Sometimes you need to recognize that you’ve made a decent profit. When that happens it’s good to take some money off the table. Why would I do that when the price seems to be increasing today? The short answer is that I want to continue to take advantage of the volatility and at the same time not get too greedy. Sometimes I day trade id the opportunity is there. Sometimes I wait and trade on a more intermediate timetable. Let’s look at a couple charts to see what is happening here. Keep in mind that digital currency typically moves on emotions rather than real news. Occasionally there are major new technology announcements or a new competitive edge that a cryptocurrency may have figured out; most of the time it is just people reacting to what they see happening. They see the price dropping and they freak out and sell.
One of the nice features about this alternative investment vehicle is that very rarely are the price movements tied to the stock market. The last few days have seen the Dow dip almost 500 points. I like to trade stocks and ETFs as well. However, when they are dropping I typically don’t like to sell if I feel they will bounce back. With cryptocurrencies, there are a lot more opportunities to jump in and out. Their markets never close which makes it fun to follow at night or on the weekends if you so choose.
Let’s take a quick look at the two charts below. The first one is from this morning. The second one is the past 14 days. (Full disclosure: my last buy in LTC was at 22.95 earlier in May. When we look at this morning’s chart we see sharp increase and then a tapering off until we see a decrease. If you were day trading this, once we see the pattern evolve where we aren’t getting back to the morning highs, then it is a good time to take your profit and wait to jump back in later.
When we look at the past 14 days we see a surge to $37 which is a price they haven’t seen since their inception in 2013. The euphoria dies out a bit and we see the chart telling us that each recovery bounce is getting less and less. Again, a good time to take a profit and jump back in later. I hope that you found this article interesting and be on the lookout for more posts like this. I will cover Bitcoin and others as well.