When you say, “buy the dips”, this means acquiring an asset that has dropped in price in a short-term period. The reason for this is that the dip or the new lower price becomes a bargain and through time the value will increase and therefore you can profit from it.
Investors and traders make use of this advantage to buy this asset because of the theory of price waves. Price wave or also known as the Elliot wave theory describes the movements of price in a financial market. The theory was able to identify their wave patterns when it comes to this and is identified depending on the price movements and consumer behavior. So essentially, buying a dip or buying an asset that has experienced a significant decline in its price will be beneficial since you can expect that it could be profitable in the future.
But before deciding to buy dips, you should take note that the market experts highly recommend buying digital tokens that are known to be quality and make sure that you are for long-term investment. When it comes to buying dips, there are a lot of factors to consider making it profitable. Some traders or investors buy dips when the asset has a long-term uptrend and suddenly just dropped. While others buy even if there’s no uptrend assuming that the asset has a potential gain in the future.
You should also be aware of the limitations when it comes to buying dips. First and foremost, this does not guarantee any profit. Just like any investment, each comes with a risk. Also, there are several factors on why an asset drops its price. In that case, you have to be more careful in choosing your investment and make sure that you research first before buying dips. If you are just an average investor, you will probably have a hard time identifying whether a drop is just temporary or a warning sign already.
In order for you to manage the risk; you should always research, ask from experts, and have some kind of risk control. For long-term investors, you could try a cost averaging strategy to minimize the risk. Cost averaging is defined as an investment strategy wherein you divide the total amount of your investment across periodic time. With this strategy, you will be able to minimize the risk as the price will vary through different periods of time.
Are bitcoins and cryptocurrencies worth buying the dip?
It will depend on your financial standing and how much cash you can invest in this. Since the market for digital tokens or crypto is volatile, you should be aware of the reality that the hope in buying the dip will make your investment profitable could turn into a loss. So, the best advice is to invest based on the money that you can afford to lose and do not put all your investment in just one place.
Here are some tips that could be helpful before you finally decide on buying:
Financial readiness. Is it the right time for you?
The first and most important tip is being aware of your own financial standing. The crypto may be cheaper now but if you do have not enough money to invest, you could end up having none left. Before you push through with the investment, you should ask yourself if you are financially ready to handle whatever risk that crypto comes with. As you all know, investing always has risks along with it. After checking your financial standing, you could also see if you have enough savings and if you already have an emergency fund. The pandemic has been a life-changing lesson for everyone to save and be ready so if you will choose to put all your money in an investment, it will be hard for you to have accessible cash in case of emergencies.
Research and understand the volatility of your investments
Although buying the dips means purchasing it at a cheaper price, there could be a lot of risk factors on why a certain price of crypto declined. So before investing make sure that you are aware of how much you can lose and if this amount is something that will not affect your needs and expenses. Especially considering that we are still in the early stages of cryptocurrencies, and we don’t know what could happen next.
Choose where you will invest your money in crypto
Cryptocurrencies' risks vary from one to another. Before buying into one, you should always investigate the underlying factors that you are investing into.
Bitcoin is one of the best examples of a well-known cryptocurrency. It's one of the most volatile assets in history, having weathered some of the worst financial meltdowns. Bitcoin's lowest point was in 2011 when its price plummeted by over 99 percent. It was a miracle that investors were able to make any money after that, but they did.
In the essence of time, it boils down to track records. Crypto, like bitcoin, is likely to recover from a dip if it is still standing after multiple dramatic incidents. Therefore, it is a good investment.
With that, make sure you've done your homework and be prepared for whatever ups and down you will go through. Cryptocurrency is a high-risk investment, therefore it's not for everyone. However, if you're ready to invest, purchasing the dip can be a wise decision
Basically, the deciding factor that you should always consider before buying cryptocurrency or any other investment is your financial status. There could be a lot of pressure in growing your assets but the key to financial success is to have a thorough plan on how you will succeed. One way to grow your money is through investing in ready for occupancy condos. You could opt to invest in places that are known to be tourist destinations, just like a condo in Baguio. You could also try to offer service in condo design and make the place Airbnb so other people could rent and you can earn from it. Condo living also is something to consider given that you can have your personal space to have more time for yourself to grow and be the person you want to be. All in all, you should always be mindful of how you choose to spend and save because through this you’ll be able to achieve your goals.
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