Read this article if you want to know about the max pain catalyst that may shock the market today. https://www.coindesk.com/bitcoin-traders-brace-for-record-6b-in-options-to-expire-friday
I used to bite my nails and get really upset over announcements like this. I've figured out that at least for now, I'm a long trader. Most people are; playing the short side requires an outlook and philosophy that usually takes time and experience to develop.
But anyway, if you see a flash crash type drop in bitcoin, which will tank the whole market, that's why. But how do you prepare without going through the mental anguish I used to go through?
The easiest way is to sell into stablecoins and wait it out. This is ok, but usually, people end up selling into stables near the bottom, after they see the crash start. It then becomes very difficult to buy back in at a profitable price.
The secret, I've found, is to trade time, not price.
You take your excess capital and use the hour-cost-average technique. Simple idea, but really switching your brain to think like this has helped me overcome the torture of waiting out a bear market. If you know options expire on Friday and you see price tanking, you take the 48 hours between Thursday at 0 UTC and Saturday 0 UTC and put in 1/48th of your capital every hour. Do this right, and you never run out of capital to put in, because you're always putting in 1/48th of the capital you have on hand. So you can actually extend past the 48 hours if need be.
If you want to keep it simple, just put in 1/48th of your initial capital every hour for the 48 hour period.
Combine this with a weighted dollar-cost-average technique for even better results. Divide your capital so that you put in a higher percentage the lower the price goes. If it's at the target price of $44k, you're putting in 1/10th of your capital on hand per time frame. If the price is higher, the percentage goes lower.
This technique requires me to focus on the much more important metric of time rather than price. If you're trying to wait out a pain event, time is the focus.
It also gets rid of all of those super annoying questions you're probably asking in chat groups. "Is the bull run over?" "What's your price target on X crapcoin?" "Do you think this will go back up?" "Why is this happening?" "Does God love me?" "Am I in hell?"
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