Insane volatility is among us…I’m sure you know what I’m talking about. One day you own an altcoin that goes up 50% and the next week plummets down. The fate of engaging in altcoin trading is not easy by any measure.
This is due to liquidity and the amount of money being traded into these coins. More volume equals more liquidity. That’s the law of mathematics.
A market node is based on sellers being able to get out and buyers being able to get in. They find equilibrium and price tends to hover around it until demands grows over time. These forces have had a role since the beginning of markets but only few people can resist the urge of emotion when the time comes around.
What I mean is that people will sell when they see price moving down and buy when it is going up significantly. The way our brains are wired makes this a normal act of human nature. The only way to beat it is to program ourselves to think differently when the time comes around.
In the beginning of my trading career, I didn’t have this key skill. But over time I learned it and now I live by it. The reason is based on ‘probability’. If an asset falls 10% what is the probability that it falls another 10%? On the flip side, after an asset rises 10% what is the probability it goes up another 10%.
In each of the above two questions, you will notice that you have less risk on the table after certain moves of distribution happen. Typically, the furthest I have seen most assets go is around 50-60% lower. In most cases, you will just see corrections which are between the 10-20% range. This is exactly the reason to buy after something goes down 10-15%.
Now keep in mind that you should understand the product you buy. NEVER trade something you have no clue about. Always find things with value and follow these simple rules. I guarantee you will make profit nearly 90% of the time.