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Why hodling makes no sense when prices fall.


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I have made quite a lot day trading and I put it in XRP, but was busy at my daughter's wedding as it first began to plummet. Xrp has fallen in value below my entry point and I continue to hold as an investor.  I have seen XRP and other cryptocurrencies take off rapidly and there is no way to get back in. The other problem involves getting out thinking it will go down more so that you can buy back in. But instead of going down it takes off and then you go back in higher losing lots of money and coin. Entry and exit in trading takes years of experience in crypto trading. Stock traders lose in this game because TA does not work.  The best way to make profits now is to hold. 

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4 hours ago, newman said:

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

 

4 hours ago, TB73 said:

5 years.

Five years also from the tax point of view for individual investors in Japan. Though it is not yet clear which category of income tax rules will be applied to the capital gain of crypto currencies, it is probable that the highest tax rate of about 56% ([the highest income tax of 45% + about 1% resurrection tax] depending on the amount of sold price +10% resident tax) is applied to the short term possession of less than 5 years, while this [45%+about 1%] part is reduced to almost half for the long term possession of 5 yrs or more unless transactions are frequently made as a business.

This prospect heavily discourages investors who bought sufficiently low from frequent buy and sell at least between cryptos and fiats but theoretically between cryptos, too, even without cashing out in fiats, which may accumulate the even larger amount of tax to be paid at the end of every year than the actual profit made in total. If taken positively, there is a very strong incentive to HODL LONG (5 years or more) from a tax point of view (depending on the prospect of applicable rules), and this may fit better to owners of XRP.

 

Edited by LaBelleSaison
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20 minutes ago, LaBelleSaison said:

 

Five years also from the tax point of view for individual investors in Japan. Though it is not yet clear which category of income tax rules will be applied to the capital gain of crypto currencies, it is probable that the highest tax rate of about 56% ([the highest income tax of 45% + about 1% resurrection tax] depending on the amount of sold price +10% resident tax) is applied to the short term possession of less than 5 years, while this [45%+about 1%] part is reduced to almost half for the long term possession of 5 yrs or more unless transactions are frequently made as a business.

This prospect heavily discourages investors who bought sufficiently low from frequent buy and sell at least between cryptos and fiats but theoretically between cryptos, too, even without cashing out in fiats, which may accumulate the even larger amount of tax to be paid at the end of every year than the actual profit made in total. If taken positively, there is a very strong incentive to HODL LONG (5 years or more) from a tax point of view (depending on the prospect of applicable rules), and this may fit better to owners of XRP.

 

its one year for the USA.

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Some random thoughts in no particular order....

The quickest path from speculator to  long term investor is a crash.

HODL'ing in the face of a TA nightmare (for XRP it began to shape up around may 8th) is not wise...minimizing risk is maximizing profit.  I was the "idiot" who took out a heroic short the day after it peaked, I was underwater for a few hours but my "tea leaves" told me crash and correction was highly likely.

I notice everyone who doesn't believe in TA uses hypothetical traders who are stupid.....why don't we compare ourselves to the top hedge fund guys? Answer, because then we'd have to admit an uncomfortable truth...and this is it.

People are predictable, especially when fear and greed are in play.  HODL'ing only makes sense if news in the near term is expected...if it is not, reposition.  The reason people think that the market will jump the moment they exit, is because people hit their panic point en masse.  Only a handful are outside the bell curve with respect to emotional management.  We are not the individual snow flakes we imagine....for the most part, especially in financially risky situations, it's almost as if our OODA loop is hive driven.  Very few people can actually buy when people are selling and sell when people are buying.  It takes discipline.

If a person can not or will not learn to understand the technical indicators, then yes, things will be mysterious.

If an individual will bother to educate themselves, then a significant amount of confusion can be removed, and in so doing, an advantage can be found.

Ask yourself how often "long term investor" is gettin' thrown around right now.....

 

Investor-psychology-cycle-102313-2.png

Edited by Texaschris
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On 19.7.2017 at 5:30 PM, Texaschris said:

comfortable truth...and this is it

I'm a bit sceptical with regards to your knowledge of the HF industry and possible returns there.

You have yet to show me a HF which consistently (25 years plus back from today) makes 30%+ a year with a solid risk adjusted performance profile, say a sortino ratio of 2.0 upwards and Return/Max DD above 2.0, too.

Mind you, HFs are leveraged, Buffets performance is 20% p.a. for 50 years now. And he has zero leverage. And a HF, leveraged 1:4 or 1:10 can't do a lousy 50% more than that, yet having access to capital on credit at a rate of 400% more than Buffet? Somthing wrong here.

How about.... HFs suck? They suck dry the investor. 2-20 model for a bunch of lunatic macro-relative-value-quant-merger-arbitrage-special-situation-distressed-credit-macro-trading-cercle-jerk-performance-fee-without-performance-gangsters? Yeah... right...

Renaissance Medaillon Fund does not count. They are exceptional, and... you can't get in.

As for TA being BS:

https://www.amazon.de/gp/aw/d/0470008741/ref=mp_s_a_1_1?__mk_de_DE=ÅMÅZÕÑ&qid=1500709333&sr=8-1&pi=AC_SX236_SY340_FMwebp_QL65&keywords=evidence+based+technical+analysis

What makes a good trader is a portfolio of OKish trading systems, heavily backtested on high quality historical data (talking about 20$ for one month of EURUSD data for example. One needs 10yrs+, you make the math on say 10 FX pairs.).

The magic is in the portfolio, not in the single system. As for the one or the other outlier, Tudor style, well, they are outliers. But that's it. The rest of so called traders are nothing but gamblers. Either you have a statistical edge, or you are extraordinarily talented (one most likely isn't), or you're a gambler.

To answer OPs question. Do this good old trick here: periodically you buy xrp for a fixed amount of fiat. Whatever you get for it is what you get. When prices are low you get a lot for your 500$, when they are high, you buy less. Makes for a good average price. 

It's not timing the market. It's time in the market.

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My opinion is... It really depends what you're trading. It depends how volatile that asset is, whether it is worth the time and trouble to actually go through all that. Is it worth the risk for that amount? 

Cryptocurrencies are extremely volatile and once you miss the boat, its hard to get back in, unlike lets say Gold or any FX pair.
 

BTC : I never believed in it, but looking at the way the price soars, it made me curious. Upside in terms of appreciation? For me to double my money, it needs to get from $2500 to $5000. I'll probably just get 1 BTC and let it be. At this price, it is possible to sell when there is a solid sell trend because there is ample room between lets say $1000 and $2500.

XRP : We are at 0.18, I see a lot of upside and very little downside. It looks more likely for XRP to hit $1 rather than BTC to hit $5000 (though I could be wrong). But for prices now to hit rock bottom? it is unlikely unless the Ripple guys make some serious critical errors. It could be a flash in a pan, where it just hits the bottom and shoots for the moon. 

Gold and FX are less volatile and perfect for day trading. You make money both ways, with leverage. You can "enter" and "exit" a market any time which makes sense for you to Buy and Sell whenever you want. 

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