Starting to test the backwardation that has been persistent. Funding Rates: longs pay 0.01% Shorts: Dumping, but not anywhere near be ‘oversqueezed’ TD’ Sequential: G5 Ichimoku Cloud: Reentering weekly cloud Relative Strength Index: 88 Average Directional Index: Not overbought, even on 4h Price Action: 24h: +13.69% | 2w: ++40.65% | +40% Bollinger Bands: Breaking out from a weekly squeeze Summary: HOW INCREDIBLE IS THIS?!?!?! I still cannot believe it! This is an unprecedented move! The last time we have had a 3 month candle this big was Q4 of 2017 and we are not even halfway through this quarter!!! I understand that I was calling for lower prices and largely missed out on this move, but I am still pinching myself, wondering if this is a dream. We are ripping through resistance that could have taken many months! The higher that the price goes the greater that the chances are that this bear market is over in my mind. If we really are entering the next bull market then I believe there is an extremely high likelihood of six figure prices. Therefore this is just the very tip of the iceberg and it is very important not to make emotional / reactional decisions. I currently have about 30% of my overall desired exposure and I do not intend on increasing it right now. It was only 15% before this > 100% increase in price, so I wasn’t necessarily intending to have that much percentage exposed, but that is a difficult ratio manage with an asset this volatile! I always recommend to have 5% - 10% of personal networth exposed to BTC at a minimum. This has been my suggestion in bull and bear markets. The upside is too great not too. In bear markets I wanted a small percentage and in bull markets I want to have a very high percentage. When risking a very significant amount of money I want to wait for confirmation opposed to trying to get the best price possible. If this is just the beginning then there is plenty of time to make a long term investment (2+ years). We are entering the weekly cloud and many indicators are not that overbought, which absolutely blows my mind. The ADX and TD Sequential both show plenty of room to the upside. The RSI could be interpreted that way as well. The funding rates and BTCUSDSHORTS confirms this. My backup plan was to wait for a golden cross and spending some time above $6,500. This is not how I was expecting to get there. Sometimes even a well thought out backup plan is not enough to prepare for the markets volatility and that is especially true in crypto. Now that we have made it through $6,200 I expect that to be an area that acts as strong support on a pullback. Before today I was looking 20% lower than that. Whatever happens I will scale in by portions and will remain as flexible as possible. It is up to you to make up your mind and develop / stick to a sound gameplan. Wait for the weekly close before making a decision for a significant amount of money. Whenever it feels like a decision needs to be made right now it is best to wait, at least for a few hours. For those who are feeling like a deer in the headlights here are TWO OPTIONS: 1) Scale in at 10% of a time. Do this at certain price points, or certain dates. For example: 10% every 2 weeks or every $1,000 in price increase. 2) Another option would be to scale in 1% of the desired position every day for the next 100 days. My Gameplan I love using Exponential Moving Averages to buy pullbacks. The 50 and 200 EMA on the 4 hour and daily charts are my favorite. When they are in a fully bullish posture then scaling in when the price tests those areas provides high probability entries. If they rollover / cross into a bearish posture then I will be immediately scaling back out. Until that happens I will be watching the 30 minute channel that is illustrated in the chart above. As long as we stay in / above that channel I am bullish . Once it breaks down I will be expecting a correction. It could happen very fast so it is important to be alert / prepared.
BITMEX:BTCUSD.P
by Sawcruhteez
17
NANO Long TermOne of the simplest strategies in trading is to buy and hold. To succeed with this strategy you need to dollar cost average your position. It's not recommended to put a lump sum of money in all at once. Rather buy periodically. We all know that you are supposed to buy low and sell at a higher price. Yet somehow people lose money because they buy high and sell low. It sounds counter intuitive but many people may start off doing that when they start trading. It's very common to lose money when you start trading, I know I did. The best thing you can do is to buy a fixed amount periodically. So if your technical analysis skills aren't where you want them to be this is the easiest thing you can do. Say every month you put $500 into crypto, especially in a bear market. Over time the amount of crypto you own will go up even if the dollar value goes down. The day we recover and return to a bull market is going to be a very good day. It's not about focusing on the value of your money in terms of fiat. It's about how much crypto can you accumulate. While the value of your coins may be dropping you have to realize that in the long term, assuming the coin is fundamentally sound, they will be worth a whole lot more. That's what may make trading difficult at times. You see your portfolio crashing but the amount of coins you actually own doesn't change. For long term traders focus on buying as many coins as you can rather than focusing on the dollar amount of those coins. Nano is currently at an all time low since being listed on Binance. You never know the lowest point of a coin until later on. Is this the lowest nano will be? Say this is the lowest point and the coin takes off, you'll be wishing you had bought when it was low. Huge potential for when nano returns to it's previous highs. Even if goes lower than what it is now simply dollar cost average your position. Don't buy AFTER it goes up significantly, buy BEFORE it goes up.
NLong
by Yo_adriiiiaan
BTC pop lock and uppin!Student of the game! Todays Menu: No EW Less TA More experience Lots of accumulation phases. BTC is on the right path! I am a buyer now dollar cost averaging my way in. I do not, in any way, think that BTC is going to go up FOR SURE. I do think that this is the calm before the storm as the most likely scenario. If it drops, I wouldn't mind because it would bring my average down as I would buy at that level as well(do not think it would break HARD support at 8200) but if it does go that way look for a mother of all POPS UPPPPPPP shortly after therefore bullish. If it goes sideways within this triangle for a bit more then pops up which I think is most likely, I would go 90%(of my dedicated crypto amount) into it at around 10.4-10.7. Currently I am closer to 50% of the way in The RSI has support at the low level it is currently at. Room to grow is there. BTC does act like this....volume coming in phases and popping upwards then waiting and coming again before the media coverage comes in and the steady volume remains. See it as this- Worst case: hold for another week or two to see gains if it drops. There is too much bullish sentiment to not grab up every drop now(goldman sachs futures, consensus 2018, exchange news, coinbase upping user capacity, history repeating, self fulfilling prophecies, place to make money while stocks dropping, etc etc) I am wading in and eventually jumping. What are your strategies peeps?! LEAVE THE LIKE :) HAPPY CINCO!
BITFINEX:BTCUSDLong
by dhillon7800