FOMO, or the fear of missing out, is one of trading’s deadliest sins.
Every trader has experienced this scenario before…
You’ve been waiting for a big move in the market, and it finally happens.
The only problem? You never actually took a position.
For some traders, this is a regular occurrence. They’re always on the sidelines, calculating all the money they could have made.
These traders are so focused on the gains, that they never bothered to put together a real plan for how to trade those big moves. It’s a mistake I see often, especially among Bitcoin and crypto traders…
On October 11, we shared a price chart of Bitcoin. The message was clear: Bitcoin is in an uptrend.
What you should do with that information depends on what kind of trader you are.
Let’s say you’re a day trader. Then you should use that information to stick to buying Bitcoin. After all, the bigger trend is to the upside.
But you shouldn’t just buy blindly at any price. Even in an uptrend, Bitcoin can easily pull back by a considerable amount. So, you’d want to take a closer look at the action and focus on timing the market as best you can.
On the other hand, if you’re a longer-term investor or swing trader, then you’d have to calculate whether it makes sense to buy the market now.
At the time I shared that chart of Bitcoin, it was trading around $28,000. Since then, Bitcoin has traded as high as just over $35,000. That’s over a 25% move.
Take a look…
My analysis suggests we have much higher to go. (I’ll share more on that later this week.)
Long-term traders have to decide if the potential reward of buying the market at the current price is worth the risk of sitting through a substantial pullback.
Bitcoin is currently trading around $34,500. If you believe Bitcoin will exceed its previous all-time high of $69,000, then you’ll double your money if you buy right now.
Of course, you might have to sit through a significant correction first. That’s your risk.
If Bitcoin pulls back to $20,000 before breaking $69,000, then you’ll potentially miss out on buying the cryptocurrency at a lower price.
It can be agonizing trying to figure out just how greedy you can be. Nobody likes leaving lots of money on the table, but nobody likes missing out on a big move either.
Here’s my practical solution…
First, figure out whether you think the market is going to trade higher in the future.
In this case, let’s say your target in Bitcoin is $100,000. That means so long as Bitcoin is trading below $100,000, you’re buying it at a discount.
The next step is to figure out how much of a discount is acceptable for you to start buying the market.
Of course, we all want to buy as low as possible and sell as high as possible. But that’s a hope, not a plan.
A real plan involves defining your minimum acceptable price. For some Bitcoin traders, that could be $40,000. For others, it could be $15,000.
Free Trading Resources
Have you checked out Jeff’s free trading resources on his website? It contains a selection of special reports, training videos, and a full trading glossary to help kickstart your trading career – at zero cost to you. Just click here to check it out.
Just understand that the lower the price you’re willing to accept, the smaller the chance that you actually get that price. And the higher the price you’re willing to accept, the lower your potential reward will be.
For most traders, that means figuring out the sweet spot somewhere in the middle.
Use this concept to help you decide whether Bitcoin is currently trading at an acceptable discount.
One thing is clear whether you’re a day trader or a long-term investor…
You should use pullbacks as potential opportunities to buy into this still-developing uptrend in Bitcoin until it reaches $60,000.
How do you decide where your middle ground lies?
Let us know your thoughts – and any questions you have – at [email protected].