Suddenly, a chart shows that a coin you were thinking of investing in has shot up. Two green elephant candles confirm it and you have the illusion that they are going to the moon. A new candle is forming and it is also green. Your instinct screams that it's better to hop on that train right now! You rush to buy before the price goes up more and every penny seems precious...
But, as soon as you buy, putting all your hopes in that sublime moment when you joined the train of the big green candles, the price starts to drop, the candle turns red, and you start to see how the illusion of profit fades away. What was the mistake?
In a recent class, one of my tutors said the phrase: "We don't buy on green candles." I thought it was extreme. But, only when the emotion that leads to buying at the peak is cleared, one remembers that the first basic rule of any market is "buy low and sell high." So why do we see two, three green candles indicating that the price has already risen as much as it should and we buy?
Yes, I know it can go up a little more, but almost always the following candles are shorter or are interspersed with some red pullback before resuming the rise, signs of exhaustion. Still, one deceives oneself without accepting that that train has already left.
So, the best thing you can do is wish good luck to the passengers who did get on in time and wait for the next train.
Now: if it happens to you again (and it will happen until you learn) this thing of buying when the impulse has already gone up several points and the price drops right after, do not blame the dark forces or the exchange. You can remember, rather, that nothing rises eternally, that the nature of the market is of impulses and pullbacks, and that, fortunately for everyone, there are new opportunities every now and then... or, as I said before: after one train comes another. All that remains is to wait.
What to expect? That the pullback begins... when it starts to go down, watch the drop (of course, there is analysis to do, indicators that can signal a forthcoming trend change and can indicate a better entry, and this will not be at the peak of a rise) and start investing, now calmly, in the pullback...
