Ahh... so I heard some news from the market, it's called the hive dump. More news of #steem frozen their ex-witnesses who doesn't run the latest softfork patch? Also, someone mentioned about the 100 days steem activities by their officials(seriously, the project just launched unsigned! Where is Eli?).
I know right?! There's so many things going on in the market, be it hive or steem, whilst everybody is worrying how their hive will end up, am I the only one taking advantage to accumulate hive? I'm just chilling, and telling you, there is this way called cost averaging. Wait a minute, aren't we learning about buying the denominator? That's exactly where we're heading to, but first you gotta get your head wrapped around with a proper investor mindset, and throw away your dollar before you can start to accumulate cryptos.
Here's how it goes, when we talk about investing, we'll be looking forward to buy a deal at a lower price, and hopefully later the deal gained value so we can sell it high. However, once again you'll have to refer back to Episode 2 of our lesson, which everybody's mind are so fucked up because we've been BIND with DOLLAR. Which means our mind has been conditioned to "think for dollar" first, instead of think for the denominator, in this case #hive.
Dollar Cost Averaging
Is an investment method that divide the total investment, split them into different entry price and or timing so to averagely divide the risk of entering at the same price. I'm sure you'll be saying it's boring and I'm going too fast. So, please do your own reading from Investopedia. All I'm trying to say is, even an investment strategy has been using the numerator(DOLLAR) to teach. Hence people are always thinking of dollar and missing the main ingredient, crypto.
Crypto Cost Averaging
As the above, but now we're using numerator and denominator to trade cost averaging. If you skipped the above paragraph, please go back up and grind it through. Somehow you will have to understand the concept of buying on a disciplined, regardless of time or price range. The difference is, now we use one type of crypto buying another type of crypto. Vice versa, using one type of crypto selling for another type of crypto.
We all know buy low sell high means profit, but when is low and when is high?
So, why do we crypto-cost average trading? That's because, crypto market are very volatile. There are way too many parameter that may affect one crypto price, on top of that, it's even worst because on the other side of the trading party could act on an entire opposite way. If one going up, the other one going down, which means the price difference will be drastic! We all know buy low sell high is the way to trade profitably, but how often do we really buy low, and how often do we sell it high? The answer is, almost never. Because we all have the greed and fear living inside of us. When we saw it low, we fear it can go lower and might lose out. Once we obtained some assets, we started to pray, hope it go high enough to cover our cost. Usually I heard people pray something like, "Let this go back to breakeven, I swear to God I will sell it and will never touch crypto again." But then woke up the next day figured the deal is in profit, "Oh well may be I should wait a little, if it drop back to breakeven I will sell it, but if it continue to rally, I might make a small fortune?". Note that, even if it's "high", people tend to WAIT.
No low is too low
So, the concept is simple, no low is too low. If you have some HBD in the wallet, do remember to split them into several portion, so you can divide them to enter the market at a different price. Here is what I do.
I have abouy 200Hive and 20HBD in hand, I can choose to power it up and earn curation reward. So tell me, how muhc 200Hive can vote? 0.001? What is the curation reward you're getting back? 0? What I can do is, trying to make the best out of it, but let the buy sell justify by market movement itself.
I break my 20HBD into two portion. 10HBD I used it to park at 0.15. Notice the yellow arrow pointing at the current trading range, the blue arrow indicate the most recent deal done in the market. Someone buy/sell at 0.21. I can sit here all day and wait for a good deal, but I don't got all day. The next best thing I can do is, put up my expectation, which is 0.15. Red arrow indicate where my price is. Was it ridiculous to park a position so darn far away?
Here you go, the trade history told me, moment ago it was already 0.19. Despite the recent deal was done at 0.21, I am not bending over just to grab a 0.20 deal because I know the position of it going down is there. So, I parked 10HBD to be traded at 0.15 for 66.667HIVE.
Once again, no low is too low! Since I broke the HBD into two parts, the second part I used it to speculate an even lower price at 0.10. Once again, you're asking the same question, is it even possible?
I don't know, you tell me. My question to you is, do you have enough to buy, when there's an opportunity for you? Will you be able to justify if this is the lowest? I'm telling you, I have got not enough HBD now, if I have another 20HBD, I would so parked them individually at 0.05 and 0.001. Once again you'll question me, why would I buy if it's already 0.001?! It's dead. The answer is wrong, because I'm not looking at DOLLAR. I'm looking at crypto. 0.001 does not mean it will die, 0.001 means the numerator gain strength! 1HBD can buy more HIVE! No low is ever too low to buy, when you have enough numerator to buy the denominator!
No high is too high
Time to mind fuck again. Conventionally, we buy a share with dollar, when the share price goes up, we sell them for extra dollar. And therefore we make a profit, correct? In crypto, we sell the denominator, but we buy back denominator! There's no dollar here, there's only volume and holding power! Remember, I have 200Hive in hand. So, here's what I do.
It's simple from this point onwards. Because we're now selling the denominator, naturally we are getting less numerator. If you remember we previously talked about now low is too low, take a look at the current bid and ask price, both went below 0.20 already! Therefore, don't rush! Give the market some space. Good deal is ahead, and best part is we do not need to sit here and hawk starring the market all day with this limit order tool.
I am selling my HIVE all the way up to 1.00. Which means 1Hive for 1HBD. Once again, no high is too high. Who is here during end of 2017 and beginning of 2018 where SBD suddenly rally up to 15 bucks? It's impossible? It could not happen? Well guess what those people who curse BTC crash at $100 say?
Summary
Why would we do this David? You asked. The answer is simple, the sole purpose of crypto is to rule out the banks! Decentralized. Get the dollar out of the window, until you use your CRYTO to buy a lots of dollars! Dollar is a service, put them back into the numerator! I have my orders in the market, and I'm always ready to anticipate any sudden change. There is no good news or bad news in crypto trading. Any news is good news.
Market is always there, but only the people who is ready will be able to receive the blessing. What happened yesterday was, no high is too high. The bottom 4 deals are all from selling high at 0.25, 0.30, 0.35 and 0.4 that makes me 13HBD, and later on I parked everything back to hive with 10HBD at 0.2 and sold for 50.012HIVE.
Previous Episodes
Part 4 here
Part 3 here
Part 2 here
Part 1 here
Good information brother.
Thanks
Tanks to
Hello @davidke20
Thank you for posting within our hive. I upvoted your content already. Please spare few minutes and read how project.hope is organized and learn about our economy.
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Thank you for curation.
I got your idea, so you're setting limit orders to profit both from the dips and from the spikes in absolute Hive terms... Your goal is to end the day with more Hive on your pockets. I'll try to do the same on the Steem internal market, there I don't have much SBD though.
Edit: I think that right now it's not possible for Hive to go more down against HBD be side of the haircut function, right now the debt ratio is 10% so the chain is not printing more HBD, therefore the Hive/HBD ratio will remain more or less constant unless the marketcap of Hive roses or u less there's a dramatic cut on the HBD supply. Have you factored this in on your limit orders?
The idea of crypto cost averaging is, no idea. Don't think. It may seems that I'm bias on the pricing because clearly 10HBD worth so much more than 10 Hive. But when you read them both as numerator and denominator, there's no dollar value here. All you care is, how much HBD and HIVE balance in the account after trading 😂 I will try to make a spreadsheet comparison this evening, may be an extra sequel of episode 6.