So in all my 3 years in crypto I have been wondering the same thing.
How do people manage to buy low and sell high.
Because I certainly have not been able to do it. We all know how hard it is to time the market and only a handful really succeed in doing that and then more out of luck than skill.
For the last year I have been dollar cost averaging in (in a way) and as such I have made a deposit on the first of every month of 150 CHF (roughly 150 dollar)
Now there is a theory to buying low and selling high that consists of 2 parts
Dollar cost averaging in
This is something that most people know about investing when they are not actively trading. Dollar cost averaging (DCA) is: Buying the same amount at regular intervals.
image from seeking alpha
Since it is very hard to predict when the optimal time is to buy it is proven that this system will net you better results in the long run.
And this is where most people leave it be. But in the end you are just buying the best bottom but not selling the best top you can.
As with bottoms its very hard to predict when to sell so lets assume we do not try to.
So we change the rules:
DCA is buy 150 (or any other amount) every month
- We target our portfolio to grow with 150 per month
- in any month if the value has dropped with 150 or more we BUY the Maximum of 150
- in any month if the value has risen with 150 or more we SELL the maximum of 150
I have made a spreadsheet that tracks this and every few months will keep you posted on how I am doing but from what I have read this seems like a sound way to get rich slowly and I prefer that then to get lucky.
Without realising I am now in month 3 of this system but that is just because BTC is dropping in value over that period (i will still change the data for October of course but it gives an idea of how this works)
This in theory will also allow me to sell positions at certain times so I figured when that time comes I will sell the BTC and put it in the Celsius Network as stablecoins where they can earn additional interest.