Whether to take over a position or not is actually straightforward — just do the math with specific numbers. Let's say the top of this wave is at 12.6, what's the probability you think it could really drop to 8? Even if it does drop to 8, a rebound to 20 is only a 1.5x return. Using such a large drawdown risk to bet on a 1.5x gain just doesn't make sense no matter how you look at it.
To be honest, there are plenty of quality opportunities in the market, so there's no need to rush and take this loss. The logic is that simple — since you've already operated well this round and successfully exited at the top, there's no reason to get on board unless the price becomes cheap enough. History repeats itself: in the last cycle, it fell from 6.9 to 4.8 and people thought it was the bottom, but it ended up getting cut in half to 1.5. How many people got liquidated in such repeated reversals.
Of course, if you're mentally prepared to enter at 9 and can calmly accept a drop to 7 or even a breakdown to 5-6, then I wish you good luck. But the prerequisite is that you've thought through the maximum loss you can tolerate.
Whether to take over a position or not is actually straightforward — just do the math with specific numbers. Let's say the top of this wave is at 12.6, what's the probability you think it could really drop to 8? Even if it does drop to 8, a rebound to 20 is only a 1.5x return. Using such a large drawdown risk to bet on a 1.5x gain just doesn't make sense no matter how you look at it.
To be honest, there are plenty of quality opportunities in the market, so there's no need to rush and take this loss. The logic is that simple — since you've already operated well this round and successfully exited at the top, there's no reason to get on board unless the price becomes cheap enough. History repeats itself: in the last cycle, it fell from 6.9 to 4.8 and people thought it was the bottom, but it ended up getting cut in half to 1.5. How many people got liquidated in such repeated reversals.
Of course, if you're mentally prepared to enter at 9 and can calmly accept a drop to 7 or even a breakdown to 5-6, then I wish you good luck. But the prerequisite is that you've thought through the maximum loss you can tolerate.