I wanted to take some time to write this very quick blog about dip buying. With Bitcoin approaching $11,000 again, I just couldn’t find a better time to bring this up. Buying the dip on any trade is always hard because we will never be able to predict that exact bottom. You have to give yourself the greatest odds possible to become profitable for that trade. You need to have a systematic approach with every buy signal and you have to do your best to predict the bottom, no you wont ever be perfect but this is why scaling your positions is important.
I tweeted this chart out not too long ago, but I just wanted to explain something really quick. Bitcoin hit lows of 6k, if you had purchased a single Bitcoin around 6k you would now have 4k in profits thats pretty incredible, considering it only took about 12 days to do so. The range Bitcoin has is something that I’ve never seen before, this continues to impress me and we have to take advantage of it. During the dip I was buying altcoins and scaling in those positions. You CANNOT panic when a pullback happens, you need to look at it as an opportunity and take advantage of it.
If you look back on this chart you can see that around 6k was its previous support line back in early November and late October, so we should expect some bounce AROUND that area. Again, we are never going to be exact so this is why we always leave room to add on to our position if we are wrong the first time. Buying the dip is a very basic technical analysis strategy, and if you can master this you’ll be very profitable. You never want to give in to the FUD when markets start to drop, but this is why it’s always critical to have a plan before you enter into any trade. One rule I always remember is always have extra finance to invest, because when everybody is selling, you need to be buying. A pullback or correction in the market is always necessary, especially with such explosive range like some of these crypto plays.