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Why hodling makes no sense when prices fall.


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Hi guys,

I’ve been into crypto and trading now for about a month, so still a complete rookie. I’ve been lurking on this forum for a couple of weeks and have been learning a lot from you guys, so thank you for that.

There’s one thing though which I can’t seem to understand. I see a lot of people say: HODL, don’t sell, it’s not a loss untill you sell it for a loss, price drops are just an opportunity to accumulate more etc. The thing is, I just don’t see the logic behind hodling in a market where the prices are dropping due to upcming events (uncertainty due to the possible changes to Bitcoins transaction capacity), which almost certainly causes prices to fall even further. Please explain to me why one would hodl in the following scenario:  

Due to upcoming events and uncertainty in the market, the prices are falling.

Suppose I bought XRP for €500 euro a few weeks ago when the price was €0,21. This gave me (500/0.21=) 2380 xrp.

If I sell this right now for the current price of €0.13, I will get (0.13*2380=) €309.40 euro. That’s a loss of (€500 euro – €309.40) = €190.60.

Now let’s say the price drops further down to € 0.10, and at this point I buy in again for € 309,40. This will give me (309.40/0.10=) 3090 xrp, which is (3090-2380=) 710 xrp more than the 2380xrp I originally got for my €500 euro.

So, in a scenario where it’s quite certain prices will fall, why wouldn’t you want to sell for a loss, only to make more profit further down the road?        

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43 minutes ago, Panda said:

So, in a scenario where it’s quite certain

No one is "certain".... and there are cases where you think it will fall more, but it is the lowest point (and you sell at the lowest point). Chances are if people can decide to buy at ATH, they can also sell at the lowest point of the crash. So if timing the market is not your thing, HODL.

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In theory, that is the perfect idea. In reality, the execution is very difficult. If you can accurately time the highs and lows of the market then you will make a lot of money, the problem is that very very few can do this reliably over and over. Human behavior, and therefore market behavior, is unpredictable and foolish at times.

Also, once the crypto world becomes more regulated. You will need to pay income tax and capital gains taxes (at least in the US) every time you sell XRP and realize a profit.

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It makes sense to sell at 0.13 and buy back at 0.1 provided you can predict the market correctly. No one knows how low will the BTC price go. Will 1800 a strong support or it will drop straight down to 1400. It maybe the start of a reversal when everyone thinks BTC price will definitely continue to drop.

Go in at the point u can convince urself to enter. Difficult to get the lowest price but it's very possible for us to catch a low price in XRP's long term trend.

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Guest SowXRP

@Panda If you study the price fluctuations of Bitcoin, for example, you will see that it too at some point was at like 10 cents.  I'm talking 2009.  This is why you hold.  Short-term losses are just that - short-term.  The way I see it, when you invest in a strong asset like XRP, you should look at the big picture and let it mature and give it time.  Thank you for asking this question, though.  As someone who is still learning about cryptos, I felt the same way in the beginning.  This will help others too understand that although the crypto scene is very volatile, the potential is enormous long term.  

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We can surely make huge profits if we can surely buy at the lowest and sell at the highest. But it's so difficult, like precisely predicting the tides of the ocean.

What we can do slightly better is to buy and sleep (or buy and forget) without worrying about up and down of tides that keep changing every minute. If what you are investing in has some value in the real life, it is likely to be appreciated in a long run.

 

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Just now, newman said:

When people say long term what is that typically? 6months 2 years 5 years ???

5 years. In 1989 it took a complex system to write and send an email. It also took 3 days for that email to arrive. The internet wasnt adopted yet and in a quick 25 years, a person can now complete that process with the swipe of their finger on their phone..that is considered exponential growth. Now take that same process and think of virtual currency, where it started and where it is today, will it take 25 years? No, because the internet is already here and used, its just missing its third part..it has things, it has information/data..now it just needs value...Money completes the triangle and with the internet creates expontential growth. The ILP is positioning itself to become the hub/the internet of money..the protocol that allows all blockchains, networks, ledgers (private or public) to connect..the Internet of Value is born...5 years and then the real boom hits

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7 hours ago, Panda said:

Thanks for the responses, makes a lot more sense now. 
Selling at exactly the wrong moment would be painfull indeed.

if you are in XRP for 10-30% gains, i think you are in the wrong crypto. XRP is a longer play.Why? because one, or a few need to source XRP. once that happens, the price could go wild. if you sold foe a quick 30% gain, you have to live with those gains in case it goes up 10x. day traders will always say, if you sell and it flies the next day, live with your decision. what happens though is people end up chasing the price. Hodl or add. just my opinion.

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8 hours ago, Panda said:

Thanks for the responses, makes a lot more sense now. 
Selling at exactly the wrong moment would be painfull indeed.

if you would have sold at .13 and its now .14700 you woulve already lost. if you did dhis and it was a hot reversal, you would be completely out.

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Reminds me of this that I found a few weeks ago:

"HIS PALMS ARE SWEATY
HANDS WEAK, BAGS ARE HEAVY
MOUSING OVER "SELL ORDER" ALREADY
GAINS ARE PETTY
HE'S NERVOUS
POLO TRADING ON MARGIN CREDDY TO SHORT COINS
BUT HE KEEPS ON FORGETTING
HOW MUCH HE'S DOWN
THE WHOLE VOLUME'S DOUBLED NOW
HE TRIES TO CLOSE HIS SHORTS BUT THE ORDERS WON'T GO OUT
IT'S MOONING NOW
EVERYBODY'S BUYING HOW
HE CAN'T TRADE OUT
MARGIN CALLED, OVER, BLAOW!"

 

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