Hello again!!! As usual I am here to help out newbies starting out in the world of crypto.
May I greet you in Cryptonian fashion before anything else: Hodliskey! It just means may you prosper more.
For today I am going to tell you on one of the strategies that have made me lots of profits trading cryptos. As you may already know by now that cryptocurrencies are perhaps the most volatile things to trade and so timing of entry is truly key to getting those big profits.
Right now we're experiencing a big pullback and prices are down. But the question really is when is the best time to get in.
In my experience, it's really hard to tell when is the right time to buy on a bear market. The lure of buying at a big discount is truly tempting but then as I tell you I've done this too that I thought that I got in really low but only to find, much to my chagrin, that prices can go down further.
So that means there has to be a perfect timing, right? Much of my trading experience has been about learning when to time buying at the right time or maybe at the lowest possible price.
Before I would just really look at BTC's lead if BTC is picking up then that's when I buy. But then sometimes you thought BTC was pumping and then comes another dump. And further sliding of prices of other coins automatically follow suit.
So how do we really time it right? For me, a good timing is not about getting in at the moment when you bought the coin and then it shoot up a few minutes later or the day after. Of course, that is the most ideal situation to be when you bought and a day or two later you're 100% up or more.
But then don't be fooled with that scenario. When bottom fishing you have to observe the coin you want. You have to check if a substantial amount has already been sold off(I mean dump really), so look at the volume. It wouldn't hurt to look also at the RSI charts to confirm oversold status.
As shown in the chart above, that is the chart for Polkadot. It shows that it is oversold. So for me, that is one confirmation that there has been a lot who sold already.
As I've mentioned observe the coin you want because this is truly key. What I'm on a lookout now is when the selling stops. Sometimes even if RSI is already saying oversold but then you can still observe that selling is still happening.
Another signal for me truly is when the price actually has a big support already. You can confirm support when you see there are ridiculous amounts of buy orders. This means that the buyers have deemed the price low enough that they would welcome it if someone dumps them more coin for the particular price they are willing to buy.
Since I can't find one coin with a legitimate support right now but if you look at the image below with the yellow circle, if that says 100 BTC, then you'll know that that is a sign that the buyers are now brazen enough to dare sellers to sell them at that price. Or demand for BTC is truly very high. But the image though shows that there is a buyer willing to buy 1.97 BTC at $41,723.16219852. For me, that is a flimsy support. Any whale can dump that amount of BTC and push down the price if they market sell even just 2 BTC.
So knowing if there is support would be a big help. But then when I bottom fish, yeah, I look at support and RSI. But then the last indicator I look at is that no one is selling anymore. Even when bitcoin gets pounded more but the coin you're monitoring doesn't want to go down further, meaning people are just holding on to their coin even if other other coins go down more.
This is the point where sellers have been saturated. For me that is the ultimate bottom. I would favor this indicator over support or RSI like if the coin say has been down 80% already from the ATH. Say RSI is neutral and support is weak, meaning not a lot of buy orders, but then no one is truly selling at that level. Holders of the coin would just rather hold on to their coin rather than sell them at a ridiculously very low price.
So then to get in, you have to put a buy order higher a bit than the highest bid you are seeing. I would hit the lowest selling price if it's not too far off from the highest buying order.
But this strategy though is not based on momentum so don't expect gains right away. Remember we are in a bear market so to get the full gain you have to sell when the whales decide to play again or when smart money starts to position themselves. Volume will only pick up when money is infused back into the market. For people with not much capital to trade the market as whales do, getting in at the lowest possible is the only way to pull a fast one on the whales.
This is how I bottom fish. Hodliskey!!!
p.s. Feel free to share your bottom fishing strategies.