Crypto Academy Week 12 : Homework Post for [ @fendit ] Don't Get Lost in the Fuzz.
Hello friends, this is my homework task for professor @fendit . One more dynamic lecture by professor based on reality. Let's do it now.
Place yourself in the following situation:
You bought BTC a couple of days ago at a price of USDT 62K. Suddenly, you see that this situation is going on:
What would you have done before reading this class? What would you do now? Explain in detail if there's something you would do differently.
in this question basically , we are being tried for our patience as well as understanding of swing in cryptomarket. By now , the little knowledge that I have gained , had taught me that, fluctation in price of cryptocurrencies is a continuous process . Volatility is a feature and infact beauty of cryptocurrency. It sometimes occurs so much that the intraday fluctuations become significant.
Few months before, if i was placed in this situation, i would have sold BTC and tried to save the money in hand. But now, i would keep holding my asset and wait for BTC to enter bullish market and than sell, if needed. Holding is another good option that i would prefer because i am optimistic about price hike of BTC and i expect to skyrocket in near future.
However, this time i would do one thing differently, that is place a STOPLOSS. Stoploss is an order in which a specific target level of price is set and if the price of asset touches that level, the order gets executed. Taking above example, where i bought BTC at 62K and within few days price dropped to 45K (approx). If i sell BTC here, i would suffer a loss of 17k USDT. Had i placed Stoploas at 60K (say) , i would have suffered loss of 2K USDT only. That is the benefit of Stoploss.
One limitation of stoploss that i understood here is, in case of holding it is not beneficial. Here i would have suffered 2K loss, but as i am planning to hold long and wait for price to enter bullish trend and than sell. So stoploss is not a good tool for me, however is beneficial for those who go for frequent trades.
Share your own experience when it comes to making mistakes in trading:
What mistakes have you done when trading and what did you learn from them? If you have little experience when it comes to trading, tell if you got to know about someone else's experience.
I recently did one mistake, a week ago , i purchased BTC worth of 30000 INR, within few days i saw BTC, going up and the price of BTC that i had, escalated to 30500 INR. I sold my position and gained 500 INR. Now when i follow market trend, i see that , had i kept holding the asset, i would have sold same for 32000 INR and secured profit of 2000 INR. Although i didn't suffer any loss but i would have gained more.
So the lesson that i learned is that, don't be greedy while trading and practice strategic selling. Have thorough understanding of market while trading.
Which of the strategies discussed in this class you find the most useful for you? Why?
I have been attending lectures in cryptoacademy from the beginning but i find this lecture entirely different from the earlier delivered lectures. The strategies and mistakes mentioned in this lecture are reality based. All of us have encountered them from time to time and we are even facing some of these today. The strategies mentioned are outstanding. Few of them that I find interesting because I have been going through them quite often are:
Don't let greed and fear take the worst of you. As i mentioned above, it was because of greed i missed 1500 INR profit and gained only 500. However i look at it in other perspective and that is, to avoid greed of gaining high, i sold at low gain. So basically i avert greed.
FOMO (fear of missing out) comes into play , when we see asset price dropping and place order but we end up losing more than gaining anything.
Do not let your emotions control you. At times we are carried away by looking at people around us talking about something (say BTC) . Without thorough understanding we plunge into that thing and end up finding ourselves in trouble. So we should not be driven by emotions.
Place yourself in the following situation:
You're browsing Twitter and you see this:
You see that whenever this kind of things happen, BTC prices rush. What would you have done before reading this class? What would you do now? Explain in detail if there's something you would do differently.
I would have ignored this news before because honestly i won't have been able to comprehend it. Now that professor @fendit has explained, what it means. Now i would place a buy order for BTC with following modifications:
Place Sroploss order, if not planning to hold.
Check the momentum of market. Once it starts accelerating, only than , I'll enter. I won't be emotional by the talks that will obviously be going on.
I won't fall prey of FOMO. Property access market only than go for buy.
I'm sorry! This homework was due on May 8th, I'm afraid to say you were late to it :(