We are at another one of those times when fear, uncertainty and doubt (FUD) dominate the packet-waves. I have actually been waiting for a time such as this. When you see FUD posts, it means that the windows of opportunity are opening ever so slightly.
It is buy time from now until there is blood in the streets. As you know, I play the game of percentages so as to never lose. Once I commit to buying on the way down, there is no selling. There is only cost averaging.
Catching the Knife
Everyone dreams of swooping in and buying the low and riding it to the top, otherwise known as catching a falling knife. When blood is in the streets, you may to catch the knife one out of every ten tries, but it is unrealistic to count on it and idiotic to place your bet with every last dime that you have to invest.
Back in November of 2020, I was watching the price of this new Hive token. It was new to me at least. I had been watching the price and looking for the bounce. On Nov. 3, 2020 .1029 it occurred. I started buying and my plan was to buy again at seven cents, and again at five and scoop much more at three cents. As it turns out, I had bought just after the lowest price and there was not much of any cost averaging. You really cannot count on this kind of luck, but your chances increase if you buy when there is blood in the streets.
Much of that investment was and still is in Hive Power, so I was not able to sell at the high last month. If I were to power down right now, I would still be making well over ten times what I invested. Compare that to those who bought the momentum a month ago. They are likely getting out right now with a tiny profit or worrying that they will go into loss territory. I rarely buy momentum and if I do, I usually sell when I am at three times my investment with no concern about missing the top.
Cost Averaging
What if I had not caught the knife. Let's take the same twenty thousand and start at a different point in time - April of 2020. In this example, I had missed the run up and I am buying an expected bounce.
I take five hundred of my twenty thousand dollars and buy Hive, then double the amount every time I see a new possible bottom. So, I buy after the spike in April - $500 dollars worth at $0.45 - I am hoping for a bounce.
The bounce does not come, so I buy twice as much at the next low point- $1,000 worth of Hive at 0.307
We are at the second red "X" on the graph. I am still hoping for a bounce but if it does not come, I am ready to double down.
Hive is still dropping as it levels off and we keep doubling down with each red "X" - these are actual prices from the historical chart. I caught the knife when I spent my twenty thousand on Hive and my cost average was $0.11 per hive.
| Price | Invest $ | Buy Hive | Total Hive | Cost Average |
|---|---|---|---|---|
| 0.450 | 500 | 1111.1 | 1111.1 | 0.450 |
| 0.307 | 1000 | 3257.3 | 4368.4 | 0.343 |
| 0.234 | 2000 | 8547.0 | 12915.4 | 0.270 |
| 0.207 | 3000 | 14492.7 | 27408.2 | 0.237 |
| 0.152 | 6000 | 39473.7 | 66881.9 | 0.187 |
| 0.106 | 7500 | 70754.7 | 137637.0 | 0.145 |
But, if I would have bought earlier and doubled down as the price fell, I would still be Ten X today! The pattern at which I bought in the above scenario is the same as if I had bought all 137,637 Hive at fourteen cents each. What varies is the total amount of Hive that I actually have, ten percent less, and a few cents more per Hive.
It is the same $20,000 - The same chart - The same time frame - The same investor
Many people look at how much they can afford to invest and then enter into a trade with all of it. I am of the opinion that jumping in with both feet, with no room to correct the price, is the main reason for nail biting and FUD.
As for me, I am never all-in, so I am never willing to sell at a loss. Give it a try!
1 How to Have Money
2 Debt and Percentages
3 Waste not, Want Not
4 A Practical Example
5 Cost Averaging for Investing
6 Overnight Successes
Catching a falling knife must be an awesome feeling - never experienced that. I'm just happily buying red and selling green; trying to develop healthy habits. Projects I do consider long-term holds are excluded.
I was considering writing a post about this today, glad you shared some insights. Been doing this with a couple presales and first-candle entries, and I always exit at 3x max. Done missed out on some 15x - 20x gains a couple times, but mistakes that still bring in profit are easier to accept.
!LUV
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Getting out too early with a triple is never a mistake. I never feel bad about that.
@lordneroo(1/1) gave you
.
That's one of the things I've been doing! When Hive spiked, I bought 60 HBD with me 18 Hive. It was a great way to maximize the rewards for the opportunity and grab something people are trying to get rid of in a mad rush. I'm hoping to get the chance to do the same if we get another run up!
If it were easier to move in and out of HBD, I would use it like USDT and take advantage of a stable harbor waiting for the drop in price. Good going both of you!
I am glad I dropped back in before bed.
:)
I've done some foolish things over time. I've spent more than I should have for something and also tried to catch the knife and failed a few times. I got lucky once or twice and got it but it was a bloody ordeal for sure!
I think buying in small bits here and there, more so when the prices come down, is a great idea. I'm getting to some of my goals through this process and am enjoying the process for sure. It's a slow process and that's totally fine, I just want to ensure that I can make some sustainable investments for the future for a time when we need them. Doing so and keeping an eye on things price wise so we can optimize for when things dip is great. That money grows a lot when things swing up. I've made some really lucky and fortunate snaps in the past that I'm proud of for mainstream tokens but also really enjoying some of the things I've gotten on the Hive landscape without a doubt!
I am also never all-in, I think that's incredibly foolish. It's led me to miss opportunities like 3k bitcoin but hindsight is always 20-20, for me conservative nature helps for sure.
Better safe than sorry. It's always a good idea to play it safe, because if you invest money you can't afford to lose, you won't be able to hold during the red times.
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I agree! The most successful investors, real investors not assholes that just do insider-trading, are very balanced and will take risk but not too much risk, at least how I think of it. Have to balance the good times with the bad!
I bet 99% of the people in crypto don't buy when there's blood on the street. I am pretty much in the same category and tbh I have never DCAed... I am planning to do so if we will have a serious uptrend on some coins I hold for a while like ADA and XTZ, but I like how organized you are with investing.
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Cost averaging works best when the price is dropping. It helps you to correct the purchase price so you go into profit sooner. On the way up, it increases your average cost. I have done it but you have to watch it because a drop puts you in the red faster. Hope you are over your cold.
Even if the price is dropping or going up, if the DCA-ing is done constantly and with a long term plan, it's hard to get it wrong.
I like it how you look back and analyze the situation.
All-in is rarely good, if ever and those who are all-in types, I guess will learn in time. Or not. For me, no matter how little I have, I'm never all-in. Times teaches me.
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Thank you for your support, it is very valuable to me, I don't know where to write to you, so I do it here @ezrider
Thank you so much, I have to learn at this one, because as long as the profit is in our hand don't worry for the top. Because we never know when the top will be, might be just when we think the price will go up again, but the price drop so much as people are taking profit.
Perfect explanation using common sense and a great tip. Never buy green is my motto I stick to and never sell red. I must confess I always look out for your posts as you have some gem advice.
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You have done a very important analogy this is very clear, as for me I was just introduce to hive I never new such things exist and the mentorship is not enough to understand how its work or maybe the person that introduce me did not understand much about it either,I really appreciate this explanation and this will also help me in the future plane on how to go about buying or investing,please I will like to be under your mentorship and support in other to grow on on this platform @ezrider and I will appreciate any advise, correction, vote or help if necessary, do have a wonderful 🎄 xmas in advance
it's really a great achievement coming down here thou am really new to this world of Cryto but I think it's an interesting game if you play well you head higher.
first of all I understood so far that you can be a great investor if you invest without the mindset of wanting to take profit in a stipulated time, the best to do i suggest is investing when there's a general drop down in price and waiting till it rises before you go for the profits is better than fixing time you want profits one could be disappointed. hoping to grow wider in Cryptocurrency knowledge
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Hope you are good dear friend @ezrider
I am planning on moving capital right now. I feel like we are at that time again but most of my HP has been from posting and I am really not used to buying HP to keep in my wallet.
But it is a good way to fix the money so you do not touch it.
A key factor in successful investing is spreading your investments.
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This is a good idea to have when investing or even trading.
Most times, it is easier to play the market game when you don't rely so much on the profits.
Like you stated, "you're never all in". That's the main point.
I've always stated it. Early investors on $hive are the real MVP. Many have over at least 5x their investments. You seems to be still here, although you don't post daily like me lol, meaning you love $hive long term.
I found this article and some other ones very instructive and helpful . Thanks for sharing.,
Thanks also for supporting my chess content yesterday.
One more thing,
Do you play chess?
thank you. this was great
thank you friends who have supported my post.