04 Jan Enter slowly, and exit slowly
This advice, which you can take or ignore at your own risk, has been repeated ad-infinitum, but seemingly always be on the buying side. It can also be applied on the exit side. Besides, I would have loved for someone to tell me all of this when I first started out investing, so I am putting it out there.
The advice goes as follows and applies to other assets beyond Bitcoin, such as stocks:
- Buy a fixed dollar amount at a fixed time interval. E.g. buy 50$ every other Friday.
This deck elegantly showcases the long-term effects of this strategy. You can automate these recurrent purchases in exchanges such as Coinbase. Setting up this strategy will, hopefully, mute the internal voice that constantly whispers “is this the right price?”, and “how much should I buy?”.
- Sell a fixed dollar amount at a fixed time interval. Once you decide you want out of an investment, you don’t need to sell all at once. This rule is actually rule 1 in disguise: buy back your fiat in fixed amounts at fixed time intervals. This minimizes the risk of selling and have prices meaningfully increase next week.
There are two addendums to these rules that will make you successful when investing:
- A long-term mindset of at least 5 years. Don’t sell on the first +/- 10% change you see. Market rewards discipline. The advice above should be executed over the course of months or ideally years. Besides Satoshi himself, time is your best bud.
- Not your keys, not your Bitcoin. This advice only applies to crypto. Do your homework and understand the risk/benefit trade-off of having your coins in an exchange, versus owning them, or even hiring a service like keys.casa.
Finally, a word of caution – do your own research as in the end, you have your best interest in mind and know your particular circumstances best. Invest at your own risk.