Please click the link below to listen to the 30th episode of my weekly crypto podcast ‘Two Minute Crypto.’ These are intended to be short, single-topic ramblings on some aspect of the cryptosphere. Comments and critiques welcome.
Two Minute Crypto – I Like My Investment Charts Raw
Welcome to Two Minute Crypto – I like my investment charts raw and here’s why. When I’m making an investment decision with a long-term horizon, I strip the relevant charts back to the barest possible details. Price over time and volume. I’m addicted to volume – I admit it and miss it on a chart but really volume too has little place over a long enough horizon.
If possible, I start with years and work my way down. As most of my listeners are crypto focused that’s clearly not very useful. Even Bitcoin only has reliable data going back to 2013. Therefore, with crypto projects, I start on a monthly chart and work my down to the daily. The lion’s share of my analysis is focused on the weekly and if possible monthly charts – this is where trend is much easier to see. Now I usually load in the 200 MA indicator for whatever time frame I’m on to gain a sense of support or resistance and that’s about it.
For my investments, I use the charts to answer a couple of very simple questions. Are we in an established trend? If yes, up or down and how deep? How does this current trend compare with previous cycles? -I don’t stress the exact lengths of troughs and spikes, a general overview is fine -I’ve got an investment spanning years in mind, no need or benefit – to being very granular.
If the market is moving sideways -that’s hardly difficult to spot on the monthly chart. At that point, my chart analysis is done – it’s the fundamentals that brought me to the chart, not the other way around. Just my preference and I invest with a minimum of 3 years in mind but usually more like 5 to 10.
Crypto projects develop, iterate and deliver far more slowly than their marketing would have you believe. I don’t believe and plan a multi-year outlook. The chart serves as a final port of call – providing useful entry and exit points and informing position sizing too. If the chart is too choppy, I may hold off, reduce my position or enter only at a much lower price point. If a bull trend is long in the tooth as compared with previous cycles -I’ll place an entry point at previous solid support looking at a retrace in the area of 80% when dealing with crypto and wait 6 months or more to enter the position or, of course, never if we don’t get there. Remember, investments abound, your capital likely does not.
Thanks for listening.