Lesson of the Past

While we're slow, I wanted to share a sad story that I hope helps some. I just happened to be thinking about it this week as we have a very important inflection here. If the coin market turns very bad, with a break of $4K Bitcoin and $100 Ether, many alt coins will not survive. I have largely been out of HODLing alts since about July 2018 and warned about them since. 

At any rate, had a member here who was very excited about a certain project. I did at one point have a bullish count, and it did perform for a while but it broke during the 2018 bear market, and I turned bearish. I knew he was deeply into it because he constantly asked for the chart at webinars and on the board. My answer after support broke was the same: Entering a Lifetime Downtrend. We ended up in PMs where he'd ask if it would turn. And, in those situations, where the downtrend is insatiable I have to say not likely. I was a little relieved that he bought on the moonish take of another member, not my analysis, but it was based on an unproven method. Through PMs it was clear he was not a person of means. I asked him why he wouldn't sell . This was not a recommendation, but I was trying to get him to think.  His reply was, 'I can't lose XYZ'. This sum was too big for any alt coin in my own situation, but probably worse for him. I just didn't understand the size of the investment. Further, this coin is near all time lows, in other words, he lost a lot more now since those PMs. 

Eventually he sent me a note to say he was leaving the service. He couldn't afford it anymore. It appeared to me he was only here to see how his too big trade was doing. At the time he left, Bitcoin was out of the bear market, we were all making money, but not his coin. 

Lessons to learn:

1. A count is a count until support breaks. You have to be decisive. But before you enter, take a look at support, decide your risk level according to support and set your size accordingly. Trading moon counts, as I've said, is generally pointless if the daily chart is in a downtrend. Wait for a turn. 

2. Alt coins are dangerous. They are all experimental projects and far more speculative than small cap stocks. Most don't have a valid business model. 'Usage and adoption, and cool visions' do not good fundamentals make. 

3. The beauty of crypto is you can take a small amount and turn it into a lot. Don't break that math by overinvesting without a max loss in mind. 

4. The market doesn't care to get you out at a gain, or even after you've taken huge losses. It really doesn't. Don't tempt fate but by trading past support you decided was key when you entered the trade. And, if you entered the trade wthout measuring risk, you are gambling. You will not make it in trading until you stop doing this. 

Ryan Wilday hosts the Crypto Waves service on ElliottWaveTrader.net.