How to slowly but surely accumulate more cryptocurrency with less effort and with little worry. Part 2 and Part 3
Ride the Fibonacci halfpipe and accumulate crypto
What kind of cryptic talk is this? It’s cryptocurrency like bitcoin (BTC) and Ehtereum (ETH) that I want!
What is a good strategy for investing in crypto? What are my goals? How can I keep my cryptocurrency safe?
What this article tries to convey is how to slowly but surely accumulate more cryptocurrency with less effort and with little looking back. Not investment advice, it’s an experience I share.
Anyone who wants to get “rich” fast should skip this article, for I can’t help you with this.
Disclaimer: this is not investment advice!
Over the past 8 years, I have regularly explained to family, friends and acquaintances how I “trade” cryptocurrencies: I don’t, in fact, trade. I set up some orders and get on with my life. Why this is so, and why this can be an enjoyable approach for you too, is discussed. In addition to practical tips and explanations. Reading is a verb. This article is work.
First, a little riddle to get you started. You only have to change one word from this timeless message from my whatsapp-history to my nephew below. Change one word and still make it relevant in any of the past ten years and in the next ten years. Which word would that be?
“You put in limit orders at your crypto-exchange and don’t look after at it anymore, that’s the idea. If the price goes up instead of down, then you haven’t been able to buy anything. That means you can celebrate (because the price goes up) or do a stop-loss manually: you buy up the rest at 7500 for an 800 euro budget.”
The changeable word is a number. The number 7500 is from 2020, but feel free to fill in 3750 for 2019, and 375 for 2017, and 37.50 for 2013. And feel free to fill in 37,500 for 2021, and 75,000 for 2022/2023?
Words like limit orders and stop loss may be new to you. You can read more about them here. They are both precautionary tactics. The bottom line with stop-loss is that if the opposite happens from what you expected, then at some point in time you take your loss. More generally, when your cryptocurrency hits a price level (“a limit”) that you buy or sell a certain amount at that price. Simply put, stop-loss is therefore a special kind of limit order.
Personal motive
So why am I only writing an article about this now? Because I see more and more people wanting to trade crypto (Asking me “Which coin should I buy?!”). The other reason I did the work is because of the increasingly crafty crooks on the Internet who are there to take a lot of money from you. “Fibonacci” could bring peace of mind. But you need to put effort in understanding why and how.
Who was Fibonacci?
Leonardo Fibonacci was an Italian mathematician of the Middle Ages (1170–1240). What is of interest to us is that he solved a problem concerning the growth of a population of rabbits. The solution, generation after generation, was a sequence of numbers that later became known as Fibonacci’s numbers.
In the Fibonacci sequence, each number is the sum of the previous two numbers.
Read more on Wikipedia.
Fibonacci numbers for crypto horns
What are we supposed to do with numbers about rabbits?!
Brief summary:
1 1 2 3 5 8 13 21 this ratio — and then set it up to both sides: if the price goes down, you buy more and more per fixed interval, and if it goes up, you sell again temporarily to buy more bitcoin back in the new downward trend: you keep net bitcoin.
When I write bitcoin, you can also fill in other cryptocurrencies for this
Now you also know immediately what a halfpipe is. In it, cyclists, skaters, skateboarders, skiers and snowboarders can do dangerous but beautiful and adrenaline-enhancing tricks.
And recently also people who want to collect cryptos :)
Why Fibonacci and why is it a useful number series?
Everything that grows and blooms in nature on earth often adheres to the Fibonacci sequence, for example, the growth of petals or branches on a tree, and the shape of a snail shell.
1, 1, 2, 3, 5, 8, 13, 21, 34, etc.
Do you see the connection? You add the last two numbers and then you have the next number.
What does a halfpipe have to do with a Fibonacci sequence?
Oddly enough, we can do something with the symbolism of the ascending slopes and the imaginary area underneath:
- the height is the Fibonacci number ascending or descending
- the area underneath is the ratio and distribution of your buy/sell orders.
Wow that’s going fast. Hold on. More on that later!
The photograph of the halfpipe above would put you in numbers like this
The height:
8 5 3 2 1 1 0 0 0 0 0 0 0 0 0 0 0 1 1 2 3 5 8
The area:
8/20 5/20 3/20 2/20 1/20 1/20 0000000 1/20 1/20 2/20 3/20 5/20 8/20Do you see it? I was too lazy to put the numbers in the right place under the halfpipe in the picture. Do it yourself, it’s your money. But with this series we’re going to work.
Why exactly would you use this Fibonacci sequence?
- Following the natural course of things also works in crypto collecting I thought. Is there any evidence for that? No, there isn’t.
- The series is expandable backwards, provided you have cash
- You know that your average purchase price is exactly the second last click or installment.
With buying and selling crypto, you could use these proportions in fixed intervals to ride what I call “the halfpipe,” symbolizing a skateboarder sliding down two sides of a halfpipe from left to right, gracefully and finally arriving at the finish line.
What are the proportions in this dance? Number/Sum by Number! The total is always 100%. That 100% represents the total amount to be converted in this side “halfpipe”, say quarter pipe.
What’s the point of this? And why is it better than other strategies? Can I get rich like this?
Hold on. First, a few things up front:
- Note this is not investment advice! It is a description of what I do with the goal of building more cryptocurrency and storing crypto value safely.
- Never invest with borrowed money or money you can’t afford to lose
- Spread your purchases and sales over time so that you are less bothered by the much-hyped Volatility, because for example you buy a fixed amount every 7 the day of the month or you put down a fibonacci series that doesn’t “fall through” easily.
Why all these difficult terms. What do you gain from it and When does it matter to you?
We want to collect more cryptocurrency slowly but surely with less effort and with little looking back.
So bite through the sour apple, you’ll need it to achieve this.
First, a little anecdote from 2016. You can guess what it’s about.
Personally, I have no desire to have my life controlled by cryptos. So I at times put down so-called limit orders, where if “it” goes down at some point I start buying and if it goes up at some point I start selling. But note: always everything with the goal of ending up with more crypto-currency.
So too with Dash one of the privacy coins of the time. I didn’t have DASH yet. Dash was at 8 euros when I looked at it. I put down my first buy-limit orders to buy Dash in 2016. I had 500 euros available for it (that’s a choice!). With a Fibonacci sequence that actually started buying immediately if Dash would drop a little and “touch” the 7.50 euro mark.
My strategy could be expressed in numbers like this:
Number of steps to 3.5 euros per DASH: 9 steps
Height:
34 21 13 8 5 3 2 1 1 0 (where 0 indicates the price level of 8 €/DASH )
The sum of these numbers: 88
The area ratio:
34/88 21/88 13/88 8/88 5/88 3/88 2/88 1/88 1/88
My limit orders:
Buy 1/88 * 500 € if Dash were to drop to 7.50 €
Buy 1/88 * 500 € if Dash drops to 7.00 €
Buy 2/88 * 500 € if Dash drops to 6.50 €
Buy 3/88 * 500 € if Dash were to drop to 6.00 €.
Buy 5/88 * 500 € if Dash were to drop to 5.50 €
Buy 8/88*500$ if Dash were to drop to 5.00 €
Buy 13/88 * 500 € if Dash were to drop to 4.50 €
Buy 21/88 * 500 € if Dash were to drop to 4.00 €
Buy 34/88 * 500 € if Dash were to drop to 3.50 €Dash was then at 8 euros each. I had rewarded every half euro decrease with an extra step in the Fibonacci sequence! I would still buy me a bag full of DASH if it hit the 3.5 euro mark in its drop in price to 3.5 euro!!!
Dash rose through without dropping anything. Not being able to buy anything.
But what did we learn?
- Fixed intervals of a 0.5 euro jump produces an even half-pipe!
- If Dash had dropped slightly for example to 5.31 €/DASH then I would have had 12/88 * 500 Euros (68.18 €) of DASH and 76/88 (431.82 €) of Euros kept in the exchange!
- Even more interesting is at what average price I would have purchased that DASH… tadaa!!! … for exactly 6 Euros on average!, all 68.18 Euros. That’s not a difficult calculation, you can read this directly: the second-to-last purchase (6 euros) is your average price. That’s a property of a correctly arranged Fibonacci sequence.
But it was all wishful thinking: Dash continued to rise carefree and I had missed the boat.
A few months later, when Dash was now at 28 euros, I placed a number of limit orders again for when it was going to drop, because I thought it would. I removed the old orders to free up the 500 euro for new luck. I deposited an additional 500 euros and made good use of 1000 euros and would make up for what I had left behind!
Dash rose further in price, again without sinking. Again, not being able to buy anything.
And what did we learn this time?
- I still have 1000 euros! So no problem, I run some risk in the exchange, but that’s it.
- Of course Dash did sink in its way up from time to time, but not when I wanted it to. I could have intervened (set up a stop-loss or a new Fibo-series and possibly remove the old one), and why didn’t I?
- It is nice and quiet though. You only have to set something once and can just wait.
All nice reasoning but Erm…: Dash climbed on carefree and I had AGAIN missed the boat.
A few months later, when Dash was now at 96 euros, I again placed a number of limit orders in case it started to drop, as I thought it really would do that now. And I put in over 2000 euros, as I had never done before when investing in a new currency.
Dash rose further. Again I was unable to buy anything.
Just checking with you half way: have you figured out yet what this anecdote is all about? About stupidity? About faith? About having no talent?
Dash rose in recent years to as high as 1200 euros per Dash. I let it go and still had my euros as a poor consolation.
The moral of this story… (drum roll)
I didn’t believe in Dash, it’s as simple as that :)
Therefore, I made wrong choices and wrong judgments. And I didn’t put corrections in place. I hadn’t been able to acquire any Dash and I deserved it.
For example, I didn’t believe in Doge coin either and sold large amounts for a trifle in bitcoin in 2016. I’m still happy with bitcoin (I do believe in it), and think it’s right that I couldn’t have happened to make a lot of money on the backs of other people who would buy Doge coin from me, while I am convinced it’s a bad cryptocurrency.
Binance coin (BNB) another one of those coins. It’s completely centralized, going against the grain of everything bitcoin ever aimed for. I don’t believe in that BNB is ever going to provide the freedom, independence, and inclusiveness we strive for. Never bought it, and rightfully so, for me. For you? I don’t know, you do.
How it can work?
Note: Tough story, not really happened, but could have.
I once multiplied my bitcoin number by 1.15 btc by going once left-right-left full! through the half pipe with net 0 euro spent below the line. How could that happen? As follows:
1. Bought with 1000 euros in a descending Fiborange between price 1700 euros and 900 euros 0.975 bitcoin.
2. Saved 0.475 BTC on a cold storage, put the remaining 0.5 BTC in a new rising Fibor Series between price 3400 euros and 4000 euros, with which I bought back 1937 euros.
3. I skimmed the 1000 euros because I could and paid my mortgage directly with it.
4. I set up a new Fibonacci series to the left and bought 0.676 bitcoin with the remaining 937 euros in a new descending Fibor series between price 2400 euros and 1200 euros.
5. I hodl from then on the 1.15 BTC I got “for free” because I had temporarily parted with my euros and got very lucky.
End of strong story
Two important caveats:
In this fictitious calculation example, everything was in place and the prices flew completely through the Fibonacci sequence up to three times!
Note: It’s very easy to talk and to calculate this way. And such success stories are scarce. Usually things move much slower. However, as long as you stick to the left-right-left principle, you can only build up cryptocurrency or stay with your euros.
Mind you, in the meantime your money is fixed and in a kind of risk area on the exchange.
Second note: Setting up a single Fibonacci sequence is, of course, not entirely a maintenance-free method. Once an order is filled you have a “hole” in your halfpipe that you could fill again. I won’t go into this any further because I’m only explaining my lazy relaxed method, with little to worry about.
Do you really believe in cryptocurrencies?
Back to the moral of this story: conviction and knowledge. Know what you are buying and buy it to hold and multiply. That’s not to say you can’t park in the interim, but don’t do anything you don’t substantively believe in.
The next article in this series addresses your real motivations. What do you gain from the Fibonacci sequence to achieve your goals and in which cases does it matter to you?
Part 1 — Ride the Fibonacci halfpipe and accumulate crypto
Part 2 — Study and don’t rely blindly on marketing
Part 3 — Recovering from misplaced but completed limit orders
