How Often Should You Buy And Sell Crypto?

1 yr
LeoFinance
3 Min Read
692 words

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Most cryptocurrency exchanges have no limit on the amount of trades you can make during a day, so you will be able to buy and sell coins as many times as you want during a 24 hour period. Without these limits, you're also given the opportunity to buy and sell cryptocurrency the same day which is basically what people call day trading. Day trading is neither illegal or unethical, but it can be highly risky and most individual investors do not have the wealth, time or the temperament to make money and to sustain the losses that day trading can bring.

Warren Buffett once said that it is wise for investors to be “fearful when others are greedy, and greedy when others are fearful”, and it simply means that prices typically boil over when others are greedy, meaning that paying too high can decimate returns. When others are fearful, it may present a good value buying opportunity though, which is why we are always looking to buy low and sell high.


How Often Should You Buy And Sell Crypto?

How often you should buy and sell crypto depends on your goals and many investors are using a strategy called Dollar Cost Averaging (*DCA). Dollar cost averaging is also called the constant dollar plan, pound-cost averaging, unit cost averaging, incremental trading or the cost average effect.

DCA entails that users allocate a small amount of money on a monthly/weekly or even daily basis to buy one or more cryptocurrencies and is a good strategy for:

  • Beginners who are just trying out the market.

  • People who are unlikely to keep investing in down markets.

As dollar cost averaging refers to the practice of dividing orders into multiple smaller buys of equal amounts instead of going "all-in". The goal is to reduce the overall impact of volatility on the price of the target asset. In general, we want to buy low and sell high regardless of the numbers of orders we make because the end goal is to make profit, but DCA helps us to invest regardless of the price while ignoring the price of each individual purchase as history has shown that Bitcoin grows in value over time.


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Bitcoin Chart


Dollar cost averaging is not always the most profitable way to invest a large sum, but it is alleged to minimize downside risk. DCA effectively leads to more shares being purchased when the price is low and fewer when they are expensive.

*While some financial advisors, such as Suze Orman, claim that DCA reduces exposure to certain forms of financial risk associated with making a single large purchase, others, such as Timothy Middleton, claim DCA is nothing more than a marketing gimmick and not a sound investment strategy.


Minimize Downside Risk

Even though the whole idea of Blockchain is security, independency and decentralization, it doesn't mean that all risks are demolished. Your crypto are better protected than in typical banking system, but many fraudulent schemes have already entered the blockchain environment.

Our goal is to minimize downside risk, so you can- and should use more than one exchange when you are buying and selling coins. This could lead to lower fees, more user-friendly interfaces and a wide variety of payment methods along with advanced account protection.

I would recommend that you trust the market flow, especially as a beginner. Reduce downside risk by choosing the most popular exchanges, trading platforms and coins. If the majority of the people use- or trust them, you should too. When you've gained more experience, you will be competent enough to make more relevant decisions depending on your selling/buying plans.

The last tips I will give you is to make a backup of your private/public keys, and to buy and sell crypto in smaller quantities for starters. Regardless of what route you decide to take, think twice before scaling up and going outside of your own trading-comfort zone.


Related Post:
How Often Can I Buy And Sell Crypto On Coinbase?

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When others are fearful, it may present a good value buying opportunity though, which is why we are always looking to buy low and sell high.

When others are fearful, the majority of the people are also fearful. Most people buy high and sell low most of the time.

Just enough to take a look at the recent events.

The whole market started to panic sell Bitcoin after a single tweet from Elon Musk. This also means that Elon Musk can easily manipulate the market. By the way, he created a good entry point (buy) for himself by pushing down the price.

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This also means that Elon Musk can easily manipulate the market.

That's usually what happens when people blindly follow wealth.

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For me personally max once a day.
If I do sell, I do convert to a stablecoin. If the market goes down that day, I could buy back. If the market goes to the moon, it is returned to fiat !

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Seems like a good approach.

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I would agree with the beginner tips. They should start off somewhere safe even if the gains might not be the best then branch out from there.

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Yeah, I think so too. It can easily spiral out of control if you go big from the get go.

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As far as I can see, the DCA is a powerful but double-edged weapon.

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It sure is, or can be.

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I think in four years, I have only ever seen you sell

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Well, this wasn't about me specifically, or my Hive tokens, but you are definitely not wrong. I've sold a lot, but I have bought some as well during the time I've been here.

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It is very hard to take anyone seriously about investment when they don't walk the walk. This seems more like a "google some terms for reward" kind of post.

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Nothing in this post has anything to do with my own investments. I haven't talked about my own results, which cryptos I invest in or tokens I recommend investing in so I can't see why it would be so hard to take it seriously.

You have somewhat of a point in "google some terms for rewards" though, but that's the thing with optimized content. You create content based upon various keywords to rank higher on search engines which will lead to more organic traffic over time.

So, one could simply say that this type of content isn't as much for the current Hive users as it is for the future ones. And those people are definitely not going to have a problem with taking this type of content seriously due to what they feel- or think about my personal journey on Hive.

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I haven't talked about my own results, which cryptos I invest in or tokens I recommend investing in so I can't see why it would be so hard to take it seriously.

Track-record. Even for those who have no idea who you are, this kind of information is everywhere, because it can just be Googled and taken from more reputable sources.

You have somewhat of a point in "google some terms for rewards" though, but that's the thing with optimized content. You create content based upon various keywords to rank higher on search engines which will lead to more organic traffic over time.

When you are just rehashing the words of others, it is likely that those others will end up getting the traffic.

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Track-record. Even for those who have no idea who you are, this kind of information is everywhere, because it can just be Googled and taken from more reputable sources.

I totally get your point but I doubt any newcomers would look up my personal history based upon a "general post" like this so to speak. I might be wrong though.

When you are just rehashing the words of others, it is likely that those others will end up getting the traffic.

True. But it's also likely that someone, at some point will find the information, and someone might say "Hey, what's Hive/LeoFinance?" and decide to join due to that post. The goal is not to reach people who invest massively, the ultimate goal is to spread awareness.

I appreciate your input though and I'll make sure to think of that in the future.

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I totally get your point but I doubt any newcomers would look up my personal history based upon a "general post" like this so to speak. I might be wrong though.

They might also check your wallet and see the gambling, which undermines whatever investment content value you might have.

In my opinion, the value of a decentralized content pool is to get the opinions of individuals that can't be found elsewhere - instead of reposting the content of web 2.0 platforms for reward.

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They might also check your wallet and see the gambling, which undermines whatever investment content value you might have.

Well, I think that both gambling and trading involves risks and even though it's not the same thing at all, I can't really see why that would undermine the information within this type of post. Personally, I could see why it would matter in case I talked specifically about a certain token or about my own results. Like I said previously though, I might be wrong. People might do exactly what you've said, they might check my entire history and whatever, long before they know me.

I don't think it's likely to happen though.

In my opinion, the value of a decentralized content pool is to get the opinions of individuals that can't be found elsewhere - instead of reposting the content of web 2.0 platforms for reward.

I agree with that to some extent, but I think it's wise to utilize the power and potential of web 2.0, and to bring awareness towards and about web 3.0 by doing that. Optimized content, keyword analyzing and producing content that people actually look for on search engines are in my opinion one of the best- and most underrated methods to bring traffic.

It is also something we haven't seen much of throughout the history of Hive (Steem), which is why I and a handful of other users have started to focus more on optimized content. It's basically a test-drive, or something we do because we believe it can- and will benefit us all in the long haul.

However, you've made some good points and I appreciate your input like I stated previously. I'll keep that in mind in the future.

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Well, I think that both gambling and trading involves risks and even though it's not the same thing at all, I can't really see why that would undermine the information within this type of post.

It is about skin in the game.

but I think it's wise to utilize the power and potential of web 2.0, and to bring awareness towards and about web 3.0 by doing that. Optimized content, keyword analyzing and producing content that people actually look for on search engines are in my opinion one of the best- and most underrated methods to bring traffic.

This is possible without spinning the content of other people. How about using these techniques on something original instead?

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Knowing that roughly 25% of all content is duplicated, (which is not the same as blatant copy/paste methods), it can make things a bit difficult sometimes in terms of SEO, but sure. I'll keep that in mind and continue to produce original content instead.

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Taraz, you should have said the motto:

"We power up, so that you don't have to!" LOL! 😂

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:D

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1 yr (edited)

I invested weekly from mid-2018 until the black swam event in March 2020 and have been sitting on them since. I'll start selling when BTC is over $100k weather that be this year are 5.

SSUK

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