How A Down Market Effects Your Trading Goals


#1

This is something I believe is worth discussing. How do we react in a down market like we have seen this week?

Most traders are aware that when Bitcoin is unstable and going down… the altcoins usually drop by an even higher percentage. Of course, this can cause your trades to go against you fast and will often effect your targets and possibly trip your stoploss. If you sell out of your position… it is possible that you may end up locking in a substantial loss.

My personal goal is to multiply my Bitcoins. When you have large positions in altcoins and the market takes a dip… you can end up deep in the red and with significantly fewer Bitcoins.

I have come to the conclusion that it is better to HODL through these cycles and not make any major trading decisions until the market stabilizes a bit and begins coming back. Of course, that is not easy when your altcoins are dropping and the indicators all seem to be giving you sell signals.

There are obviously some very experienced traders here and I would love to hear your thoughts.


#2

Experienced traders know that while the market is trending up and while the market is trending down, you can make money. It’s when the market is flat, that’s the real problem.

The goal is to predict when it will trend up and when it will trend down. That’s the hard part.

Stay Fishy


#3

When a coin is flat (depending on the coin of course)… the whales and savvy players are accumulating as much as they can without drawing attention. This is what happens before the markup phase.


#4

Shorting the btc rallies has been really reliable


#5

I know that is often the case. However… given the current situation, I am thinking the altcoins are going to rise fast as Bitcoin rallies from this low. I could be wrong?


#6

@InsiderLife I will start by saying “investors” should only be using funds that they can afford to lose. Obviously nobody wants to lose money and for full time day traders their income is derived from market movements.

The advantage that part time traders have over full time traders is that it’s easier for them to wait for the market to recover i.e. they are not reliant on the gains as their primary source of income.

With the investment pot split into several blocks what I do with a long position that goes against me is buy MORE with another block rather than taken a stop loss hit. Basically DCA and wait for the market to go back up. This wouldn’t work for full time traders with a prolonged market decline but seems to be fine for part time traders.

So I am actually setting stop limit buys rather than stop limit sells to try to “protect” my position. I then review the stops based on market conditions.


#7

Isn’t this even more risky? No stop limit sells can turn into a disaster if market plunges heavily overnight. Ofcourse, as you said, the market may recover, but the time to recover is also something to be kept in mind, right?


#8

The other thing to remember about hodling over a stop loss, is the funds are now tied up while waiting for a recovery, whereas the bot… err… Trader, could be using those funds to execute other trades on other CDA’s.

Stay Fishy