@JJG, sorry if I never mention it before, but buying when price is decreasing and selling when price is increasing is pretty much disaster in the making for anything else, apart from bitcoin, maybe, and even then, I doubt that it is optimal for bitcoin, spreadsheets non-withstanding. Maybe, if you are not selling UNTIL it reaches the prior high, but even then...
You might be correct that there are better ways to structure your BTC investment strategy and your ways of dealing with potential downside volatility... both objectively and subjectively. There surely is some amount of personal tailoring that goes into any consideration, including the goals that you might have in terms of are you attempting to stack dollars or to stack BTC and what levels of allocation in each are comfortable for you to maintain and/or to attempt to trade upon.
I had never even proclaimed to be a trader at all.
When I first started my system, I was attempting to offset some of my own psychological and financial insecurity in terms of possible downside volatility, and so the profit making and/or profit taking was merely a secondary effect of the first goal.
Largely my goals are not so much about profits but moreso insurance with profits as a kind of secondary incidental outcome.
So in that regard, I have never really proclaimed to have created any kind of perfect solution or one that would necessarily be suitable exactly for someone else who has different goals, but through my participation in this forum, I largely have been trying to discuss what I do and to share what I do in order that I can hopefully learn from such sharing and feedback that I might receive from time to time.
There surely may be ways to tailor to your own circumstances in such a way that is more optimal than what I do, and I do attempt to even tweak my system a bit from time to time, too.
Largely what I have been attempting to accomplish is a kind of hybrid of dollar cost average investing that largely causes little to no need to attempt to predict the BTC price at all, so long as overall, the BTC price ultimately goes up from the point in which I had been buying (or at least overall, if I were to ever decide to get out of BTC, I would be able to do so at a profit because I had continued to lower my average cost per BTC).
So, built into my system has been a purposeful desire to NOT predict the BTC price at all.. merely to buy when the BTC price goes down and to sell when the BTC price goes up. The spread between buys and sells can be increased or lessened along the way and the increments between each buy and between each sell can be increased or lessened too. Surely, over the years, I have tweaked these, and sometimes, i will tweak them based on recent price movements, too.. or if there seems to be something that is a bit off about the placements of my buy/sell locations... or changing the amounts, too.
When I first got into BTC in late 2013, I did not even proclaim to know what system I was going to employ until I started employing it and practicing it for a considerable amount of time. So, in late 2013, when I started, I did not really sell any BTC at all. I merely bought on a regular basis in a kind of front loading DCAing way. It was a kind of front loading DCA kind of way because I had a decent amount of value that I wanted to initially injecting into BTC, and after the initial value was injected into BTC, then I transitioned into a bit more normal kind of a DCA. It took me nearly a year to inject value into BTC and to get to some kind of comfortable level of BTC allocation... even though for a while I was not really completely comfortable, even with the allocation that I had made or was making because it continued to be in the red, in terms of valuation.
I already had been aware of the Warren Buffet ideas of selling on the way down and buying on the way up... but for nearly two years, I did not sell any BTC. Any time that I sold any amount of BTC, I would replace the quantity of BTC (and even a bit more) within a few days - maybe a week at most, if I was trying to play around a bit to try to buy that BTC quantity at a lower price.. Sometimes, after I had sold some BTC, I would soon give up and just buy it back ASAP because I was mostly in a NOT selling mode for nearly two years of my first getting into BTC.
So, at first in mid-2015, when I first started creating my plan to sell some BTC on the way up (which seemed like what I was supposed to do, in accordance with the warren buffet principles), it took me a couple of months to create such plans and to figure out how I was going to execute such plans exactly.. because I still had a mindset that was leaning more heavily in the BTC accumulation mode, and so in some kind of sense, I did not really want to get rid of much if any of the BTC that I had been accumulating.
Furthermore, in mid-2015, overall, my BTC portfolio was in the red.. like 50%-ish in the red, so in some sense in mid-2015, I had to figure out a way to divide my BTC into portions that were NOT in the red, and ONLY to sell from the portion of BTC that was in profits, in order that I was not selling too much BTC - or at least not selling beyond a level with which I was psychologically and financially comfortable.
In mid-2015, I ended up dividing my BTC into three conceptual portions (and some of those overlapped too), and my first BTC sales were ONLY coming from a small portion of the most profitable of those BTC.. so the BTC portion that had average costs of less than $250 were within the authorization to sell small portions at a profit, and so I could only sell a very small percentage of that particular portion of my BTC, which caused my sales in the supra $250 range to be approaching real bare minimums. Actually, I had a way of trading at that point that did not cause any kinds of fees (it was before coinbase pro), but it was a bit of a manual method, too... as I practiced, and as the BTC price went up, I authorized myself to employ greater amounts of my BTC, and surely at some point, when the BTC price got over $500, my whole BTC stash got into the "in profits" zone, so the formula that I authorized myself to use began to use my whole BTC stash as the reference points for the formula that I had created.
In essence, what I had done in 2014 and even into 2015 was that I had invested into BTC that was a bit higher than my authorized allocation amount, so instead of investing 10% of my quasi-liquid investment assets into BTC, I had ended investing somewhere in the territory of 13% into BTC, and with such a higher level of allocation into BTC (aka overallocation into BTC), it caused me to become comfortable in terms of shaving off some of that overallocation as the BTC price went up.. and surely, over the following couple of years, the BTC price went up way more than my various formulas could even keep up...so there were needs to tweak those practices, and tweak and tweak, but still I attempted to stay with some of the original presumptions, learning along the way and even learning more about myself along the way.
Actually, there was a bit of an embarrassing point in late 2015, and sure it is kind of funny now, but at the time, I kind of kicked myself in the ass for doing it.. like I was such a fucking stupid and compulsive ass to get caught up in emotion as a lot of us may tend to do when we are still learning about how to control our emotions in terms of dealing with the price movements of our investments.
Surely, I am no exception to allowing BTC price movements cause my emotions to screw me up.
Anyhow my plan had authorized me to sell BTC on the way up, and in late October 2015, the BTC price pretty much shot up from $250 to $504 within a bit more than two weeks, and I believe that I had just gotten started with my plan to sell on the way up, so the first week or so, the BTC price was moving slowly UP, and all of a sudden within a few days it broke above $300 and got up to $504, which caused me to cancel all of my sells on the way up, and to instead buy at around $500.
Using about 2/3 of all of the money that I had in my bank account, I bought at around $500.. which caused me to have no money to buy back for when the BTC price dropped back down to $300 and largely stayed in the $400s for the next 6 months. Sure, I was not completely locked out of buying BTC during that time, because I did have some more cash come in during the next 6 months, but still, after the BTC price dropped from $500 to $300, I knew that I had fucked up my whole system of what I was supposed to do by discontinuing my BTC sells between $300 and $500 and buying at $500 rather than selling and getting stuck with almost no money for 6 months.
Actually, come to think of it, I have never claimed my system was the most profitable or anything like that because in some sense I had been attempting to largely give myself some ability to profit from volatility and to give myself some peace of mind to be able to take advantage of the BTC price going down.
I purposefully have not been selling BIG but instead emphasizing HODLing, and merely shaving off small amounts on the way up, in order that I don't feel so bad when the BTC price goes shooting down.. NOT that I am going to make any kind of killing when the BTC price goes down because the way that I have structured the whole matter is to value my wealth in the HODLing of BTC.
Sure in the long run, my dollar wealth went way the fuck up mostly from holding BTC, but I had not been structuring any of the matter in terms of stacking dollars because I have had plenty of other assets and investments that are already more directly tied to the dollar than bitcoin.
ALL markets consensus is you buy when stuff goes up in price (not at once, of course) and you sell when price starts going down (not the bottom, of course).
This way you get more winners and dispose of losers.
Over the years, I have heard of those kinds of theories, and they surely seem to NOT be for me because I think that my goal has been to largely just to HODL onto BTC, not sell too many of them, and sure I lose value when the BTC price goes shooting down 80% or so, but I am largely making a fundamental bet in BTC in the long run, too... and that fundamental bet remains longer term rather than getting caught up on short term price movements or attempts to profit from them in any kind of meaningful way.
Accordingly, like I mentioned above, I have not been trying to stack dollars, even though in the longer run, it remains quite likely that my BTC are going to be more valuable in terms of dollars (just like they have become in the past) - especially looking at going through a couple of BTC cycles... and if at that point, there are enough BTC in my stash, then I should not be bothered if BTC prices are $50k or $250k, if my average cost per BTC is less than $1k and my preferred minimum sell point is $5k...
I figure that I can just sell a bit here and there, as I need them, and not really be bothered about the actual BTC price.
Personally, I already am in that kind of a position in terms of my preference NOT to sell any BTC if the price is below $5k, but I am more than financially and psychologically comfortable to liquidate small amounts of BTC on a regular basis as long as the price is above $5k.
So, I am not really sure if I need to employ MOAR better strategies than I had already been employing.. ... and sure, I really hope that BTC does not go below $5k because then I won't really feel as comfortable selling and then I might feel that I need to go back into either a buying mode or merely a HODL mode.
Who knows for sure, what is going to happen?
You likely realize that in recent times, I have been focusing on the 200 Week moving average, and observing that it is currently a bit above $6,700, so there surely comes some level of assurance and confidence that the 200 week moving average keeps moving up and it is getting considerably above my preferred minimum sell threshold of $5k.
Right now, my buy as the BTC price goes down and sell as the BTC price goes up seems to be more of a maintenance strategy rather than any attempt to either time the market or to maximize profits... even though at any point, I could decide to shave off a BIG chunk of my BTC, such as shaving off 10% or more...
Currently, my routine maintenance sells merely shaves off less than
1% .5% for every 10% rise in BTC prices (which would also be a bit less than 10% for every 100% that the price goes up), but frequently my system buys a bit of that back too in such a way that my system is skewed more towards buying BTC rather than selling BTC .. and as the BTC price goes up, maybe above previous ATH (such as above $25k), then I might well decide to tweak my system in such a way that skews such system a bit more in the direction of selling more BTC and buying less with it (but so far and in recent times, I have NOT really been tweaking my system in any kind of BIG way.. My system has largely been serving me in ways that have continued to be comfortable for me - both financially and psychologically)..
Edit:**Note, after submitting the above post, I went back and calculated how much of the portion of my BTC that I am selling for the next about 10% that the BTC price rises between about $11,200 and $12,500, and it appears that I am only selling .57% of my holdings for that about 10% rise. I had done some random checks through the years, at various points, and I am pretty sure that in 2016 and 2017 when BTC prices went from about $600 to about $4k, I was selling close to 1% of my BTC holdings for every 10% that the BTC price went up (and maybe even slightly more than 1%), and perhaps I was over selling a bit and causing me some uncomfortableness, because I also seemed to have had a tendency to over buy on dips, too... so that may have led to some overall internal uncomfortableness with my own feeling of well-being that I knew caused my BTC selling practices to gravitate towards below 1% for every 10% rise in BTC prices - however, until I just did this spot check, I had not realized that my BTC sell amount had gravitated all the way down to about .57% for this next 10%-ish..
On reflection of this kind of spot check surprise (regarding what I thought that I was doing versus what I am actually doing), based on my own cashflow and other personal factors including my views on where I believe bitcoin is at and where I believe bitcoin might be going, I am thinking that I don't really feel inclined to readjust such practices.. at least NOT currently.
I know that sometimes the amount that i sell and the amount that I buy is a bit of a ballpark estimating based on some numbers that feel more or less comfortable to me based on how I feel at the time, including how bullish or bearish I might be feeling about BTC in the short to medium term. I still try to structure them, currently, in a kind of emotional neutral way.. as much as I can, even though I do proclaim to be human, too.
Maybe I will increase the amount of BTC that I am selling later down the road, perhaps? Let's see what happens and maybe how I feel? And, sure if the BTC price goes above $25k or maybe that might inspire me to up my BTC sales a wee bit... I am not sure.
Will keep this whole matter in the back of mind, and maybe reconsider the matter at a later date after seeing how the BTC price plays out in the coming month to 18 months.
Poll
