We’re seeing this question a lot over the past week. I don’t recall the source of this statement, but it’s so true:

“There is more pain felt by an investor sitting on the sideline, watching a rally go by without them, than there would be actually taking a loss on a position.”

Did you get that? Psychologists have found that It’s actually HARDER to watch a rally go by without you than it is to suffer the loss on a position that doesn’t work out!

So let’s say you’re looking at a price chart of Bitcoin and (as I write this) the price has gone from a low of about $3200 in mid-December of 2018…to a high today of about $11,500. You do the math and you figure that you’ve missed out on a 259% gain! That’s enough to give you heartburn and you get that feeling of “desperation” as your mind screams out

WHAT IF IT GOES TO $100,000 WITHOUT ME BEING ON BOARD! I MUST ENTER NOW!!!

I’m sure that some of you are feeling that now, especially if you barfed out all of your coins at the bottom. Before you pull the trigger due to your impulsive brain overriding logic, let’s break it down to see how you can handle this situation going forward.

Don’t Panic Buy

If you’re buying what has become a parabolic rally, you’re entering what will undoubtedly be an intermediate top, even if price does eventually go higher in the long run. There’s nothing like chasing the rally and buying the near-term highs….only to watch it subsequently fall….to make you doubt

Unfortunately it’s almost impossible to know where the exact “top” is going to be, and it depends on many emotional forces which “runaway” markets exhibit. Let’s put it this way: markets that “run away” like this typically rise far further than anyone expects them to, yet also fall much further than anyone anticipates.

You can see this effect during the middle of one of the strongest bull runs in history, the spring-fall bull run in 2017:

Notice how each rally creates a parabolic rise, only to dramatically drop afterwards, and in two of these cases, the fall gave back some 62% of the previous gain! These are not comfortable pullbacks, (none of them are!) and many weak-hand bulls who bought in at the top sold out during the pullback, enduring big losses.

The point here is to NEVER “chase” a market higher, no matter how painful. Odds are, it’s about to bite back and leave you with regret for entering at the intermediate peak in price.

Get a System

The reason why you missed the rally to begin with was because you didn’t think the rally would occur (usually because of negative public sentiment and fear-based articles) or you were waiting for it to pull back to a better price. Guess what? You still wouldn’t have taken the entry had the price pulled back, because that pullback would have felt “scary.” I don’t care whether it’s Dollar Cost Averaging, a technical swing system, or even a short-term intraday system, you simply must define a “system” for entering positions and stop relying upon your intuition or social media to make decisions for you.

Scale In

Well, there’s no wonder that you were scared of entering, because you were going to drop your whole nut on one entry. Learn to scale in your capital, let a rising price earn your continued contributions, however you enter it. I typically risk no more than 2% of my capital on any one trade, and if you do have price appreciation, the risk to that capital drops. Learn to sprinkle capital into a rising market in small portions.

Define Your Exits

As well as trading smaller on each contribution, it’s important that you define your exits on every entry. If you are a HODLer, that’s fine, but understand that the next 61.8% swing retracement might be around the corner, just know that you might be unhappy sitting through that. You might find that you’re really not a HODLer, but more of a trader. Many people came to me in 2018 that claimed to initially be HODLers but couldn’t take the pain of the bear, and sold out. This is why you have to define your exits BEFORE you enter, which requires you to have a system

There Will Be Time

This bull’s just getting started, even though there’s a lot of FUD going around from pundits trying to get attention, an initial run this strong is extremely unlikely to fail. Use the last run in 2017 as your guide and note that there were repeated opportunities to jump on board the bull, however none of them felt particularly safe at the time. That’s the hallmark of a good entry, one that goes against public sentiment. And FOMO no more.