To give a bit of nuance to how I approach my position taking and strategy within digital assets. I have a long term view, I seek to express that view through my positions but at the same time appreciating that on the journey where I think the asset is going; there will be volatility to exploit along the way. For example if I think an asset will take $2 but will take seven years to get there, I want to exploit the volatility it experiences in its journey to $2.
At the same time, I believe within digital assets/crypto that the ability to explode upwards in to a bull run is there and can be unpredictable so I refrain from taking short positions. Hence me being a long only PM in the digital asset space. As I have the view that we will ascend in the longer term, I maintain a small long position that I hold very much long term. It's a smallish portion of my AUM but it's enough that not only will it generate significant returns in a strong bull run but it will allow me to take advantage of a large move upwards and not feel the need to join a breakout or go long on a pull back. When talking of clip size, once I've offloaded long clips in an up move, I would be maintaining most likely half a clip to a clip that I hold long term.
It's important to stress that I use no leverage due to the volatility in digital assets, I believe there is enough volatility to generate strong returns without the risk of leverage. So in terms of your portfolio, how much percentage wise would I still have in the market for the longer term. At a low price where entering the position, realistically 5% is enough that the returns are significant if that asset is appreciating by a multiple of ten during a bull run. These numbers within equities would be outlandish but within the crypto space, they are not unheard of even in these modern more liquid times in comparison to ten years ago.
The rest of my position taking is built around scaling in to positions at levels I believe will have strong support and a strong bounce within weeks/months for me to generate outsized returns. So for example, I may pay 13 cents for a clip and exit that at 18.3 cents. Meanwhile my small long term position would not be altered during these type market moves.
So where would I be if I were flat today, looking at Dogecoin with no position and a fresh pot of capital to deploy. As someone with a small amount on for the longer term, I will patiently wait for x cents to trade but if flat there is nothing wrong with scaling in from a bit higher. You could go long half a clip at x cents with a view to putting your next half a clip on at x cents. That way if the market doesn't trade lower but you are filled at your first half clip entry point, you are still going to benefit from a bounce. If the market does trade through and fills your second buy order then you have a whole clip on with an average of x cents. For the exit we would still be looking at the x level that has been a good exit for several trades in the teens. Look at the chart above, where we have a strong breakout from, we've retraced to and become support, it's a good area to be long especially looking at BTC being very bid and building steam towards ATH’s.
As ever, any terminology that I use that is confusing, please send me a message and I'll explain. Stay patient, stay disciplined and let the market do the work!