Since Bitcoin's price volatility is a feature, not a bug, many feel that it would be beneficial to take advantage of it.
After all, why not try selling at the top, then buying back after a correction? Why not do this over and over again to make more and more money?
This approach comes with several problems:
- Why sell something you think has a positive long-term future to prepare for a decline you think is temporary?
- By doing so, you introduce the additional risk of being wrong (when there are already so many), since the decline may not happen.
- Selling to try to time the market gives you two ways to be wrong: the decline may not happen, and if it does, you'll still have to decide when to buy back in. Not easy.
- You may even have a third way to go wrong. Once you sell your asset, what are you going to do with the money until the dip happens and you consider it time to get back into the market?
- Sellers who have been right always having a hard time choosing the right time to re-enter the market, which can cause them to wait until lower and never take a position again.
- Finally, how will you handle the case where you are wrong and there is no dip? Will you be able to accept this psychologically by overcoming your regrets and taking higher positions?
It is therefore generally not a good idea to sell in an attempt to time the market. Opportunities to do so are rare, and very few people have the skills to take advantage of these opportunities.
It is not in your best interest to get into a game where you are up against traders who are much more skilled than you are.
Your best interest is to apply the best strategy, which is also the easiest one: Buy, HODL, Repeat and Be Patient.
Submitted October 18, 2022 at 07:31PM by sylsau https://bit.ly/3D7uvxM
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