With the Bitcon price going from a high of nearly $20K to $11K this morning, I’m reminded of the following:
- Prices are going down. Making profit on a trade requires that one sells at a higher price than was bought. If prices are going down, there may not be an opportunity to exit at a higher price.
- False signals. Prices are starting to go up again. Maybe this is a sign that the market is reversing and on its way up.
- Velocity of decline. Loses can occur fast and in a short amount of time that one is not able to exit the position.
- Funadamental value not assessed. If the entry point was above the fundamental value of the asset, the asset price may not rise above the entry point again. An exit in the position will result in a lost.
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