VEN: example of laddering in
In crypto or any other trading platform it is hard to call the bottom of a coin.
We do know from VEN that its going to retrace.
But, we don't know till what price it will drop.
This is where the principle laddering becomes a handy tool.
Basically a coin retraces more then 50% of its top value.
The most common retraces are thus 61.8%, 78,6% and 88%.
We don't know what retrace this coin will execute, so we split our buy-ins up in 1/3.
If VEN reaches the 61.8% retrace, we will buy our first 1/3 of our total buy-in.
Lets say we want to buy 100 VEN.
We will buy our first 33 at the 61.8% level.
However we will start buying a little bit above here and stop buying a little but beneath the level, because the price can reach this area, but does not always perfectly bounce on that exact level.
Therefore, we start buying our first 33 at:
- 34k (10% - 3.3 VEN)
- 33.5k (10% - 3.3 VEN)
- 33k (30% - 10 VEN)
- 32.5k (30% - 10 VEN)
- 32k (10% - 3.3 VEN)
- 31.5k (10% - 3.3 VEN)
If you follow this principle:
- you will never miss out on a coin, because you start buying early.
- you will always have a good average entry
- you will spread your risks.
IF prices drop below the 61.8% level, you may think: shit i could have bought VEN at a lower price.
However, because you accumulate the next low (71.8%) also, your average entry is good and you are sure that you've got some VEN.
Hope this may be helping!
We do know from VEN that its going to retrace.
But, we don't know till what price it will drop.
This is where the principle laddering becomes a handy tool.
Basically a coin retraces more then 50% of its top value.
The most common retraces are thus 61.8%, 78,6% and 88%.
We don't know what retrace this coin will execute, so we split our buy-ins up in 1/3.
If VEN reaches the 61.8% retrace, we will buy our first 1/3 of our total buy-in.
Lets say we want to buy 100 VEN.
We will buy our first 33 at the 61.8% level.
However we will start buying a little bit above here and stop buying a little but beneath the level, because the price can reach this area, but does not always perfectly bounce on that exact level.
Therefore, we start buying our first 33 at:
- 34k (10% - 3.3 VEN)
- 33.5k (10% - 3.3 VEN)
- 33k (30% - 10 VEN)
- 32.5k (30% - 10 VEN)
- 32k (10% - 3.3 VEN)
- 31.5k (10% - 3.3 VEN)
If you follow this principle:
- you will never miss out on a coin, because you start buying early.
- you will always have a good average entry
- you will spread your risks.
IF prices drop below the 61.8% level, you may think: shit i could have bought VEN at a lower price.
However, because you accumulate the next low (71.8%) also, your average entry is good and you are sure that you've got some VEN.
Hope this may be helping!
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.