Disclaimer: This guide is intended as a loose guide for education and entertainment purposes only. This doc is not and should not be considered medical or financial advice of any kind. Please use your doctor/financial advisor for that.
Timing the Dip
Just don’t do it. There’s no point and you’ll only cause yourself more of a headache. Sure you can buy books and read online about charts and patterns etc. Follow twitter fanbois who think they can draw lines on charts. And in the end, that’s all it is, a bunch of lines on a chart and looking for patterns, sometimes where they don’t exist. And that latter point is the problem.
Sometimes, the token you’re looking at has such low volume, TA or trend analysis doesn’t work. You can drive yourself mad looking for a signal that doesn’t exist. But let’s say you think you timed the bottom, now what happens in your head. Well, you think you bought the bottom, but you never really do. Why b/c someone will always buy it cheaper than you, and even if the price only goes down by a few percentages it will eat you inside that you miss calculated. Now that flywheel starts all over again and your in a worse spot, b/c now you’re doubting your original analysis. But oh, what if it goes up, then everything’s perfect right?
Wrong again! Why, because you’ll fixate over and over again why you didn’t time a lower bottom to squeeze out a few more percentage gains or bang your head because you didn’t buy enough. And then what happens when we hit a red day and all the charts are read and your gain is back at break even? Now you bang your head b/c you wish you would have bought it lower to give you a bit more buffer. “Arg, I should have bought this last week when it was x% less!”
This is a self fulfilling prophesy that will never end. And to add to that, what’s worse is that you’ll be missing out on other possible opportunities or cool projects you could have invested in for the long run.
Many will say “just DCA.” Well if you have price anxiety or are trying to find patterns in the chart, you will lead yourself to sometimes buying more, just because it dipped below your original investment. So DCA could work, but I don’t think it’s ideal for someone investing who already has mental health challenges. So what’s the solve? Not sure there’s one answer because everyone’s trigger is different. Everyone has something that sets them off, sends them down a spiral, or leads them back to the start. But maybe it’s setting smart price triggers or playing a wider field w/ ladder orders.
Only time will tell, and that’s part of the reason I wrote this, maybe others have ideas too?!