Bitcoin up again. What NOT to do?

Hi and welcome to this new video. The topic today is. Well, you can see from the chart bitcoin. And why do I want to speak about bitcoin? Because probably you know that in the last days the price went up a lot. Really a lot. So I want to analyze with you the situation and then we can discuss about what is the best thing to do. Now let's start to have a look at the chart. And. Just to show you better what is going on, I use these three lines that are the moving averages. Okay, so we have the 50 and 150 moving average, daily moving average. And the 50 is this blue line and the green one is the 150. And then we have this red line that is the 20 exponential moving average. Why I'm using them. Well, if you have not watched my video on how to use moving averages to identify a trend, you can have a look. But the main idea is that when the blue line is above the green line and both are sloping up or flat, this could be an indication of uptrend in the medium term. And when the price is above the red line, this is an indication of a short term uptrend. Okay. And this is useful to understand better what we are supposed to do. So let's have a look first at this. You probably remember what happened at the end of 2018. There was this huge increasing price till this level, it is around 20,000 and then the price drop. And if you look here, well, here we were in a clear uptrend, of course, but notice what happened. We were quite far from the blue line. So when the price start to quickly move far from the blue line is an indication that there may be a correction. Okay. And then notice that after that the price started to make lower high and lower low. And then it went down and down. Because usually in an uptrend you have higher highs and higher lows. Like here you see, you have this low and then high and low, high, low, high. And in a downtrend is the opposite. You have lower high and lower lows. Now what happened is that the price went down. And you can see here at this point the 50, the blue line was below the 150. And at this point both were flat or sloping down. So at this point here, according to the technique that I just shared, we were in a downtrend. And starting from this point, the downtrend, the downtrend, where like was going on and on. Deal here. Okay, here we have again the blue line going above the green line and around here, when the green line the 150 moving average started to become flat again. And the price is also above the red line. Here is a new uptrend. So why I'm saying all this because my strategy for cryptocurrency actually is not trading. Why is not trading? I mean the volatility is too high. To me, if you look here, if you want to trade with stop loss, how can you do that? If. Let's check here. This is daily daily candle. In two days you have a drop of what? 25, 26%. How can you possibly trade with stop loss if. If you have this kind of volatility? So you may do it if you're really into short term, maybe you are looking at 30 minutes candles. So if you do it as day trading. But to me this is not compatible with my trading style where I use daily candles. So what do I do with cryptocurrencies? Usually I put a small amount of my capital around 5% and I use a DCA approach, a kind of DCA approach. So if you don't know, DCA means that you buy at regular time, like every month you put the same amount of money. But I don't do it every month, I only do it if there is an uptrend. So for example, here I would have done it. And then here of course, if you see the price is too extended, you may stop it. But then at this point, from this point here, I stop to use the DCA approach and you can start to use it again here. Why? Because in a downtrend low can become lower. And that's actually what happened. If you look at here, from 10,000, we went all the way down to almost 3,000. Okay. Now you may say okay, but the idea of DCA is that you buy more when you are in a downtrend. And you are totally right. Problem is that bitcoin is not an asset that I trust so much to go up in the long term. What do I mean? If I have to do that with an ETF like the S&P 500 spy, I will do it because I know that in the long term this will go up. But bitcoin may even go to zero. Okay, so first I am just willing to risk a small amount of money, 5%. But second of all, I also want to be more risk averse with my DCA approach. I also use DCA Telling the Truth for Singapore Real Estate Investment Trust. And in that case I may buy even if I am in a downtrend if I see the price hitting a strong support and then bouncing up. But why I don't do it here? Because the volatility is too high. And also as I say, the risk of this thing will go to zero exists. So since it's a more risky asset, I will just be extra safe in my approach. So again, what I will do, every month I put some amount of money, very little if there is opportunity to buy. So I am in a clear uptrend and the price is not overextended. Or I can buy using this DCA approach. If I am in a downtrend, I just stop doing that. Okay. And I wait till the uptrend is confirmed again. Now you may ask, would you buy now? And I tell you no, because again, here the price seems to be quite overextended from the 50 moving average. And if you look at the Ethereum instead, these are the two cryptos that basically I buy Ethereum. The chart is similar, but here is not as far as Bitcoin. Okay, so here for example, the ideal time to buy would have been of course around here, you know, again, the 50 above the 150 and the price above the red line. So here would have been again the moment to start accumulating. Here is a little far, but not overextended. If you compare with Bitcoin is much more healthy, I would say. And if you also compare with what happened in the past, you can see here the type of distance between the 50 and the price. And the situation now is not the same. You can see the magnitude of this distance from here and here. Okay, now I want to mention something that is very important. Be careful because in these kind of situations like the bitcoin is very easy to be like to have the really the, the strong feeling that we are missing out on opportunity. Sometimes this is called fomo, Fear of missing out. What does it mean? You see the prices going up a lot, A lot. And then you are feeling bad. Why? Because you are feeling that you're missing the opportunity of making money. And so what do you do? You buy as well. And what is going to happen? Well, if you look at again December last year, what happened is that many people maybe enter here, here they see price going up 13, 14, they know they should not buy because it's overextended. And they keep telling themselves, yeah, the price is going to go down, but then it keep going up. And then 16, 17, 18, and they say, my God is not stopping, I should enter. And then you enter and then poof is going down. And why is this happening? Because it's basically the way your mindset work. Okay, this is again the point that I made in other videos where I say that we know technically what we should do and what we should not do, but often we fail to follow the rules. Why? Because of our emotions. And in one of my last video I shared this point. It was related to trading. But we can take the same message here that to be successful, we need to be able to manage emotions in trading. I was referring to the situation where you experience a set of losses because it will happen sooner or later and if you're not able to manage your emotions, you will start to change the system and do adjustment and. And that's not what you should do. So it's very easy on the paper to say, yeah, I just follow the system. But most of the time the real objective of people becomes I want to make, not make money, but I want to be right more than being wrong. These two things are not going the same direction and I just want to share something else about this topic. I started, as you probably know, a blog and also an Instagram account. So what is the idea of that Instagram account? And I will put the link in the description is this. I say, okay, I want to put quotes from famous traders and investors. And what is the reason of that? I say because you may attend a course, you may read a book, you may study something that makes sense, but maybe after a few weeks or months, you will forget about that. Here what I'm doing is that every day, except weekends, I take a quote from some famous investor or trader. You can see here we have Warren Buffett, for example, and I put the quote here. And the objective is that if you keep seeing this kind of wisdom, if you keep seeing quotes from people that really succeeded in the market, then probably by being exposed day after day after day, you will start to adopt the same kind of mindset. It will become your default mindset. So eventually, when you're going to make a mistake by being exposed to all these kind of quotes, something inside you may tell you, oh, maybe I should not do that. Because you keep looking at all these quotes and eventually you will somehow absorb the key points. So this is my Instagram account. And then I also, I also created this blog. Again, the link in the description. And I have articles about many things. It can be real estate, investment trust in Singapore, stocks in the US market. But recently I started to write a lot about what I share right now. The mindset. Okay, so how, which kind of techniques you may use to not to fall in these traps, for example, the fear of missing out and being better in managing your emotions. And you can subscribe to both of them. Now you see here the main objective is to be exposed constantly because I found that many times the big issue is when we see something or we listen to something or we read something and then we never practice and then we forget. So I hope that you find these resources useful and you can comment if you have questions here and also here. And of course you can also comment on my videos on the YouTube channel. I'm happy to reply. So to summarize, I would say Bitcoin now is starting again uptrend but is a little too overextended. I will wait because you see here there is this level around 12,000 that was a previous resistance, now is testing it. If the price is staying around here probably the 50 moving average will get close to the price and then maybe it's time to buy a little more. But again as I say for crypto I don't really put a lot of money because to me is a risky risk asset. And with that I would like to conclude. Thank you for watching the video, subscribe if you if you want to be updated when I upload other videos and as usual see you next time.