Pretty much my approach. When there's a big spike, I just sell it and buy after the crash. Sucks timing t, but when you feel its gone too far I just sell and buy back when it's lower. I'll bite one eventually, I think, but for now, I'm pretty on top.
I just invested figuring that it won't crash until I buy into it, and I sorta want it to crash. Unfortunately, it has gone up another 20% since then so my strategy is failing.
Spread your chances. Buy some now, buy some again later when it crashes even further. If it doesnt crash further, at least you profited from the current dip.
Timing the market i usually easier said than done. When do you buy back? What if the market goes down initially and then bounces back, are you still a seller or do you buy?
I have a strategy to bring forward some of my regular investments if the market dips and sort of average into that.
This is one thing that William Bernstein (I recommend his books) points out. You need to be able to calmly watch your portfolio halve in value and sit it out if you're going to be a buy and hold investor (or any investor, really). I have several friends who took their money out near the bottom of the latest crash and put it it cash or cash equivalents. It's the absolute wrong choice investment-wise, but it's understandable.
Selling before the bottom and buying before the climb is the right thing to do, but if you can do that, you're not spending time reading HN, you're either working hard as a trader or relaxing on your desert island.
An interesting technical point I saw on that is that you may be better getting out a little after the peak. The reason being on the way up there is no way of knowing where the peak is. For example in the recent bitcoin run up you might have bought at 1000 and sold at 2000 missing most of it. If however you waited until it looked like it was on the way back down you likely would have sold at around 16000 - 10000 and so done better.
I think the key is more to buy in early rather than near the top. Indeed if you time that ok you can sell half your stake when it goes 2x and so be kind of risk free for the rest.
If history is a guide bitcoin will go nowhere for 6 months to a year, then up up slowly, then have another silly bubble a few years later. So my infallible guide is buy in a years time, sell half when the price doubles, wait till there is a bubble and when it's super hyped but starts crashing sell out, probably about 1/3 below the next peak.
How do you ensure that you react fast when the market crashes? Do you have some kind of stop-loss setup that pulls you out of the market faster than all the “losers” of the game?
If you're buying in order to speculate, why not sell gradually into the gains? Your strategy seems like it is taking what is already a high-risk, and artificially making the risk higher than needed...
Also, the time to buy is almost never after/during a large boom, heh.
Timing the market is possible if you know more than the market otherwise it’s just gambling.
But what do you do if you got lucky selling now?
I sold three weeks ago figuring it would be bumpy ahead, but I don’t want to miss the bottom entirely. Now I’m thinking the low risk strategy is to buy very slowly over a long period.
Not OP (who may well just be interested and not do anything differently at all) but if I had an oracle for market crashes I would use it to sell before the crashes and rebuy after/during.
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