Portfolio Erosion happens when you get caught up in the "moment" and start buying and selling on swings and emotional impulses. "Ohhh Lord its going down SELL!, wait, there it is going back up, BUY!" and at the end of the day, the market is back to where it was and you have less money and less shares then you did before it started. PORTFOLIO EROSION! Your loss their gain!
Portfolio Erosion is why I use the 70/30 portfolio. It has saved me personally from "market erosion" over many years. It literally keeps me out of these moments as I pretty much have nothing I can panic sell here. I have been down to my core holdings since Dec 20th and only doing small limited trading. By nature of this strategy, I have limited my risk, as only a few coins Bitcoin' XRP' XLM' and Litecoin' are getting close to where I want to add for the longer term.
Looking at the chart from yesterday we almost hit the $13,500. Of course not only is this a retracement level, its a key as well going back to December (not shown but you can pull it up), so it is no wonder it was bought up quickly. There is also a valid 5 wave count on the daily as shown. Now this can be misleading, so be careful counting waves here, but it helps bring some perspective to the chart. I am looking to enter closer to $13,000 area for a longer term trade. Now this will only be a 1/3 position, as we can always dip more and I want some money on the sides to take advantage of a panic selloff. In addition I want to see how the market reacts at $13,000.
Longterm: We are still in a bull market
Midterm: Bear market
Shorterm: Bear market
Long Term Investors
If I had no Bitcoin and was looking to add for the longterm there would be no reason for me not to add a small position here. We can still head lower and its never wise to come into a market long term in one move.
Bottom Line: Corrections are difficult to trade and very risky. Patience and money management should be the primary focus. Trades should be short term with tight stops out of consolidation. This is not the time, after doing everything right, to expose yourself to "PORTFOLIO EROSION"!
If I do not respond to messages or to comments it is due to a project we are in the final stages of releasing for Saturday. So I apologize. I always try to respond to everyone's comments, questions and messages, but we have been trying to get this finished up for some time now. Good luck and keep calm! There is always a better trade tomorrow do not try and force one today!
#1 - We clearly stated in the short and mid term this is a bear market which would imply we can go down. The boxes are levels we want to watch price action for a reversal.
#2 - I do NOT have a buy on Bitcoin or any other coin here. I have stated we need to let the market run its course and look for levels where we can add positional trades.
#3 - Since we are in a short and midterm bear market we have gone to the 30% cash position. Again this is a strategy where in the LONG TERM we anticipate the market moving higher, but in the short and midterm understand we are likely to go lower.
#4 - The target boxes are LOWER than the current price. I do not see anywhere we have posted BUY for the RALLY. We have had the same or similar levels for over a week now. other than the short term trade we bought just under 14k and sold at $16k
#4 - Market sentiment can change on a dime. This is why we do not completely exit the market. I do NOT care how good you THINK you are, unless your returns in a 100% trading portfolio are greater than 400% over the past 4 months you have NOT outperformed this strategy. PERIOD!
#5 - If you just started with 10k across the board in BTC ETH LTC last year evenly weighted. You would be sitting on over 600k! So if you are that good of a trader where your calling dips and blips you would not be making calls on trading view, and I would be in the caribean tightening up for a tsunami not tightening up my portfolio.
Bottom line, I only know one group of people that consistently call market tops and bottoms, and you would not be posting trades or making calls on trading view.
The TRUTH HURTS - traders almost ALWAYS under-perform buy and hold. I've been investing for 30 years, I've seen the dot.com the bio and the housing bubbles. I can tell you with certainty that market timing traders are the first to the unemployment line!!!
I was wondering, when you talk about 1/2 position, how much of your 30 % trading portfolio does that take up? Is that then 15 % of your total portfolio, or do you have a special quota you plan for each currency?
So if I allocate $4500 for a trade, then I may buy three positions all at $1500 each. The more it goes in my direction the more I add. This provides a safety cushion in the event it turns out I have a chance at getting out even or better, or with a minimal loss.
Money and risk management is critical in trading!