For New Investors - The 3 Percent Bitcoin Rule

fintekneeks

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Quote from: Idrisu on May 11, 2017, 02:23:04 AM

Quote from: fintekneeks on May 09, 2017, 07:16:59 AM

People new to Bitcoin may want to consider the 3 Bitcoin Rule (3% of total), since investors unfamiliar with Bitcoin have many stories involving mistakes of selling too early, or jumping in at the wrong time due to the panic of missing a trend. I met one of the smartest bitcoinaires at a meetup in downtown Dallas, who interacted with Satoshi on the bitcoin forums and was one of the earliest adopters. He sold his bitcoins to pay for student loans and felt regret at selling the too early, even though I would argue he made a good trade. However, seller’s remorse can happen and we can mitigate it by simply following this 3 Bitcoin Rule: always keep a minimum of 3% of your bitcoin total (so 3 if you have 100). In our minds, we’ve “lost” these forever, so we don’t debate whether we made a mistake when we sold some or not.

Traders who have more experience may find this rule inappropriate, but for people new to bitcoin, this has done well over time.

I sold part of my bitcoin last month I think up to 95% of my hold at $1090 and this week bitcoin went up to $1,800! not even up to three weeks that I sold out of panic. The wost of it is that I cannot remember using my money for any better things! I just learned from this your post now never to sell my coin out of panic.

That's a good lesson to learn; bitcoin is a tough market for new traders. Many didn't see the recent 12-15% dip coming and it did. Friday, I thought GBTC was cheap due to this oversell, just like I saw a lot of potential in GBTC before the bitcoin ETF was denied. It's a tough market though.

Having a strict rule - whatever it is, helps. For most people "3 percent" doesn't feel like a lot of risk. For some, it may be higher or lower.

robelneo

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Quote from: fintekneeks on May 09, 2017, 07:16:59 AM

People new to Bitcoin may want to consider the 3 Bitcoin Rule (3% of total), since investors unfamiliar with Bitcoin have many stories involving mistakes of selling too early, or jumping in at the wrong time due to the panic of missing a trend. I met one of the smartest bitcoinaires at a meetup in downtown Dallas, who interacted with Satoshi on the bitcoin forums and was one of the earliest adopters. He sold his bitcoins to pay for student loans and felt regret at selling the too early, even though I would argue he made a good trade. However, seller’s remorse can happen and we can mitigate it by simply following this 3 Bitcoin Rule: always keep a minimum of 3% of your bitcoin total (so 3 if you have 100). In our minds, we’ve “lost” these forever, so we don’t debate whether we made a mistake when we sold some or not.

Traders who have more experience may find this rule inappropriate, but for people new to bitcoin, this has done well over time.

It's a good rule then but not now,people are more of hoarding their coin even up to 50% because they know is on the price and every negative effects or issues Bitcoin have encountered in the past and in the future will not harm it's price..

Ucy

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100% correct. I have been considering this idea too. Not only Bitcoin, every valuable cryptocurrency you invest in should have your 3% minimum. Just forget about the 3% whether it becomes Worthless in the future or not. Then comeback once every month to see the investments or simply set price alert for each coin.

Always remember: Good Altcoin not shitcoin

aardvark15

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Quote from: fintekneeks on May 09, 2017, 07:16:59 AM

People new to Bitcoin may want to consider the 3 Bitcoin Rule (3% of total), since investors unfamiliar with Bitcoin have many stories involving mistakes of selling too early, or jumping in at the wrong time due to the panic of missing a trend. I met one of the smartest bitcoinaires at a meetup in downtown Dallas, who interacted with Satoshi on the bitcoin forums and was one of the earliest adopters. He sold his bitcoins to pay for student loans and felt regret at selling the too early, even though I would argue he made a good trade. However, seller’s remorse can happen and we can mitigate it by simply following this 3 Bitcoin Rule: always keep a minimum of 3% of your bitcoin total (so 3 if you have 100). In our minds, we’ve “lost” these forever, so we don’t debate whether we made a mistake when we sold some or not.

Traders who have more experience may find this rule inappropriate, but for people new to bitcoin, this has done well over time.

I agree with holding some Bitcoin long term. I would even suggest holding more than 3% because selling 97% is a huge amount. As we're seeing right now, there seems to be no limit to how high the Bitcoin price can go.

Kemarit

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You just make the new investor's experience more complicated with this rule. I think there's no universal rule that you can apply specially in the crypto trading because the market price changes really fast. Its the investor's responsibility to used his/her better judgement if they want to sell everything or leave like 10% of the total capital for re-investment. I personally don't follow any rule, as long as I know I'm getting ROI and huge profit from it, then I will sell regardless of any rule.

EggTank

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I'm a collector (hoarder) by my nature so since 2013 have been buying & mining whatever coins I can & only selling/exchanging btc for other coins. Planning to keep as long as I can & add to them when I can afford to. Think it is all very early stages & once mass adoption happens things will get very interesting.!

Idrisu

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Quote from: fintekneeks on May 09, 2017, 07:16:59 AM

People new to Bitcoin may want to consider the 3 Bitcoin Rule (3% of total), since investors unfamiliar with Bitcoin have many stories involving mistakes of selling too early, or jumping in at the wrong time due to the panic of missing a trend. I met one of the smartest bitcoinaires at a meetup in downtown Dallas, who interacted with Satoshi on the bitcoin forums and was one of the earliest adopters. He sold his bitcoins to pay for student loans and felt regret at selling the too early, even though I would argue he made a good trade. However, seller’s remorse can happen and we can mitigate it by simply following this 3 Bitcoin Rule: always keep a minimum of 3% of your bitcoin total (so 3 if you have 100). In our minds, we’ve “lost” these forever, so we don’t debate whether we made a mistake when we sold some or not.

Traders who have more experience may find this rule inappropriate, but for people new to bitcoin, this has done well over time.

I sold part of my bitcoin last month I think up to 95% of my hold at $1090 and this week bitcoin went up to $1,800! not even up to three weeks that I sold out of panic. The wost of it is that I cannot remember using my money for any better things! I just learned from this your post now never to sell my coin out of panic.

Sled

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Quote from: fintekneeks on May 09, 2017, 07:16:59 AM

People new to Bitcoin may want to consider the 3 Bitcoin Rule (3% of total), since investors unfamiliar with Bitcoin have many stories involving mistakes of selling too early, or jumping in at the wrong time due to the panic of missing a trend. I met one of the smartest bitcoinaires at a meetup in downtown Dallas, who interacted with Satoshi on the bitcoin forums and was one of the earliest adopters. He sold his bitcoins to pay for student loans and felt regret at selling the too early, even though I would argue he made a good trade. However, seller’s remorse can happen and we can mitigate it by simply following this 3 Bitcoin Rule: always keep a minimum of 3% of your bitcoin total (so 3 if you have 100). In our minds, we’ve “lost” these forever, so we don’t debate whether we made a mistake when we sold some or not.

Traders who have more experience may find this rule inappropriate, but for people new to bitcoin, this has done well over time.

This is true, keeping at least 3% of our total bitcoins will us to not regret the following decisions that we will pursue. If you have bitcoins and planning to buy then save the 3% for long term in a cold storage and you are good to go now. I think this is one of the most traders are still doing wrong, when they sell their bitcoins they sell it all and didn't save or keep some of their bitcoins.

xuan87

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I think I will save more than 3% more like 5%, but it depends on the situation, if the situation is bad maybe I will sell it all, or if the price is up very high I will also sell all of my coin, trading coins is about reaching your price limits, so if you are satisfied with the coin just sell it and used it

fintekneeks

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Quote from: bamboylee on May 09, 2017, 08:54:07 AM

Isn't 3% left in your account is too small? There is nothing much after you sold 97% of your bitcoin.

What I follow on my altcoins is I sell 10% every 2x of the amount. So if I bought at 20, at 40 I will sell 10%. Then another 10% on 80, 160, 320, 640 and so on. But I only follow this if I believe that the altcoin I am holding have great potential.

You're assuming here that the person only sells the other 97% and never buys again. He may buy and sell and buy and sell and buy and sell multiple times, but never touches the original 3% and any additional 3%.

fintekneeks

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Quote from: pawel7777 on May 09, 2017, 07:57:09 AM

Can you provide any rationale for the 3%? Or is the number just taken out of nowhere?

Why not 1%, 5%, 10% or even 20%?

And I must be missing a point, how would the rule prevent the Dallas bitcoinaire from feeling regret for selling 97% of his stash at ridiculously low price? Not to mention that (according to the rule) he vouched to hold the remaining 3% forever, so won't be ever taking any advantage of the price rise, unless he decides not to follow the rule.

For this specific example, the "sell half each time the price doubles" (or variation of it) seems way more appropriate.

Many reasons:

1. Most people act emotionally, not rationally.
2. Most people hate math and numbers like 3 and 10 feel easy. In money, 3 is even easier.
3. We're talking very new traders; not experts. People like to talk to everyone like they're an expert; they're not.

Bitcoin is new for most people, thus rules with higher percentages will feel like more risk. For people familiar (if you have more than 1 year, you're probably good), they generally feel better about retaining more.

skorupi17

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This seems like the concept of the bank to me. Every bank had their percentage on how much they will hold and how much they will use for investments, loans, etc. So for example, if you deposited 100 dollars to a bank (let's just say that their percentage to hold is also 3%) the 3% of the total deposit, which is 3 dollars, will stay in the bank ang the remaining 97 dollars will be used for the services offered by the bank in order for them to gain profit. They can use that 97 dollars for their investments or for loaning other people. And your 3 dollars stays for reserve money.

The 3% bitcoin rule for me does not have any basis that is backed up by an economical theory/study or even mathematical whatsoever. It will be the decision of the owner if he/she will use all or hold a certain percentage of it. Any number will do. It's the user's decision after all.

KuromaYoichi

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Why 3%? the article doesn't give any reason for this particular number and even in the article's example, the number is 1/3 from the total shares, about 33,3%, not 3 %. For me the 1/3 from the example makes more sense as the number of bitcoin we hold is still high and the value worth something. 3% is too small to make difference in life.

TheCoinGrabber

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I think 3% is still small. Maybe be just hold some bitcoin, and then just withdraw the "profits" leaving a seed equal to the fiat you used to buy your initial stash. I dunno about the "sell before it crashes" thing though. I mean, I find it hard to tell if a rally is more of a bubble or not.

Quote from: Slark on May 09, 2017, 09:53:08 AM

Quote from: fintekneeks on May 09, 2017, 07:16:59 AM

who interacted with Satoshi on the bitcoin forums and was one of the earliest adopters. He sold his bitcoins to pay for student loans and felt regret at selling the too early, even though I would argue he made a good trade

We get it, he is early adopter, good for him, but the fact that he he interacted in Satoshi is not all that all that impressive.
He couldn't understand the significance of this encounter at that time anyway.

The regret of spending bitcoin too soon should be called "Bitcoin pizza syndrome". I expect that it is something almost all of us will feel in the future.
I too spent bitcoin when it was worth 1/5 of its current price.

Thanks sir Slark, I believe this is the best name for that feeling, rather than "buyer's remorse".

Kubra Dam

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Good method, but the amount that you might risk depends on your characters. Some of my friends have seventy or eighty percent of their total money in bitcoin and altcoins, approximately equivalent to thousands of dollars.

cazza

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I like the 50% rule or take out profits and keep the seed money to 'play' with.

avikz

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Quote from: fintekneeks on May 09, 2017, 07:16:59 AM

People new to Bitcoin may want to consider the 3 Bitcoin Rule (3% of total), since investors unfamiliar with Bitcoin have many stories involving mistakes of selling too early, or jumping in at the wrong time due to the panic of missing a trend. I met one of the smartest bitcoinaires at a meetup in downtown Dallas, who interacted with Satoshi on the bitcoin forums and was one of the earliest adopters. He sold his bitcoins to pay for student loans and felt regret at selling the too early, even though I would argue he made a good trade. However, seller’s remorse can happen and we can mitigate it by simply following this 3 Bitcoin Rule: always keep a minimum of 3% of your bitcoin total (so 3 if you have 100). In our minds, we’ve “lost” these forever, so we don’t debate whether we made a mistake when we sold some or not.

Traders who have more experience may find this rule inappropriate, but for people new to bitcoin, this has done well over time.

That 3 bitcoin rule may make sense to the newbies, but not to the experienced people who are tracking bitcoin’s price trend from some time. We can use this 3 bitcoin rule just to save ourselves from future regrets and nothing else. But may I know, why 3 only and why not any other value??

I regret that I didn’t adopt bitcoin at an earlier stage even after having such opportunity. Finally when I started investing in bitcoin, the price was standing at 450 USD. I could have made myself a millionaire by now if I had adopted it earlier.

KeyGenKing

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Don't agree mutch on the 3 % your giving right here, it's impeccable timing yes we know that now right?

mrcash02

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Who sells Bitcoins will always regret about it later when the currency price hits high amounts. I think the 3% rule is too low, we should hold at least 50% of our amount in BTCs for the future.

If possible, even more... Especially for who doesn't have much money to invest and don't have a good money income. Holding BTCs you are taking care of your future, to have a confortable life later.

BrewMaster

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Quote from: franky1 on May 09, 2017, 09:19:35 AM

Quote from: panju1 on May 09, 2017, 09:08:42 AM

I have a better rule. I keep 50% of my coins in cold storage, and don't plan to access them until 2030.
These coins are not going to be sold at short term peaks/valleys, and are my bet for long-term wealth creation.

a few have the 50% rule

only invest an amount that if 50% was lost, wont make you want to commit suicide.

if the price doubles and you really need the funds, sell half (meaning 100% ROI while keeping half as bitcoin)

if that remaining half doubles. sell half of the remainder.. keep half (25% of original stash sell 25% of original stash keep)
if that remaining half doubles. sell half of the remainder.. keep half (12.5% of original stash sell 12.5% of original stash keep)

but only sell if you really need the funds or you think you can use the funds to buy in cheaper later if its just an obvious speculative spike

i don't have the habit of clicking on random links so i don't know what OP is talking about with his 3% rule but this makes sense. and i am kinda doing this too.
mostly with my altcoin trading, i keep my investment and take out the profit, but things are easy in altcoin market as you get the 50%+ so soon.
i have to add this one to the details of my investment

Topic: For New Investors - The 3 Percent Bitcoin Rule (Read 1677 times)