I've talked about it a bit before here on the Hive chain, but you really shouldn't try to catch the falling knife.
(Editor Note: You should still buy the dip, I'm just talking about a strategy to get an average lower buy, either due to it going lower, or due to bounces, while other times ensuring you don't end up missing out, if it doesn't go as low as you think it will.)
It's a phrase commonly used by traders, that trying to buy in at the bottom of the market is like trying to catch a falling knife. I've definitely experienced the stress and turmoil of it during the crash of crypto a while back. It kept going lower and lower, and I kept putting in buys at different points, and it would hit them and go lower. And I'd stress and debate about selling and where to sell, to buy back lower. That experience was stressful as all hell, and it taught me a lot.
It taught me about biting the bullet sometimes to sell and buy lower, and that even if you do sell to buy lower, keep a portion in at different sell points, because it could easily reverse at any moment, even if just for a bit.
I'm still learning that TBH.
You can't put all your trades in one basket. I end most of my trading posts with something like this for a reason. It's a very important lesson. That doesn't mean just trading in different coins, which has saved my ass countless times, but also splitting up buys and sells to different points. You keep a portion of your holdings to sell at different points, NO MATTER WHERE YOU BOUGHT IT AT, and you sell a bit at whatever level you think you should, perhaps even if it's currently going down and you don't know when it will hit your sell points.
When it's steadily going down, sometimes you have to bite the bullet and just sell, even into the buy orders. But you shouldn't sell everything usually, you should keep some at different sell points. Sometimes, even when it seems like there's no hope in sight, it could turn around at an moment.
You have to take a moment, look at the larger chart, determine if you need to just sell some off to put in buys lower, or if you want to hold out for a bit and hope it hits your sells.
It's not so drastic when the market is going up. You get the FOMO, but if you have your money in a more stable coin, you're only missing out a little bit. You can usually get a buy in for another push up later.
When you're talking about a falling market though, if you put everything into a buy at a certain point, there's a very real risk that it can hit it and keep going down. You tried to catch the falling knife and it cut you. Then the FUD sets in and you sell. Then, seemingly just to spite you, it reverses and spikes up, setting in FOMO, and you're just all fucked in every way.
This is a training cycle that every trader probably has to go through. Eventually you get better at managing the FUD and FOMO and objectively determining when and where to buy and sell.
It's incredibly hard to fight that urge to catch the falling knife though. Especially if you've learned trading from various traders.
They tell you "buy in here".
No. Don't. If you think it's going to go there, you look at the support lines, and you set buy orders a bit higher and a bit lower, and a lot lower. Sometimes, you may decide to set in a few buy orders in smaller amounts a lot higher than you think it will go, usually because you think it might bounce a few times before it hits your lower buys, and you need to populate some sell orders higher up.
The end result of this is that sometimes you may see your portfolio down a bit. Sometimes a lot, but hopefully, you get a steady growth, and eventually have your portfolio increase in size several hundred percent.
That claim sound crazy? It's not.
When you simply HODL you can grow your portfolio a few hundred percent, if you're holding the right coins. If you're trading, if you're good enough, you might just start to make enough you can live on. Especially if you don't live in an expensive country.
Good luck, and happy trading.
